DRAFT 2021 Operating Budget & Capital Improvement Plan

2021 Operating Budget & Capital Improvement Plan Port of Anacortes

DRAFT Table of Contents

Introduction Environmental Program MESSAGE FROM THE EXECUTIVE DIRECTOR 2 ENVIRONMENTAL STEWARDSHIP 30 WHO WE ARE/WHAT WE DO 3 ENVIRONMENTAL SITES 31 ORGANIZATIONAL CHART 4 COMMISSIONERS 5 Cash Flow Projections COMMISSIONER DISTRICT MAP 6 DEFINITIONS & ASSUMPTIONS 32 THE BUDGET PROCESS 7 CASH FLOW PROJECTIONS 2021-2025 33 COVID-19 RESPONSE & IMPACTS 9

Long-Term Debt Operating Budget LONG-TERM DEBT 38 FINANCIAL OVERVIEW 11 2021 BUDGET SUMMARY INCOME STATEMENT 12 AIRPORT 13 Property Tax MARINA 15 TAX LEVY: TYPES & USES 40 MARINE TERMINAL 17 2021 TAX AT A GLANCE 41 PROPERTIES 19 2021 COMBINED OPERATING BUDGET 21 Supplemental Information 2021 BUDGET – SUPPLEMENTAL COMPARISONS 42 Capital Improvement Plan (CIP) OVERVIEW 23 CIP CONSOLIDATED SUMMARY 24 2021 CIP 25 2021 CAPITAL PURCHASES 29

Cover Photos: (Top Left) Anacortes Airport runway aerial (Photo by Steve Berentson), (Top Right) Cap Sante Marina Harbor Office (Photo by Karla DeCamp), (Bottom Left) Aerial view at Marine Terminal Pier 2 (Photo by Dan Crookes), (Bottom Right) Waterfront Festival Dinner at Port Transit Shed (Photo by Karla DeCamp)

Message from the Executive Director

Message from the Executive Director Thank you for your interest in the Port of Anacortes’ 2021 budget. From our 1,000 slip Cap Sante Marina, to our deep water Marine Terminal, to our general aviation commercial services Airport, to our Port Properties, the Port of Anacortes is a driver of regional economic vitality in the community. With this budget, you will see that the Port has three overarching priorities that are evident in all of our endeavors: 1) Economic Benefits. The Port of Anacortes is not only a facilitator of domestic and international trade, but also a vital economic institution in and of itself. Despite the economic challenges posed by COVID-19, the Port plans to invest nearly $15 million in its Capital Improvement Plan in 2021, completing a number of projects permitted, bid, and started in 2020. 2) Environmental Stewardship. The Port is a committed environmental steward, rising above standards and leading the way across all lines of business. We do this through our environmental clean-ups, voluntary Green Marine membership at the Marine Terminal, and successful implementation of the Clean Marina and EnviroStars programs at our Marina. In partnership with the Washington State Department of Ecology, the Port anticipates completing over $6.5 million in environmental remediation and monitoring activities across its six environmental cleanup sites in 2020 and 2021. 3) Community Leader and Convener. The Port of Anacortes is a mission-driven and responsible operator with Commissioners and dedicated staff leadership who bring the community, stakeholders and tribal partners together to build partnerships that benefit the community.

In 2020, the Port continued to pursue our North & West Basin Redevelopment project. To that end, the Port has a Memorandum of Understanding with the City of Anacortes to work collaboratively to achieve a long-range vision for the Marina Uplands, benefiting all of Anacortes and its residents, and to provide for maximizing the highest and best uses of our Marina properties and the return of the Transit Shed to industrial marine usage.

Despite the impacts of COVID throughout the world, Cap Sante Marina continues its growth as the premier destination marina in the Pacific Northwest. A slow spring was followed by a record setting summer, keeping Cap Sante as the busiest public marina in the state. It continues to be a hub of activity and economic driver in the Anacortes community, hosting the first virtual boat show in the United States, the NMTA Anacortes Boat & Yacht Show. In 2020, the Port started procurement and reconstruction of A-Dock, anticipating a new world-class commercial dock in spring of 2021.

The Marine Terminal was hardest hit in 2020 due to the drop in crude oil prices nationally. Petroleum coke and prilled sulfur remain the primary cargoes shipped from Pier 2, the largest of our shipping terminal piers at the Marine Terminal. In 2020, the Port commissioned a Marine Terminal Modernization Study that will help identify key areas to pursue and recapitalize in the future to help land other bulk product and diverse cargoes that require deep-water access. Two major repair projects were started in 2020, including Curtis Wharf corrosion repairs and steel piling cathodic protection and Pier 1 piling and decking repairs.

The Port achieves a great deal in cooperation with our valued partners, including the City of Anacortes, the Anacortes Chamber of Commerce, the Northwest Marine Trades Association, Pacific Northwest Waterways Association, the Washington Public Ports Association, the Anacortes Waterfront Alliance, the Economic Development Alliance of Skagit County, Port tenants, Tribes, Skagit County, the Port of Skagit and the residents of our Port district.

If you have any questions or comments regarding the Port, please call me at (360) 293-3134.

Daniel C. Worra Executive Director

Who We Are/What We Do

Who We Are/What We Do Who We Are The Port of Anacortes is a municipal corporation of the State of Washington, created in 1926 under provision of the Revised Code of Washington (RCW Title 53 et seq.), to provide for the development and maintenance of harbors and terminals, promote tourism and foster economic activity in its district. With one of eight natural deep water marine terminal facilities in Puget Sound, its nearly 1,000 slip marina, and its roughly 80 acres of commercial properties, the Port is instrumental to the success and economic development of the community. The Port is independent from other local or state governments and has geographic boundaries that consist of Fidalgo, Guemes, Cypress, Sinclair, and neighboring islands, and a small strip of land bordering Padilla Bay up to and including Samish Island.

A five-member Board of Commissioners elected for four-year terms by Port District voters governs the Port. The Commission delegates administrative authority to an Executive Director and staff to conduct operations of the Port. The County levies and collects taxes on behalf of the Port as determined by the Board of Commissioners and acts as treasurer for the Port as defined under RCW 53.36.010.

Industrial Development Corporation of the Port of Anacortes. The Industrial Development Corporation, a public corporation, is authorized to facilitate the issuance of tax-exempt nonrecourse revenue bonds to finance industrial development within the corporate boundaries of the Port. Revenue bonds issued by the Corporation are payable from revenues derived as a result of the industrial development facilities funded by the revenue bonds. The bonds are not a liability or contingent liability of the Port or a lien on any of its properties or revenues other than industrial facilities for which they are issued.

The Port of Anacortes’ five member Port Commission serves as the Board of Directors for the Industrial Development Corporation.

What We Do The Port provides quality jobs, international trade connections, a strong industrial land base, and economic stability by producing revenue for state and local services. The Port is authorized by Washington law (RCW Title 53.08) to provide and charge rentals, tariffs and other fees for docks, wharves and similar harbor facilities, including associated storage and traffic handling facilities for waterborne commerce. The Port may also provide freight and passenger terminals and transfer and storage facilities for other modes of transportation, including air, rail and motor vehicles. The Port may acquire and improve lands for sale or lease for industrial or commercial purposes, and may create industrial development districts.

Mission Statement: In partnership with public agencies and private business, develop and manage facilities and services which stimulate private job creation and commerce, while protecting the quality of life, needs and desires of area residents.

Organizational Chart

Commissioners

Commissioners Ken Goodwin Commission President 2020 District 1 Term Expires: December 31, 2021 Commissioner Goodwin was elected Port Commissioner in 2017 and began his term in January 2018. A graduate of the University of Washington, with bachelor’s and master’s degrees in business administration and accounting, Mr. Goodwin’s career includes 40 years as a Certified Public Accountant, owner/operator of a chain of retail stores in remote Alaska, Director of Finance for the Alderwood Water and Wastewater District, and Commissioner of the Woodinville Water District for 17 years. He is a Vietnam veteran and served on the Port’s Marina Advisory Committee before becoming Commissioner.

Jon Petrich Commission Vice President 2020 District 2 Term Expires: December 31, 2021 Commissioner Petrich was elected Port Commissioner in 2017 and began his term in January 2018. Commissioner Petrich is employed as a Project Supervisor and licensed Lead Vessel Operator at National Response Corporation (NRC). He has two bachelor’s degrees from Eastern Washington University in finance and economics.

Joe Verdoes Commissioner 2020 District 3 Term Expires: December 31, 2023 Commissioner Verdoes was initially elected Port Commissioner in 2015, and began his term in January 2016. Mr. Verdoes was subsequently re-elected in 2019 and began his second term in 2020. Mr. Verdoes is self-employed as a Puget Sound commercial fisherman and local businessman. He has a bachelor’s degree in business administration from the University of Washington and a master’s degree in developmental studies from Deakin University, Geelong, Australia. Mr. Verdoes was a member of the Port’s Marina Advisory Committee for seven years. Before becoming a commercial fisherman in 1994, he was employed as an Economic Development Officer for a small Australian community and operated a dairy farm locally.

