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

BST Associates 2 Agenda Case Study Issues for Consideration Q&A

BST Associates 3 Des Moines Marina Lines of Business 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)

BST Associates 4 Des Moines Marina Methodology 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)

BST Associates 5 Des Moines Marina Revenues 55% of Total in % of Total in % of Total in 2005; includes fuel 3% of Total in % of Total in % of Total in 2005, parking fines and interest income

BST Associates 6 Des Moines Marina Gross Profit 75% of Total in % of Total in % of Total in 2005; includes fuel -1% of Total in % of Total in 2005

BST Associates 7 Des Moines Marina Net Profit 128% of Total in % of Total in % of Total in 2005; includes fuel -2% of Total in % of Total in % of Total in 2005

BST Associates 8 Des Moines Marina Key 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)

BST Associates 9 Des Moines Marina Key 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.

BST Associates 10 Des Moines Marina Master Plan

BST Associates 11 Sources of Capital Finance for 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

BST Associates 12 Alternative Development Strategies Dry 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

BST Associates 13 Everett 12 th Street Marina The new 12 th 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.

BST Associates 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.

BST Associates 15 Thank you! Paul Sorensen BST Associates rd Avenue NE, Suite A Bothell, WA (425) BST Associates If you would like a copy of this presentation please ask!