1. Kodiak Cash Flow Analysis June 7, 2016 Michelle Humphrey Presentation to Kodiak City Council

2. Agenda Approach Assumptions Findings Recommendations 2

3. Approach Life Cycle Cost Model Takes into account cost of operating, maintaining, and replacing harbor facilities 50-year study period Cash Flow Model Looks at Enterprise Fund’s cash flows and working capital balance under three moorage rate scenarios  Scenario I: Status Quo  Scenario II: Annual Inflation Based Moorage Adjustments  Scenario III: FY 2017 Flat rate Increase & Annual Inflation Adjustments 3

4. Findings- Life Cycle Cost Model Net Present Value of Cash Flows: $71.2 million Annualized life cycle cost: $2.03 million Annual moorage rate per foot: $59.39 4

5. Recommended FY 2017 Rate Adjustment Slip Size (Linear Feet)Number of Slips Current 2016 Rate Per Foot ($) 2017 Flat Percentage Increase- Rate Per Foot ($) 171830.0035.55 231230.0035.55 249230.0035.55 305730.0035.55 353130.0035.55 4010530.0035.55 46 41.0048.58 483541.0048.58 552141.0048.58 603841.0048.58 624061.0072.28 851571.5084.73 901571.5084.73 1001471.5084.73 1101482.0097.17 1251789.00105.46 1501089.00105.46 1510100.00118.50 Average Rate Per Foot51.5261.05 5

6. Market Comparison Slip Size (Linear Feet) Kodiak Dutch Harbor / CEM ($)Homer ($)Seward ($) 2016 Rates ($)2017 Flat % Increase ($) 1730.0035.5540.2549.9154.32 2330.0035.5540.2549.0956.01 2430.0035.5540.2548.9955.79 3030.0035.5540.2548.5454.79 3530.0035.5540.2548.2954.22 4030.0035.5540.2548.1053.79 4641.0048.5840.2547.9254.71 4841.0048.5840.2547.8754.54 5541.0048.5846.0047.7354.07 6041.0048.5851.7547.6553.79 6261.0072.2851.7547.6253.70 8571.5084.7374.7547.3853.62 9071.5084.7380.5047.3553.46 10071.5084.7386.2547.2953.19 11082.0097.1792.0047.2452.97 12589.00105.46103.5047.1852.71 15089.00105.46149.5047.1152.39 151100.00118.50149.5047.1152.38 Average Rate Per Foot51.5261.0584.9048.5354.22 6

7. Findings- Cash Flow Model Rate adjustments could reduce harbor system’s debt requirements by over $314 million over 50 years Three rate scenarios analyzed Scenario I: Status Quo Scenario II: Annual Inflation Based Moorage Adjustments Scenario III: FY 2017 Flat Percentage Increase & Annual Inflation Adjustments 7

8. Projected Working Fund Balance without Debt, Nominal Dollars 8

9. Preliminary Debt Issuance Plans & Grant Funding Assumptions, Nominal Dollars 9 Harbor FacilityReplacement YearEligible Tier Level Grant Funding (Nominal $) Channel Transient Float2017Tier I1,500,000 St. Herman Harbor2020Tier II5,000,000 St. Paul Harbor2035Tier I5,000,000 Channel Transient Float2057Tier II5,000,000 St. Herman Harbor2060Tier II5,000,000 Status Quo- No Change to RatesFlat Rate Increase & Annual Adjustment YearDebt Issued ($million)YearDebt Issued ($million) 202027.00202026.00 202511.50203534.00 203018.50204524.50 203548.00205514.00 204049.002060120.00 204571.50 205096.00 2055136.00 2060288.50 Total Debt (Nominal) 746.00 Total Debt (Nominal) 218.50 Net Present Value of Debt 450.21 Net Present Value of Debt 135.89

10. Projected Working Fund Balance with Preliminary Debt Plan, Nominal Dollars 10

11. Recommendations A 18.5 flat percentage increase in FY 2017 to bring the average annual moorage rate to $61.05 Annual inflation-based moorage rate adjustments based on the PPI for port and waterfront terminal operations (2.8 percent) 18.5% increase year one & annual inflation-based adjustments thereafter to other services (i.e. grid use, used oil disposal, launch ramp…etc.) Develop debt plan based on cash flow needs 11