Bonnie Bowers Commission Secretary 2020 District 4 Term Expires: December 31, 2023 Commissioner Bowers was elected Port Commissioner in 2019 and began her term in January 2020. Commissioner Bowers is a graduate of Washington State University and the FBI National Academy. She retired as Police Chief in Anacortes after a 33 year career in public safety. She has a keen interest in economic development and green industry. Commissioner Bowers is a longtime member of the Anacortes Rotary Club.

Katherine “Kathy” Pittis Commissioner 2020 District 5 Term Expires: December 31, 2021 Commissioner Pittis was elected Port Commissioner in 2017 and began her term in January 2018. Commissioner Pittis had a 21-year career at the Port of Anacortes, serving in various leadership roles. She served on the Anacortes School Board and on numerous community and regional committees, including the Governor’s Southern Resident Killer Whale Task Force. Commissioner Pittis is currently serving as the Vice President of the Washington Public Ports Association Executive Committee.

Commissioner District Map

The Budget Process

The Budget Process The budget has several major purposes. It converts the Port’s policies and plans, including its Strategic and Comprehensive plans, into services and future capital improvement projects. It serves as a vehicle to communicate these plans to the public, and once adopted by the Commission, becomes the work plan to be accomplished during the next fiscal year.

The annual operating and capital budgets are a forecast of expected resources and the purposeful distribution of those resources. This includes the rate of taxation for the coming fiscal year. Typically, the operating budget is developed based on historical trends in revenue and expenses, information from customers and tenants, market projections, and key economic and regulatory assumptions. The 2021 budget was developed in much the same way, however, the outbreak of the 2019 novel coronavirus (“COVID-19”) is a significant event that has had and will have ongoing, material effects on the finances, operations, and economy of the Port. (Please see the COVID-19 Response & Impacts section of this document for information and expectations about the effects of COVID-19, including projected revenues of the Port.) While the Port’s current financial outlook remains positive, the Port cannot predict the duration and extent of the COVID-19 public health emergency, or quantify the magnitude of the impact on the regional and local economy. This economic uncertainty as a result of the current global pandemic, shifts in markets (especially those affecting our local refineries), considerable capital requirements for the Port’s aging infrastructure and development plans, continued regulatory requirements and environmental risks remain challenging.

Citizen involvement and understanding of the budget is a major part of the review process. The Budget Calendar on the following page provides an overview of the budget process and important dates regarding its review and adoption.

Jill R. Brownfield, CPA Director of Finance & Administration

Photo: Cap Sante Marina (Photo by Rakan AlDuaij)

The Budget Process

BUDGET CALENDAR July 16 Regular Commission Meeting - 2nd Quarter Financial Results 22 Mid-Year Update & Budget Kick-Off August 6 Regular Commission Meeting 10 Departments submit draft budgets to Finance 11-14 Departmental budget workshops 20 Regular Commission Meeting 21 5 Year Draft CIP submitted to Finance 28 Preliminary 5 Year Cash Flow complete 31 Directors/Project Managers budget workshop CIP/Cash Flow September 3 Regular Commission Meeting - Tax Levy Discussion 9 Final 5 Year CIP and Cash Flow complete 17 Regular Commission Meeting - Budget Assumptions 18 Draft budget available to Commission October 1 Special Commission Meeting - Budget Study Session 7 Budget revisions from Study Session complete 9 Preliminary budget available to public 15 Regular Commission Meeting - 3rd Quarter Financial Results 21-22 1st public notice; budget hearing scheduled 28-29 2nd public notice; budget hearing scheduled November 5 Regular Commission Meeting - Budget Public Hearing & Adoption 6 Certify to County Assessor amount of taxes levied; publish final budget 9 Adopted budget available to public

COVID-19 Response & Impacts

COVID-19 Response & Impacts Background The COVID-19 pandemic is affecting many parts of the world, including the State, the County, and the Port. Beginning January 31, 2020, and continuing through the early part of March, federal, state and county officials declared states of emergency in response to the COVID-19 pandemic. On March 19, 2020, the Port Commission adopted Resolution No. 1361, declaring COVID-19 a civic public health emergency, and therefore giving the Executive Director authority to exercise emergency powers to ensure the continued operation of the Port and its facilities in response to COVID-19. The State Governor has issued a series of proclamations designed to limit social interactions, including orders requiring or encouraging individuals, governments and businesses to take certain precautionary measures designed to prevent the spread of COVID-19. On March 23, 2020, the State Governor issued a statewide “Stay Home, Stay Healthy” proclamation, requiring individuals to stay home except for essential activities, banning social and other gatherings, and closing all businesses with certain exceptions for essential businesses. Washington State currently is following a phased re-opening approach. As of the budget adoption date, Skagit County is in Phase 2 of the re-opening phases. The Port has and continues to coordinate its response to the pandemic with the Washington State Department of Health, as well as the local county public health department.

Operations Ensuring maximum protection for the health and safety of Port stakeholders has been the Port’s top priority during this public health emergency. On March 20, 2020, the Port closed its Main Port Office and Harbor Masters Office to the public, maintaining normal business hours to serve customers via phone or email. All administrative and other staff who could feasibly perform their duties remotely, were sent home to do so. Facilities, outside Marina operations, and security staff were deemed essential to keep Port operating areas open and responsive to the needs of the Port’s tenants, customers and guests. All meetings, including regular and special Commission meetings, became virtual as of March 19, 2020.

The Port believes it has a critical role in assisting the community continue through the phased reopening and safely advancing toward the “new normal.” In July 2020, Port Commissioners and staff adopted a Start Safe Return Plan, aligned with Washington state guidance, which is an implementation tool that ensures Coronavirus Prevention Practices are deployed to safeguard all stakeholders from biological hazards and address known hazards at all Port facilities. Key elements include education, social distancing, cleaning and disinfecting, hand washing, and rigid protocol around sick and exposed employees. The Port continues communicating to customers, visitors, and stakeholders, the importance of staying safe, such as: practicing good hygiene (hand washing, use of disinfectants, avoiding hand shaking), social distancing, wearing a mouth and nose covering when around groups of people in public and staying home if feeling sick or unwell.

COVID-19 Response & Impacts

Potential Financial Impacts The Port did not formally amend its 2020 adopted budget, but anticipates a potential net adverse impact of approximately $0.6 million as a result of lost operating income and additional expenses, net of Federal relief. (Please see the Supplemental Information section of this document which estimates 2020 results alongside 2020 budget.) Despite this, the Port currently estimates a positive net operating income in 2020 of approximately $2.3 million (before depreciation) and has continued to move forward with its capital improvement initiatives as originally planned.

The Port has experienced direct expenses associated with COVID-19 primarily as a result of information technology purchases including additional software licenses and hardware purchases (to support remote work), temporary essential personnel additional pay (in excess of their regular pay rates) for employees who were unable to telework, personal protective equipment, a cleaning contract with an outside vendor, and a business tenant rent relief program. The Port’s 2021 budget forecasts continued expenses related to personal protective and safety equipment, increased cleaning and sanitation, and anticipates the addition of a full-time custodian position.

The Port has also seen individual revenue streams impacted by COVID-19, primarily as a result of restrictions placed on people to stay home, avoid travel, not gather, etc. In particular, the price of oil has fallen as a result of a significant decline in global demand. As local refineries decrease production, the Port anticipates decreased exports of refinery by-products, petroleum coke and sulfur. While, the ultimate impacts of COVID-19 on bulk product exports is unknown at this time, the Port has estimated a 40% reduction in 2020 of its original budgeted 359,000 metric tons. In 2021, the Port assumes similar results to that of 2020, and has forecast 238,800 metric tons of petroleum coke and sulfur exports.

Restrictions on gatherings resulted in event cancellations beginning in mid-March 2020 and are currently anticipated to continue into 2021. All of the Port- hosted community events for 2020 were cancelled impacting both direct venue rental revenue and sponsorship revenues. The Port has not experienced and does not currently anticipate any material lease defaults among its tenants.

The impacts to the Marina include reduction in guest moorage, use of boat launches, RV nights and fuel sales. Permanent moorage at the Marina has not been impacted thus far by the pandemic. Guest moorage, which made up 18% of total moorage in 2019, saw a decline of about 25% in guest boater nights through July 31, 2020, but has since shown signs of recovery.

