Capital Investment & Business Planning

1. Capital Investment &Business Planning Prepared for the 34th PCC Annual Conference Vancouver, British Columbia April 18, 2008 By BST Associates

2. Agenda • Case Study • Issues for Consideration • Q&A

3. Moorage Permanent Moorage Winter Moorage Waitlist Admin Fee Waitlist Annual Fee Waitlist Forfeitures Late fees Storage Dry Sheds Lockers Storage Yard Utilities Electricity Cable TV Leases Services & Retail Sales Fuel Propane & Fuel Products Launcher Guest Moorage Shared Moorage Redondo Parking Marina Parking (Long Term) Sub-Leases Other Retail/Vending Misc./Other Services Special Events Other Parking Fines Non-Operating Income (interest) Des Moines Marina Lines of Business

4. Des Moines MarinaMethodology • Revenues • Gross profit • Revenues less cost of goods sold • Applies to • Fuel, • Retail goods (propane, fuel etc) and • Utilities (electrical, cable TV) • Net profit • Gross profit less other costs: • Direct labor allocation (accounts for ~60% of marina labor) • Indirect labor allocation (~40% of marina labor allocated to LOB by % of gross profit) • Expense allocation (by % of gross profit) • Interfund transfer allocation (by % of gross profit and/or to other LOB)

5. Des Moines Marina Revenues 1% of Total in 2005, parking fines and interest income 2% of Total in 2005 3% of Total in 2005 34% of Total in 2005; includes fuel 5% of Total in 2005 55% of Total in 2005

6. Des Moines Marina Gross Profit 2% of Total in 2005 2% of Total in 2005 -1% of Total in 2005 14% of Total in 2005; includes fuel 7% of Total in 2005 75% of Total in 2005

7. Des Moines Marina Net Profit -32% of Total in 2005 4% of Total in 2005 -2% of Total in 2005 -10% of Total in 2005; includes fuel 12% of Total in 2005 128% of Total in 2005

8. Des Moines MarinaKey Considerations • Services • In 2006, Service Division labor and benefits was $388,990. • Short-term goal is to make services self supporting. • Long-term, significant net profit. • Utilities • Small increase in minimum charge for electricity would give utilities a small positive net profit margin. • Current $3 per month, would need to increase to about $4.50 per month. • Other • Revenues come from parking fines and interest income. • Cost primarily consists of unallocated Interfund transfers (around $300,000 in 2005)

9. Des Moines MarinaKey Considerations • Marina rates • Where do we want to be in comparison to other Marinas in our market area? • Process • Review of competitive marinas • Square footage rates • Set Open & Covered Rates to cover all costs • With tenant input • Marina Services Fee • Per slip charge for water, garbage, minimum electricity charge, etc. • Benefit is that it is a fee vs. moorage rate and can be adjusted by CM to make sure Marina is recovering these costs.

10. Des Moines Marina Master Plan

11. Sources of Capital Financefor Marina Development • Net revenue from operations • Smaller CIP items • General obligation bonds • Based on assessed value of property within district • Revenue bonds • General pledge of port revenues • No legal limit • Need to demonstrate ability to repay typically through debt service coverage • State/provincial and Federal loans • Public private partnerships

12. Alternative Development StrategiesDry Stack Storage • Port owns and operates facility • Difficult to get positive net profit from a public stand alone dry storage facility • More advantageous to enter into a public-private partnership • Port builds and leases buildings • Higher cost and higher risk for Port • Questions on whether Port can obtain its required return on investment (does the marina have a policy?) • Port enters into a ground lease and tenant builds buildings • Lower cost and lower risk for Port

13. Everett 12th Street Marina The new 12th Street Marina in Everett provides 156 slips for 40’ to 70’ yachts with end-ties up to 140’. It cost approx $20 million. Funded through bonds and grants (for transient moorage). Marina is a price leader with rates ranging from $9 to $12 per foot.

14. Triple Bottom Line • Help make decisions about facility construction or improvements • How to decide between projects • Triple bottom line • Financial sustainability • Regional economic benefits • Environmental/Community Benefits • Port of Seattle • Ensure the portfolio of assets maximizes the Port's triple bottom line; • Ensure the Port's financial situation is able to support the economic and community benefits that the Port provides; • Enhance all elements of the triple bottom line through proactive property planning and development of certain key Seaport properties; • Apply HDS decision tools, such as the triple bottom line, into the Port's decision-making processes; • Tell the Port's story to the community, including the vital role it plays in the regional economy; and • Seek projects and areas where regional port cooperation can be developed and strengthened for the overall benefit of the region.

15. BST Associates Thank you! If you would like a copy of this presentation please ask! Paul Sorensen BST Associates 18414 103rd Avenue NE, Suite A Bothell, WA 98011 bstassoc@seanet.com (425) 486-7722