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BST Associates 1
Capital Investment &Business Planning
Prepared for the 34th PCC Annual ConferenceVancouver, British Columbia
April 18, 2008
By BST Associates
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 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)
BST Associates 5
Des Moines Marina Revenues
0 500,000 1,000,000 1,500,000 2,000,000
Moorage
Storage
Services & Retail
Utilities
Leases
Other
2003 2004 2005
55% of Total in 2005
5% of Total in 2005
34% of Total in 2005; includes fuel
3% of Total in 2005
2% of Total in 2005
1% of Total in 2005, parking fines and interest income
BST Associates 6
Des Moines Marina Gross Profit
-500,000 0 500,000 1,000,000 1,500,000 2,000,000
Moorage
Storage
Services & Retail
Utilities
Leases
Other
2003 2004 2005
75% of Total in 2005
7% of Total in 2005
14% of Total in 2005; includes fuel
-1% of Total in 2005
2% of Total in 2005
2% of Total in 2005
BST Associates 7
Des Moines Marina Net Profit
-800,000 -400,000 0 400,000 800,000 1,200,000
Moorage
Storage
Services & Retail
Utilities
Leases
Other
2003 2004 2005
128% of Total in 2005
12% of Total in 2005
-10% of Total in 2005; includes fuel
-2% of Total in 2005
4% of Total in 2005
-32% of Total in 2005
BST Associates 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)
BST Associates 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.
BST Associates 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
BST Associates 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
BST Associates 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.
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
18414 103rd Avenue NE, Suite A
Bothell, WA 98011
(425) 486-7722
BST Associates
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