Due to revenues derived from property and ground leases and T-hangar rentals, the Port predicts that Airport revenues will not be negatively impacted. Additionally, the Port received $30,000 in Federal Aviation Administration funding award through the Coronavirus Aid, Relief and Economic Security (CARES) Act, which will offset any potential decrease in Airport revenues.

Financial Overview

Financial Overview Revenues The 2021 budget reflects total operating revenues of $15.150 million, a decrease of approximately 15% from the 2020 adopted budget. As discussed in the previous pages, the COVID-19 public health emergency has had and will have ongoing, material effects on the finances, operations, and economy of the Port. While the full impact of the COVID-19 pandemic on the Port and the regional economy is uncertain, the Port anticipates a continued reduction in demand for oil, thus decreasing the price of fuel and export volumes of petroleum coke and sulfur. Restrictions on travel and social gatherings are also anticipated to impact event venue rentals and Port-sponsored events. Conversely, Marina activity shows signs of full recovery and the Port maintains a current waitlist of over 250 customers seeking permanent moorage. Recent property acquisitions and environmental remediation efforts provide opportunities for increased property lease and marine terminal business. This, along with sufficient debt capacity, is contributing to aggressive future cash flow projections and capital improvement initiatives. 55% of the total projected 2021 operating revenue is from the Marina, 31% is from the Marine Terminal, 11% from Properties and the remaining 3% from the Airport.

Non-operating revenues consist primarily of property tax collections. As directed by the Port Commission, property tax levies fund property acquisition, industrial development including environmental costs, debt service for general obligation bonds, and public access improvements. The budgeted levy of $1.673 million reflects a rate of $0.21 per $1,000 of the Port district’s preliminary total assessed value.

Expenses Similar to the reduction in operating revenues, the 2021 budget projects operating expenses of $15.104 million, a 13% decrease from the 2020 budget. Since not all costs are fixed, increases or decreases in revenues will have a similar effect on operating expenses. On the other hand, while the rate of inflation has slowed as a result of the global pandemic, some costs, such as insurance have continued to increase. Further, the Port remains committed to process improvement and providing safe, productive facilities with excellent customer service. The 2021 budget reflects increased expenses associated with additional communications outreach, facilities maintenance staffing, records retention efforts, and proactive maintenance across all operating areas. Included in total operating expenses is approximately $2.436 million in depreciation, general and administrative (G&A) expenses of $3.096 million, and facilities expenses of $1.054 million. G&A expenses are allocated to each operating area as a percentage of total operating expenses. Facilities expenses are allocated based on direct labor hours.

The 2021 non-operating expenses consist primarily of interest expense on general obligation bonds. The Port has two outstanding general obligation bonds, totaling $10.385 million. Annual debt service payments in 2021 total $1.572 million, and are anticipated to be paid from operating funds.

Net Income The 2021 budget reflects a net income, before environmental and capital grants, of $1.630 million, a slight improvement over the Port’s revised expectations for 2020 of $1.379 million.

2021 Budget Summary Income Statement

2021 Budget Summary Income Statement OPERATING REVENUES

Airport $ 430,637 Marina 8,392,800 Marine Terminal 4,737,524

Properties 1,589,288

Total Operating Revenues 15,150,249

OPERATING EXPENSES

Airport 567,430 Marina 6,796,661

Marine Terminal 3,877,869 Properties 1,426,699

Total Operating Expenses 12,668,659

Net Operating Income Before Depreciation 2,481,590

Total Depreciation 2,435,800

NET OPERATING INCOME 45,790

Non-Operating Revenues 1,821,860 Non-Operating Expenses (237,963)

NET NON-OPERATING 1,583,897

Net Income Before Environmental 1,629,687

Environmental Grants and Recoveries 1,828,126

Environmental Expenses (2,481,533)

NET ENVIRONMENTAL (653,407)

Capital Grants 2,440,800

NET INCOME $ 3,417,080

Photo: MV Bluefin Research Support Vessel Berthed at Pier 2 (Photo by Port Staff)

2021 Operating Budget: Airport

Airport Overview: The Anacortes Airport serves as a vital link for postal, commercial, recreational and passenger services, primarily to the San Juan Islands. The Airport is also strategically located for emergency services in the case of natural disasters in and around the surrounding areas.

Building and property leases, hangar rentals and fuel sales comprise the majority of Airport revenues. While significant declines in the price of oil and State- imposed travel restrictions due to the COVID-19 global pandemic contributed to reduced gross fuel sales in 2020, other Airport revenue streams have been unaffected.

The Port owns and leases forty hangars. A consistent waitlist over the past few years indicates steady demand for this hangar space, despite statistics, which show decreasing numbers of private pilots in the United States. Core building and property tenants, most of which are in long-term lease agreements, are Micro AeroDynamics, Aeronautical Services, Northwest Marine Technology, Inc., Rugby Aviation DBA San Juan Airlines, and 48 Degrees North Aviation. Of note, Northwest Marine Technology, Inc. recently signed a new 30-year lease agreement and constructed a 7,900 square foot building, including a hangar, enabling eight new full-time employees. In recognition of their business expansion, they were selected as the Port’s Economic Development Partner Award for 2020.

Budgeted revenues in 2021 total $431,000, an approximate 2% increase over 2020-budgeted revenues. Based on the downturn in the economy as a result of COVID-19 and current Consumer Price Index (CPI) data, no CPI increases have been factored into any of the Port’s long-term leases in 2021. Due to consistent demand, 10% rate increases have been forecast in hangar rentals. Fuel sales have been forecast conservatively, using a trailing twelve month average of fuel cost, reduced by nearly 20% to reflect volume decreases through July 31, 2020.

2020 Improvements and 2021 Significant Initiatives: In 2020, the Port, in cooperation with the FAA, completed a comprehensive obstruction survey to enable future projects within the Airport Improvement Plan. In response to the COVID-19 pandemic, Congress adopted the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As part of this act, the Port was awarded $30,000 in grant monies administered through the FAA, which were used to fund parking area pavement improvements. In 2021, the Port will wrap-up stormwater management feasibility work and begin pre-construction elements on the selected approach to improvements. Utilizing FAA grant awards, the Port will complete north tie down apron improvements, and lastly, the Port will complete additional pavement or asphalt improvements outside the operational fence.

Photo: Airport Asphalt Project (Photo by Port Staff)

2021 Operating Budget: Airport

OPERATING REVENUES Building & Ground Leases $ 153,544 T Hangar Storage 121,943 Fuel Sales 143,750 Other 11,400

Total Operating Revenues 430,637

OPERATING EXPENSES Fuel for Resale 125,000 Facilities & Operations 301,225 G&A Allocation 141,205

Total Operating Expenses 567,430

Net Operating Loss Before Depreciation (136,793)

Depreciation 311,751

NET OPERATING LOSS $ (448,544)

Photos: (Top) Airplane Flying Over the San Juans, (Bottom) Airport Fog Seal Project (Photo by Port Staff)

2021 Operating Budget: Marina

Marina Overview: Located in Fidalgo Bay and containing nearly 1,000 boat slips, Cap Sante Marina is one of the Northwest’s premier boating destinations as well as home to many local commercial fishermen, tour companies, yacht brokerage firms, and other commercial marine businesses. Proximity to the downtown corridor, exemplary customer service, competitive fuel pricing, and quality amenities result in thousands of visiting boaters from early spring to late fall each year. Typically, events such as the Anacortes Chamber of Commerce’s Waterfront Festival, the NMTA Anacortes Boat and Yacht Show, and the Summer Concert Series draw numerous visitors and community members to the Marina and downtown Anacortes businesses. Based on the COVID-19 pandemic restrictions and guidance, the Port cancelled all community events scheduled in 2020, with the largest impact being on Marina revenues in the months of April, May, and June.

Moorage revenues and fuel sales comprise over 90% of the Marina’s total revenues. Significant declines in the price of oil and travel restrictions due to COVID-19 contributed to reduced gross fuel sales in 2020, as well as declines in guest moorage nights. However, permanent moorage, which represents 80% of total moorage, was not affected. As of July 31, 2020, the waitlist for permanent moorage numbered more than 250 customers, and those seeking slips larger than 36 feet in length can expect a 12-24 month wait. The remaining 10% of Marina revenues consists of items such as; boat launch fees, boat trailer and recreational vehicle parking, web locker and outside gear storage rent, and retail sales. While many of these categories were impacted by COVID- 19 in the spring and early summer of 2020, the reopening of commercial and recreational crabbing and families seeking outdoor activities such as boating contributed to typical volumes in July and August.

Budgeted revenues in 2021 total $8.393 million. While the original 2020 budget forecast revenues of about $9.223 million, revised revenues as a result of COVID-19 are estimated at $7.996 million. Thus, the 2021 budget is an increase of about 5% over projected 2020 results. Key assumptions include; recreational permanent moorage rate increases of 3-6%, depending on slip size, 3% guest moorage rate increases, and no increase for commercial moorage customers. Fuel volumes are expected to return to pre-COVID amounts, but at prices of only about 5% ahead of 2020 averages and the Port anticipates partial closure of its RV parking area due to redevelopment planned for 2021.

2020 Improvements and 2021 Significant Initiatives: The Marina underwent many small, but crucial, process improvements and maintenance projects in 2020, including electrical work on North-end docks to the addition of fiber optics for greater connectivity and reliability in processing transactions to remote offices and a Marina-wide Wi-Fi upgrade of infrastructure originally installed in 2013. The Port also completed a pier expansion at the entrance to P and Q docks for pedestrian and small boat launch users’ safety.

The much-anticipated A-Dock recapitalization project is underway with completion slated for spring 2021. The Port also anticipates completing electrical service upgrades at B-dock, primarily used by commercial fishermen and other commercial marine businesses, and to install an additional high speed fuel dispenser at the fuel dock. The north basin docks, specifically O, P & Q docks, as well as T-Dock, are the next in line for recapitalization and funds for planning, permitting, and remedial repairs in the short-term, round out the Port’s 2021 capital plans.

2021 Operating Budget: Marina

OPERATING REVENUES Moorage $ 5,052,895 Fuel Sales 2,553,842 Operating Grants 3,780 Other 782,283

Total Operating Revenues 8,392,800

OPERATING EXPENSES Wages & Benefits 1,065,371 Fuel for Resale 2,000,660 Facilities & Operations 2,070,080 G&A Allocation 1,660,550

Total Operating Expenses 6,796,661

Net Operating Income Before Depreciation 1,596,139

Depreciation 965,692

NET OPERATING INCOME $ 630,447

Photos: (Left) Cap Sante Marina voted 2020 Best Moorage Facility, (Right) Cap Sante Marina’s Fuel Dock, Fido’s Fuel

2021 Operating Budget: Marine Terminal

Marine Terminal Overview: The Port’s Marine Terminal facility consists of three deep-water working piers, Pier 1, Pier 2, and Curtis Wharf. The Marine Terminal achieves its revenues through cargo shipments, short and long- term lease of dock space, other ground leases and transient dockage revenue from berthing of vessels, barges and tugboats.

Pier 1 houses the Port’s historic Transit Shed, currently used as a community events center and administrative offices, as well as providing moorage for a variety of vessels. In addition, Dakota Creek Industries, a primary tenant of the Port, uses Pier 1 for its floating dry dock in support of its shipbuilding and repair operations while M&M Seafood operates a seafood processing area.

Pier 2, the primary use of which is exporting dry bulk cargoes, is the most active part of the Port’s Marine Terminal. At 37 ½ feet draft, it is the Port’s deepest pier. Pier 2 has 14 acres of paved asphalt-cement surfacing, a self-contained stormwater management system, a 460-foot concrete cement frontage pier, and a stationary ship loader. Currently, the Port’s primary bulk product commodities are petroleum coke and prilled sulfur; both of which are by-products of the refining process.

Curtis Wharf is a working wharf and dock providing periodic vessel moorage to a range of commercial users, including the American Spirit and American Constellation cruise ships, which visit throughout the spring, summer, and fall, as well as home to a seafood processing facility.

Budgeted revenues in 2021 total $4.738 million. As mentioned previously, the COVID-19 global pandemic has had a devastating effect on oil prices as a result of plummeting demand. While the true impact is unknown at this time, the Port estimates bulk product exports of 220,000 metric tons in 2020, roughly 40% less than originally forecast. In 2021, bulk product shipments are conservatively estimated at 238,800 metric tons. Tariff increases for other Marine Terminal activity, such as dockage, has been estimated at 3%, to be adjusted mid-year. The Port expects to welcome back American Cruise Lines to Curtis Wharf for the 2021 sailing season based on recent berthing reservations.

2020 Improvements and 2021 Significant Initiatives: In 2020, the Port received final permitting and commenced construction on Pier 1 Piling Repairs and Curtis Wharf Corrosion Repairs and Cathodic Protection. Both projects are anticipated to be complete by year-end. The Port also completed a Marine Terminal Modernization Feasibility Study, which was funded in part by a Community Economic Revitalization Board grant. Recommendations and findings from the study will help to guide the Commission and staff on future capital investments.

The 2021 Capital Improvement Plan forecasts about $1 million in infrastructure improvements to various Marine Terminal facilities, including Phase 2 of Corrosion Repairs and Cathodic Protection on Curtis Wharf, paving the street and entrance to Curtis Wharf, a Port Maintenance Building Extension to protect critical assets from the elements and Pier 2 cleat design and replacement.

2021 Operating Budget: Marine Terminal

OPERATING REVENUES Terminal Services $ 1,528,128 Handling 2,265,226 Ground Leases 536,386 Other 407,784

Total Operating Revenues 4,737,524

OPERATING EXPENSES Wages & Benefits 32,784 Longshore/Stevedoring 2,266,126 Facilities & Operations 633,529 G&A Allocation 945,430

Total Operating Expenses 3,877,869

Net Operating Income Before Depreciation 859,655

Depreciation 835,980

NET OPERATING INCOME $ 23,675

Photos: (Bottom) Lakeside Industries Marine Terminal Asphalt Repairs in May 2020 Supporting DCI, Transpac & Cortland Tenants, (Top) MV Nord Madeira First Port of Call Celebration in February 2020

2021 Operating Budget: Properties

Properties Overview: Properties consists of building and ground leases not associated with the other three operating areas, rental of the Port’s Transit Shed and Seafarers’ Memorial Park Building, and revenue and expense related to Port-sponsored events.

Over 90% of Properties’ revenues are determined by already negotiated lease rates (many long-term) with increases set by CPI or by a fixed rate. Concerns for Port tenants and their businesses at the onset of the COVID-19 pandemic resulted in a Commission-adopted rent deferral program in March 2020. The program, which offered deferment of up to three months’ worth of rent (exclusive of leasehold tax) to year-end, penalty-free, received low participation indicating financial strength and business continuity amongst Port tenants. However, CPI increases have virtually disappeared as a result of the slowdown in the economy. The Port has assumed no major lease defaults and assumed no CPI increases in its lease rates for 2021 budgetary purposes.

The remainder of Properties’ revenues comes from venue rentals and sponsorship and ticket sales for Port-sponsored events. State-mandated restrictions on social gatherings and community events resulted in the cancellation of all events beginning in mid-March 2020. It is anticipated that these cancellations continue throughout year-end. Rental activity for 2021 is assumed to resume in the 3rd quarter. Because most Port-sponsored events occur in the latter half of the year, the Port anticipates hosting all of its typical events in 2021, though with reduced sponsorship revenues.

2020 Improvements and 2021 Significant Initiatives: In 2020, the Port continued North and West Basin Redevelopment planning efforts. This project, which involves repurposing the Transit Shed to a marine industrial use and moving the Port’s Events Center and Administrative Offices to the Marina’s North and West Basin, also includes an RV Park (with full amenities), establishment of a ground lease pad for potential future developments, and enhancement of waterfront public access areas. The Port is working towards 100% design and plans to begin the first phase of development, to include the redevelopment of the RV Park, an RV Park Restroom Facility, and improved vehicle parking near J-K-L Docks in 2021.

Developing properties to the highest and best use remains a top priority for the Port. In 2019, the Port purchased three properties; the Rockwell site, consisting of nearly 7 acres of zoned light manufacturing property near the Airport, the N Avenue/3rd Street property near Curtis Wharf, and the Bartholomew property, consisting of over 4 acres of zoned heavy manufacturing property including five warehouses and office buildings. In 2020, the N Avenue/3rd Street property was renovated in order to relocate an existing Port tenant and the Bartholomew property has been 60% leased to various business enterprises. The Port’s 2021 capital plan includes preparation of the Rockwell site for future development for which the Port is already receiving inquiries from potential tenants. Photo: RV Park Aerial

2021 Operating Budget: Properties

OPERATING REVENUES Property Rents $ 1,487,384 Venue/Event Revenues 50,770 Operating Grants 12,000 Other 39,134

Total Operating Revenues 1,589,288

OPERATING EXPENSES Wages & Benefits 532,657 Facilities & Operations 544,892 G&A Allocation 349,150

Total Operating Expenses 1,426,699

Net Operating Income Before Depreciation 162,589

Depreciation 322,377

NET OPERATING LOSS $ (159,788)

Photos: (Top) Bartholomew Property Acquisition, (Bottom Left) Port of Anacortes Summer Concert Series voted 2020 Best Live Entertainment Venue (Bottom Right) Anthony’s at Cap Sante Marina, Anthony’s Cabana, and Port of Anacortes Esplanade Tables

2021 Combined Operating Budget

2021 Combined Operating Budget Marine Airport Marina Terminal Properties Non-Op Totals

OPERATING REVENUES T Hangar Storage $ 121,943 $ - $ - $ - $ - $ 121,943 Fuel Sales 143,750 2,553,842 - - - 2,697,592 Moorage - 5,052,895 - - - 5,052,895 Terminal Services - - 1,528,128 - - 1,528,128 Handling - - 2,265,226 - - 2,265,226 Building & Ground Leases/Rents 153,544 - 536,386 1,487,384 - 2,177,314 Venue & Event Revenues - - - 50,770 - 50,770 Operating Grants - 3,780 - 12,000 - 15,780 Other 11,400 782,283 407,784 39,134 - 1,240,601 TOTAL OPERATING REVENUES 430,637 8,392,800 4,737,524 1,589,288 - 15,150,249

OPERATING EXPENSES Wages & Benefits - 1,065,371 32,784 532,657 - 1,630,812 Longshore/Stevedoring - - 2,266,126 - - 2,266,126 Fuel for Resale 125,000 2,000,660 - - - 2,125,660 Facilities & Operations 301,225 2,070,080 633,529 544,892 - 3,549,726 G&A Allocations 141,205 1,660,550 945,430 349,150 - 3,096,335 TOTAL OPERATING EXPENSES 567,430 6,796,661 3,877,869 1,426,699 - 12,668,659

NET OPERATING INCOME (LOSS) BEFORE DEPRECIATION (136,793) 1,596,139 859,655 162,589 - 2,481,590

Depreciation 311,751 965,692 835,980 322,377 - 2,435,800

NET OPERATING INCOME (LOSS) $ (448,544) $ 630,447 $ 23,675 $ (159,788) $ - $ 45,790

2021 Combined Operating Budget (continued)

Marine Airport Marina Terminal Properties Non-Op Totals

NON-OPERATING Revenues $ - $ - $ - $ - $ 1,821,860 $ 1,821,860 Expenses - - - - (237,963) (237,963) NET NON-OPERATING - - - - 1,583,897 1,583,897

NET INCOME (LOSS) BEFORE ENVIRONMENTAL (448,544) 630,447 23,675 (159,788) 1,583,897 1,629,687

ENVIRONMENTAL ACTIVITY Grants and Recoveries - - - - 1,828,126 1,828,126 Expenses - - - - (2,481,533) (2,481,533) NET ENVIRONMENTAL ACTIVITY - - - - (653,407) (653,407)

Capital Grants 440,800 500,000 - 1,500,000 - 2,440,800

NET INCOME (LOSS) $ (7,744) $ 1,130,447 $ 23,675 $ 1,340,212 $ 930,490 $ 3,417,080

Capital Improvement Plan Overview

Overview Port Commissioners and Staff developed the 2021 Capital Improvement Plan (CIP) through a robust scoring effort in 2019 for budget years 2020- 2021. This biennial process involves identifying all potential projects, including previously unfunded or backlogged projects, some new, and several ongoing projects. Some of the projects date back to the Port’s 2008 Comprehensive Plan. The project inventory is reevaluated and prioritized every other year to best meet the Port’s priorities.

The 2021 CIP continues to focus on deferred maintenance across all operating areas, along with new redevelopment opportunities within the Marina and newly acquired properties.

At the Airport, the Port will continue planning efforts towards the maintenance and improvement of the stormwater detention pond, north tie down apron improvements including pavement rehabilitation and installation of subsurface edge drains. Additionally, pavement improvements outside the operational fence will complete the pavement rehabilitation project started in 2020.

At the Marina, work will continue on the A-Dock Recapitalization project. First estimated to be completed by 2019, the intensive permitting process delayed the project, which is now on-track for completion in 2021. The Port also anticipates completing upgrades to electrical service at B-Dock and installing an additional high speed fuel dispenser at the fuel dock to increase capacity. As a follow-on to a recent condition report and stakeholder outreach, 2021 will include a focused feasibility planning effort for T-Dock Reconfiguration and Replacement. The North Basin docks, specifically O, P & Q docks, are next in line for recapitalization and repairs in the short-term, pending procurement of necessary permits, round out the Port’s 2021 capital plans for the Marina.

While a recently completed Marine Terminal Modernization Feasibility Study will help to guide the Commission and staff on future capital investments at the Marine Terminal, 2021 will see a continuation of four in-progress projects. Port staff will proceed with the final phase of Curtis Wharf corrosion repairs and cathodic protection system. Pier 2 cleat design will explore additional cleat additions to increase safety and efficiency during loading events. The Port maintenance building extension will provide a covered area for storage of the Port’s equipment that currently are exposed to outdoor elements and Curtis Wharf entrance paving will improve access for upland services that support marine trade activity.

Within Properties, the newly acquired Rockwell property will see design and site development construction efforts. Planning efforts continue on the North and West Basin Redevelopment with significant investments in design and permitting in the North Basin anticipated in 2021, These components include a fully upgraded Cap Sante Marina RV Park which will create a first-rate RV Park with 25 spaces (2 ADA compliant) complete with dedicated utilities, green spaces, privacy hedges, and a restroom facility. Reconfiguration and paving of the parking lot area that serves J-K-L Docks, will also be included in the North Basin upgrades in 2021.

2021 Capital Procurement primarily includes equipment purchases to replace assets at the end of their useful lives. Included in planned purchases in 2021 are new signs at the Airport and Bartholomew Properties, MT Acrulog for sulfur monitoring at the Marine Terminal, Brivia Access Controls at the Marina, additional Wi-Fi capacity at the Marina and flooring overlay at the Seafarers’ Memorial Park Building.

2021 CIP Consolidated Summary

CIP Consolidated Summary Prior Year(s) TOTAL PROJECT FUNDING Current Year Current Year Cash Future Year(s) Cost Center Project Carry PORT GRANTS Project Budget Expenditures Project Spend Forward Dollars Dollars

Airport $ 90,000 $ 534,000 $ 624,000 $ - $ 183,200 $ 440,800

Marina 6,711,800 575,000 7,286,800 - 6,786,800 500,000

Marine Terminal 500,000 485,000 985,000 - 985,000 -

Properties 735,000 5,020,000 5,755,000 - 4,255,000 1,500,000

Capital Procurement - 96,200 96,200 - 96,200 -

Total for All Projects $ 8,036,800 $ 6,710,200 $ 14,747,000 $ - $ 12,306,200 $ 2,440,800

2021 Airport CIP

2021 CIP Airport CIP Future TOTAL PROJECT FUNDING Prior Year(s) Current Year Current Year Project Year(s) PORT GRANTS Project Title Project Carry Project Cash Type Project Forward Budget Expenditures Source Dollars Source Dollars Spend Airport Stormwater Facility Improvements $ 90,000 $ - $ 90,000 $ - Tax Fund $ 90,000 --- $ - M&R (Pre- construction) North Tie Down Facility General FAA / Apron - 464,000 464,000 - 23,200 440,800 M&R Fund WSDOT Improvements Outside Operational Facility General - 70,000 70,000 - 70,000 --- - Fence Pavement M&R Fund Improvement

Total Airport Projects $ 90,000 $ 534,000 $ 624,000 $ - --- $ 183,200 --- $ 440,800

2021 Marina CIP

Marina CIP Prior TOTAL PROJECT FUNDING Current Future Year(s) Current Year PORT GRANTS Year Year(s) Project Title Project Type Project Cash Project Project Carry Expenditures Source Dollars Source Dollars Budget Spend Forward A-Dock General .09 Economic Demolition and $5,611,800 $ - $5,611,800 $ - / Tax $5,111,800 Skagit $500,000 Development Replacement Fund County

B-Dock Electrical General Facility M&R 625,000 - 625,000 - 625,000 --- - Upgrades Fund

North Basin Docks General O-P-Q Float Rehab Facility M&R 475,000 325,000 800,000 - 800,000 --- - Fund (Construction)

T-Dock Economic Tax Reconfiguration - 150,000 150,000 - 150,000 --- - Development Fund (Feasibility) Additional High Speed Fuel Economic General - 100,000 100,000 - 100,000 --- - Dispenser Development Fund (Construction)

Total Marina Projects $6,711,800 $ 575,000 $7,286,800 $ - --- $6,786,800 --- $ 500,000

2021 Marine Terminal CIP

Marine Terminal CIP Prior TOTAL PROJECT FUNDING Year(s) Current Year PORT GRANTS Current Year Future Year(s) Project Title Project Type Project Cash Project Budget Project Spend Carry Expenditures Source Dollars Source Dollars Forward Curtis Wharf Corrosion Repairs and General Cathodic Facility M&R $ 500,000 $ - $ 500,000 $ - $ 500,000 --- $ - Fund Protection system (Phase 2 of 2)

Pier 2 Cleat General Facility M&R - 150,000 150,000 - 150,000 --- - Design Fund

Port Maintenance General Facility M&R - 200,000 200,000 - 200,000 --- - Building Fund Extension

Curtis Wharf General Facility M&R - 135,000 135,000 - 135,000 --- - Entrance Paving Fund

Total Marine Terminal Projects $ 500,000 $ 485,000 $ 985,000 $ - --- $ 985,000 --- $ ---

2021 Properties CIP

Properties CIP Prior TOTAL PROJECT FUNDING Current Future Year(s) Current Year PORT GRANTS Year Year(s) Project Title Project Type Project Cash Project Project Carry Expenditures Source Dollars Source Dollars Budget Spend Forward RCO & Cap Sante Marina Economic General .09 RV Park $ - $3,470,000 $3,470,000 $ - $1,970,000 $1,500,000 Development Fund Skagit Redevelopment County Cap Sante Marina Economic General RV Park Restroom - 660,000 660,000 - 660,000 --- - Development Fund Facility

N/W Basin Community Tax Redevelopment 400,000 140,000 540,000 - 540,000 --- - Development Fund (Planning)

Rockwell Site Economic Tax Development 335,000 - 335,000 - 335,000 --- - Development Fund (Pre-Construction) N/W Basin Development - Community Tax - 750,000 750,000 - 750,000 --- - Cap Sante Marina Development Fund Parking Lot (JKL)

Total Properties Projects $735,000 $5,020,000 $5,755,000 $ - --- $4,255,000 --- $1,500,000

2021 Capital Purchases

2021 Capital Purchases Prior TOTAL PROJECT FUNDING Current Future Year(s) Current Year PORT GRANTS Year Year(s) Project Title Project Type Project Cash Project Project Carry Expenditures Source Dollars Source Dollars Budget Spend Forward Miscellaneous Capital Purchases General within Equipment $ - $ 96,200 $ 96,200 $ - $ 96,200 --- $ - Fund Executive Director Authority

Total Capital Procurement Projects $ - $ 96,200 $ 96,200 $ - --- $ 96,200 --- $ -

Photos: (Top Left) Quiet Cove Before Project Began, (Bottom Left) Quiet Cove Project Progress in September 2020 (Right) Quiet Cove COVID-Style, Social-Distancing Groundbreaking by Executive Director, Dan Worra 29

Environmental Program

Environmental Stewardship Environmental Stewardship The Port of Anacortes is committed to protecting and enhancing the natural environment through implementation of a proactive environmental program of prevention, remediation and education. Our strategies encompass:  The development and implementation of preventative measures to lessen the possibility of environmental damage or degradation.  The identification and rehabilitation of environmental damages or degradation on Port properties.  The orientation and education of staff, tenants and the general public regarding environmental requirements and issues.  Participation in voluntary environmental stewardship programs and certifications.

After three consecutive years at the silver level, the Port of Anacortes was awarded the Northwest Clean Air Agency (NWCAA) Partners for Clean Air Gold Award. The Gold Award recognizes business in Island, Skagit and Whatcom counties that demonstrate at least three consecutive years of compliance with air quality regulations and implemented additional clean air practices. Of more than 490 businesses registered with NWCAA, the Port is one of only 6 businesses in Skagit County to earn the Gold Award in 2020.

Clean Marina Cap Sante Marina is EnviroStars certified under Clean Marina Washington which is an incentive-based certification program in which marinas assess their operations and implement improvements to better protect the environment. Clean Marina Washington provides marina best management practices (BMPs) that are practical and affordable actions that can reduce pollution at the source. By effectively implementing BMPs, marinas and marina tenants may be able to avoid more expensive and restrictive measures being placed on the boating public by regulatory agencies.

Green Marine To benchmark and further improve its environmental performance, the Port’s Marine Terminal became a Green Marine participant in 2019 and underwent self-evaluation with external verification in 2020. Green Marine is an environmental certification program for the North American marine industry dedicated to advancing environmental excellence. The program stems from a voluntary initiative by the maritime industry to exceed regulatory requirements. Green Marine is a rigorous, transparent and inclusive program that targets prioritized environmental issues such as greenhouse gases, community impacts, and water and land pollution.

Voluntary Cleanup Program: Wyman’s Aquatic Habitat Mitigation Site In 2014, the Port embarked on a cleanup project on the far east end of the Port’s Marine Terminal. This project provides compensatory mitigation for adjacent development. Through cooperation with DOE’s Voluntary Cleanup Program, the Port excavated 13,550 cubic yards of upland and intertidal material to provide high quality intertidal habitat along the Guemes Channel. Post construction monitoring continues, with consistent evidence that the site is meeting its established functional objectives. 30

Environmental Program

Environmental Sites Environmental Sites The Port of Anacortes has identified six contaminated sites on various Port properties that require investigation, and potential remediation, in order to comply with state environmental laws and regulations. Since 2008, the Port, in partnership with the Washington State Department of Ecology (DOE), current and former tenants and their insurance carriers, former site operators, and the Port’s own historical insurance carriers, has completed in excess of $60 million in clean-up actions.

To date, clean-ups have occurred and are significantly completed at the Cap Sante Marine site, the in-water portion of Dakota Creek Industries Shipyard (DCI), the former Scott Paper Mill site, and the former Shell Tank Farm site. The former Scott Paper Mill site was completed in 2011 and the Port plans to complete the DOE required 10-Year Sediment Sampling and Mitigation Monitoring work in 2021. In total, the Port has forecast $188,000 in post-construction monitoring costs associated with these sites in its 2021 non-operating budget.

The remaining sites, which are in various stages of remedial investigation, feasibility studies, alternative analysis or remediation activities, include the uplands portion of DCI, the former Pier 2 Log Haul Out site (also known as “Log Pocket”), and the Quiet Cove site. The latter, purchased in 2013, is located adjacent to Curtis Wharf. To fast-track economic development, the Port in cooperation with its funding partners, including DOE, developed an interim action for remediation activities which commenced in August 2020. This $3.5 million project is anticipated to be substantially complete by year-end and the Port estimates roughly $360,000 in closeout and post-construction monitoring expense in 2021.

Also in 2021, the Port anticipates commencement of remediation activities on the uplands portion of DCI, pending acceptance by the Port and DOE of an approved clean-up action plan. Continued remedial investigation and alternatives analysis on the Log Pocket site round out the 2021 environmental cost budget.

Model Toxics Control Act (MTCA) Critical to the ongoing success of the environmental remediation program is the funding of clean-up activities by the Model Toxics Control Act (MTCA), which is funded through several different mechanisms, including a tax assessed on hazardous materials. In recent years, MTCA fund balances were significantly overspent (due to a variety of factors including reduced revenues from historically low prices on petroleum products), but through concerted efforts at the state level, shortfalls were covered with bond packages and the Port has continued to receive necessary awards to advance clean-up projects each biennium. The Port currently has over $5.5 million in grant awards, guaranteed through June 30, 2021. MTCA funding continues to be a legislative priority for the Port.

Cash Flow Projection: Definitions & Assumptions

Definitions & Assumptions Port Funding Sources  General Fund: Non-restricted cash fund derived from Port operations and used for the daily operation of the Port.  Construction Fund: Non-restricted cash fund used to collect money for future construction projects. Capital projects outlined in the Capital Improvement Plan to be funded by the General Fund are financed with cash from this source.  Property Sales Proceeds Fund: Restricted cash fund derived from proceeds from the sale of surplus Port properties. The Port Commission restricts the use of this fund for property acquisition and/or industrial development.  Environmental Fund: Non-restricted cash fund which is an accumulation of cash receipts related to cost recovery settlements with third parties regarding environmental remediation costs. These funds are set aside to be used for current and future environmental remediation and cleanup costs. The Port is currently teaming with the Washington State Department of Ecology on “Focus Fidalgo” which includes long-term post- construction monitoring and clean-up of six sites in the Port District over the next few years.  Property Tax Fund: Restricted cash fund which is an accumulation of property tax revenues received. Uses of this fund are property acquisition, industrial development including environmental costs, debt service for general obligation bonds and public access, as established by the Port Commission.

Estimated Cash from Operations: Estimated cash from operations is the result of Net Operating Income less Depreciation plus capitalized and reclassified wages. Net Operating Income is the result of operations from the Port’s operating areas: Airport, Marina, Marine Terminal and Properties. In general, these operating areas are expected to generate sufficient revenues to pay for operating costs including normal maintenance and repair, allocation of general and administrative costs and debt service on capital projects.

Interest Earned on Investments: Interest income is budgeted conservatively for 2021. Estimated interest earnings in future years were calculated based upon estimated average investment balances and current interest rates of less than 1%.

Operating Reserve: Operating reserve is established by Commission resolution and is currently based upon a three-month average of historical monthly expenditures.

Cash Flow Projections 2021-2025

Cash Flow Projections 2021-2025 Construction Property Totals General Fund Fund Sales Proceeds Fund Environmental Fund Property Tax Fund 2021 Beginning Cash/Investment Balance $ 15,247,940 $ 4,776,917 $ 7,889,605 $ 37,656 $ 884,662 $ 1,659,100 Estimated Cash from Operations 2,304,625 2,304,625 - - - - Estimated Cash from Non-Operating: Tax Levy 1,673,000 - - - - 1,673,000

Interest Income 114,360 35,827 59,172 282 6,635 12,443 Other Non-Operating 30,600 30,600 - - - - Environmental Projects & Mitigation: Dakota Creek Shipyard Cleanup Project (1,649,000) - - - (1,649,000) - Former Pier 2 Log Haul Out Cleanup Project (284,333) (284,333) - - - - Quiet Cove Cleanup Project (360,200) (360,200) - - - - Post-Construction Monitoring (Completed Sites) (188,000) - - - (188,000) - Environmental Recoveries 1,828,127 640,434 - - 1,187,693 - Debt Service Payments (1,571,923) (1,571,923) - - - - Interfund Loans and/or Transfers: 2010 Loan - Anthony's Parking Lot - (22,600) - - - 22,600

2019 Loan - Bartholomew Acquisition - - 300,000 - - (300,000) Surplus Property Sales (PY Receipts) - (4,000) - 4,000 - - CIP Funding - (1,680,000) 1,680,000 - - - Operating Reserve (2,892,000) (2,892,000) - - - -

Cash Available for Capital Expenditures $ 14,253,196 $ 973,347 $ 9,928,777 $ 41,938 $ 241,990 $ 3,067,143

2021 Comp. Plan Expenditures: Airport CIP (See Page 25) (624,000) - (534,000) - - (90,000) Marina CIP (See Page 26) (7,286,800) - (6,587,830) - - (698,970) Marine Terminal CIP (See Page 27) (985,000) - (985,000) - - - Properties CIP (See Page 28) (5,755,000) - (4,130,000) - - (1,625,000) Capital Procurement (See Page 29) (96,200) - (96,200) - - - Capital Grants 2,440,800 - 2,440,800 - - - 2021 Comp. Plan Expenditures Net (12,306,200) - (9,892,230) - - (2,413,970)

Ending Cash/Investment Balance 1 $ 1,946,996 $ 973,347 $ 36,547 $ 41,938 $ 241,990 $ 653,173

1 Exclusive of $2,892,000 Operating Reserve.

Cash Flow Projections 2021-2025 (continued)

Construction Property Totals General Fund Fund Sales Proceeds Fund Environmental Fund Property Tax Fund

2022 Beginning Cash/Investment Balance $ 1,946,996 $ 973,347 $ 36,547 $ 41,938 $ 241,990 $ 653,173

Estimated Cash from Operations 3,372,317 3,372,317 - - - -

Estimated Cash from Non-Operating: Tax Levy 1,709,730 - - - - 1,709,730 Interest Income 94,360 75,374 713 818 4,719 12,737 Other Non-Operating 31,518 31,518

Environmental Projects & Mitigation: Former Pier 2 Log Haul Out Cleanup Project (424,667) (424,667) - - - - Quiet Cove Cleanup Project (280,000) (280,000) - - - - Post-Construction Monitoring (Completed Sites) (87,000) - - - (87,000) - Environmental Recoveries 766,667 704,667 - - 62,000 -

Debt Service Payments (1,575,850) (1,575,850) - - - -

Interfund Loans and/or Transfers: 2019 Loan - Bartholomew Acquisition - - 150,000 - - (150,000) CIP Funding - (1,740,000) 1,740,000 - - -

Additional Operating Reserve (86,000) (86,000) - - - -

Cash Available for Comp. Plan Exp. $ 5,468,072 $ 1,050,707 $ 1,927,260 $ 42,756 $ 221,709 $ 2,225,640

2022 Comp. Plan Expenditures: Capital Project Expenditures (3,291,000) - (781,000) - - (2,510,000) Capital Grants (Potential) 630,250 - 183,750 - - 446,500 2022 Comp. Plan Expenditures Net (2,660,750) - (597,250) - - (2,063,500)

Ending Cash/Investment Balance 2 $ 2,807,322 $ 1,050,707 $ 1,330,010 $ 42,756 $ 221,709 $ 162,140

2 Exclusive of $2,978,000 Operating Reserve.

Cash Flow Projections 2021-2025 (continued)

Construction Property Totals General Fund Fund Sales Proceeds Fund Environmental Fund Property Tax Fund 2023 Beginning Cash/Investment Balance $ 2,807,322 $ 1,050,707 $ 1,330,010 $ 42,756 $ 221,709 $ 162,140

Estimated Cash from Operations 3,698,487 3,698,487 - - - -

Estimated Cash from Non-Operating: Tax Levy 1,746,827 - - - - 1,746,827 Interest Income 112,833 78,579 25,935 834 4,323 3,162 Other Non-Operating 32,464 32,464 - - - -

Environmental Projects & Mitigation: Former Pier 2 Log Haul Out Cleanup Project (2,575,000) (2,575,000) - - - - Quiet Cove Cleanup Project (225,000) (225,000) - - - - Post-Construction Monitoring (Completed Sites) (85,000) - - - (85,000) - Environmental Recoveries 2,842,500 2,800,000 - - 42,500 -

Debt Service Payments (1,581,050) (1,581,050) - - - -

Interfund Loans and/or Transfers: 2020 – Property Acquisition - - 150,000 - - (150,000) CIP Funding - (2,160,000) 2,160,000 - - -

Additional Operating Reserve (89,000) (89,000) - - - -

Cash Available for Comp. Plan Exp. $ 6,685,384 $ 1,030,188 $ 3,665,945 $ 43,590 $ 183,532 $ 1,762,129

2023 Comp. Plan Expenditures: Capital Project Expenditures (3,310,000) - (1,825,000) - - (1,485,000) Capital Grants (Potential) 100,000 - - - - 100,000 2023 Comp. Plan Expenditures Net (3,210,000) - (1,825,000) - - (1,385,000)

Ending Cash/Investment Balance3 $ 3,475,384 $ 1,030,188 $ 1,840,945 $ 43,590 $ 183,532 $ 377,129

3 Exclusive of $3,067,000 Operating Reserve.

Cash Flow Projections 2021-2025 (continued)

Construction Property Totals General Fund Fund Sales Proceeds Fund Environmental Fund Property Tax Fund 2024 Beginning Cash/Investment Balance $ 3,475,384 $ 1,030,188 $ 1,840,945 $ 43,590 $ 183,532 $ 377,129

Estimated Cash from Operations 3,809,441 3,809,441 - - - -

Estimated Cash from Non-Operating: Tax Levy 1,784,296 - - - - 1,784,296 Interest Income 127,596 79,915 35,898 850 3,579 7,354 Other Non-Operating 33,438 33,438 - - - -

Environmental Projects & Mitigation: Post-Construction Monitoring (Completed Sites) (63,000) - - (63,000) - Environmental Recoveries 63,000 - - - 63,000 -

Debt Service Payments (1,569,050) (1,569,050) - - - -

Interfund Loans and/or Transfers: 2019 Loan - Bartholomew Acquisition - - 150,000 - - (150,000) CIP Funding - (2,220,000) 2,220,000 - - -

Additional Operating Reserve (92,000) (92,000) - - - -

Cash Available for Comp. Plan Exp. $ 7,569,105 $ 1,071,932 $ 4,246,843 $ 44,440 $ 187,111 $ 2,018,779

2024 Comp. Plan Expenditures: Capital Project Expenditures (13,415,000) - (3,415,000) - - (10,000,000) Capital Grants (Potential) 1,355,000 - 555,000 - - 800,000 Capital Loans (Potential) 14,000,000 - - - - 14,000,000 2024 Comp. Plan Expenditures Net 1,940,000 - (2,860,000) - - 4,800,000

Ending Cash/Investment Balance4 $ 9,509,105 $ 1,071,932 $ 1,386,843 $ 44,440 $ 187,111 $ 6,818,779

4 Exclusive of $3,159,000 Operating Reserve.

Cash Flow Projections 2021-2025 (continued)

Construction Property Totals General Fund Fund Sales Proceeds Fund Environmental Fund Property Tax Fund

2025 Beginning Cash/Investment Balance $ 9,509,105 $ 1,071,932 $ 1,386,843 $ 44,440 $ 187,111 $ 6,818,779

Estimated Cash from Operations 3,923,725 3,923,725 - - - -

Estimated Cash from Non-Operating: Tax Levy 1,822,139 - - - - 1,822,139 Interest Income 247,048 82,523 27,043 867 3,649 132,966 Other Non-Operating 34,441 34,441 - - - -

Environmental Projects & Mitigation: Post-Construction Monitoring (Completed Sites) (50,000) - - (50,000) - Environmental Recoveries 50,000 - - - 50,000 -

Debt Service Payments (1,375,450) (425,450) - - - (950,000)

Interfund Loans and/or Transfers: 2020 – Property Acquisition - - 150,000 - - (150,000) CIP Funding - (3,300,000) 3,300,000 - - -

Additional Operating Reserve (95,000) (95,000) - - - -

Cash Available for Comp. Plan Exp. $ 14,066,006 $ 1,292,170 $ 4,863,887 $ 45,307 $ 190,760 $ 7,673,883

2025 Comp. Plan Expenditures Capital Project Expenditures (10,275,000) - (3,275,000) - - (7,000,000) Capital Grants (Potential) 500,000 - 500,000 2025 Comp. Plan Expenditures Net (9,775,000) - (3,275,000) - - (6,500,000)

Ending Cash/Investment Balance5 $ 4,291,006 $ 1,292,170 $ 1,588,887 $ 45,307 $ 190,760 $ 1,173,883

5 Exclusive of $3,254,000 Operating Reserve.

Long-Term Debt

Long-Term Debt Limited Tax General Obligation Bonds Limited Tax General Obligation (LTGO) bonds are general obligations of the Port payable from general (ad valorem) taxes, subject to certain constitutional and statutory limitations. The Port plans long-term debt issuance to finance its capital program based on its cash flow needs, sources of revenue, capital construction periods and market conditions. Borrowings by the Port mature over a term that does not exceed the economic life of the improvements that they finance.

In September 2020, the Port closed on its $8.185 million sale of LTGO bonds to refinance existing debt and provide funding for future capital projects. $2.89 million refinanced the Port’s 2010 Build America Bonds, saving the Port over $190,000 in interest payments over the next four years. The remaining $5.295 million funded elements of its 2020-2021 capital improvement plan, including the demolition and replacement of A-Dock. The Port’s strong “Aa3” LTGO bond rating and favorable market conditions at the time of the sale allowed the Port to achieve a historically low true interest cost of 1.91% over the 20- year life of the bonds.

Outstanding Limited Tax General Obligation Bonds: $10,385,000 LTGO bonds will remain outstanding at December 31, 2020.

Principal Outstanding - LTGO Bonds 12,000,000 10,000,000 8,000,000 2010 LTGO Bonds 6,000,000 2012 LTGO Bonds 4,000,000 2020 LTGO Bonds 2,000,000 - 2018 2019 2020 2021 2022 2023 2024 2025

Obligation Purpose Final Maturity Original Issue Balance at 12/31/2020 2012 LTGO Bonds Refunding 2024 $ 4,500,000 $ 2,200,000 2020 LTGO Bonds Capital Improvement & Refunding 2040 8,185,000 8,185,000 Total Bond Amount $ 12,685,000 $ 10,385,000

Long-Term Debt

Indebtedness Limitation (RCW 53.36.030) Under Washington State law the Port may incur indebtedness payable from ad valorem taxes in an amount not exceeding one-fourth of one percent of the value of the taxable property in the district without a vote of the people. With the assent of three-fifths of the voters voting thereon, the district may incur additional general obligation indebtedness provided the total indebtedness of the Port at any time shall not exceed three-fourths of one percent of the value of the taxable property in the district. The following estimates the 2021 debt limit. The Port does have debt capacity to issue additional general obligation bonds.

Value of Taxable Property (2021 Collection Year - Preliminary) $ 7,974,541,563

Limited Tax General Obligation Debt Capacity (Non-Voted) 0.25% of Assessed Value 19,936,354 Less: Outstanding LTGO Debt at 12/31/2020 (10,385,000) Remaining Capacity (Non-Voted) $ 9,551,354

Revenue Bonds Revenue bonds are obligations of the Port payable solely from the Port’s net operating revenues. The Port plans long-term debt issuance to finance its capital program based on its cash flow needs, sources of revenue, capital construction periods and market conditions. Borrowings by the Port mature over a term that does not exceed the economic life of the improvements that they finance.

Outstanding Revenue Bonds: Currently there are no outstanding revenue bonds.

Image: A-Dock Replacement Project Plan 39

Tax Levy Types & Uses

Tax Levy: Types & Uses Regular Tax Levy The County Treasurer acts as an agent to collect property taxes levied in the County for all taxing authorities. Taxes are levied annually on January 1 on prior year property values. Assessed values are established by the County Assessor at 100% of fair market value. Taxes are due in two equal installments on April 30 and October 31. Collections are distributed to the Port by the County Treasurer.

The Port is permitted by law to levy up to $0.45 per $1,000 of Assessed Valuation for general Port purposes. The levy may go beyond the $0.45 limit to provide for General Obligation debt service. The rate may be reduced for either of the following reasons:  Washington State Law in Revised Code of Washington 84.55.010 limits growth of regular property taxes to 1% per year, after adjustments for new construction.  If the assessed valuation increases by more than 1% due to revaluation, the levy rate will be decreased.

Special Tax Levies Special levies approved by the voters are not subject to the above limitations. The Port can levy property taxes for dredging, canal construction, leveling or filling upon approval of the majority of voters with the Port District, not to exceed $0.45 per $1,000 of Assessed Value of taxable property within the Port District.

Industrial Development District Tax Levies The Port may also levy property taxes for Industrial Development Districts (under a comprehensive scheme of harbor improvements), for two multiyear levy periods only. The levy may not exceed the sum of $2.70 per $1,000 of Assessed Value for taxable property in the Port District for taxes collected in the base year and the maximum allowable amount that could have been collected under RCW 84.55.010 for the first six collection years of the levy period. The levy period may not exceed twenty years from the date the initial levy is made, and the levy rate in any year may not exceed $0.45 per $1,000 of Assessed Value. If a Port District intends to levy this tax over a second multiyear levy period, the Port must publish notice of intent to impose such a levy, and if signatures of at least eight percent (8%) of the voters protest the levy, a special election must be held with a majority approval required. The Port District has not levied this tax.

Tax Levy Uses The Port Commission has directed that the funds collected by the tax levy will be used for property acquisition, industrial development including environmental costs, debt service for general obligation bonds and public access improvements as directed. The Commission further has established a fund with the Skagit County Treasurer to collect these taxes and hold them separate from the General Funds of the Port. The 2021 budget allows the available tax monies to be utilized for new projects authorized by the Port Commission.

2021 Tax at a Glance

2021 Tax at a Glance The preliminary total assessed value for the Port District for 2021, as of budget adoption, is $7,974,541,563. Total proposed general levy rate for 2021 is $0.21/$1,000 of assessed valuation, which calculates to a regular tax levy of $1,673,000.

As described on the previous page, the Port is permitted to levy the lesser of the statutory maximum dollar rate allowed by State law ($0.45 per $1,000 of assessed valuation) or the regular certified levy rate as calculated by the County Treasurer. The 2021 proposed general levy is equal to the maximum regular certified levy available.

Taxy Levy $1,800,000

$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

Maximum Levy Available Taxes Actually Levied Projected Tax Levy

2021 Budget: Supplemental Comparisons - Combined

2021 Budget – Supplemental Comparisons Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING REVENUES Airport $ 430,637 $ 569,624 $ 422,024 $ 820,171 $ 383,159 Marina 8,392,800 7,995,892 9,222,928 9,176,568 8,431,854 Marine Terminal 4,737,524 4,262,745 6,623,767 6,630,622 5,865,317 Properties 1,589,288 1,524,427 1,591,821 1,576,577 1,598,914 Total Operating Revenues 15,150,249 14,352,688 17,860,540 18,203,938 16,279,244

OPERATING EXPENSES Airport 567,430 734,543 600,966 953,708 543,817 Marina 6,796,661 6,224,667 7,698,968 7,004,037 7,038,386 Marine Terminal 3,877,869 3,671,359 5,480,633 5,012,529 4,610,136 Properties 1,426,699 1,394,900 1,326,229 1,320,926 1,199,363 Total Operating Expenses 12,668,659 12,025,469 15,106,796 14,291,200 13,391,702

Net Operating Income Before Depreciation 2,481,590 2,327,219 2,753,744 3,912,738 2,887,542

Depreciation 2,435,800 2,314,418 2,177,200 2,514,362 2,368,600

NET OPERATING INCOME 45,790 12,801 576,544 1,398,376 518,942

Non-Operating Revenues 1,821,860 1,779,987 1,886,439 1,364,144 1,838,395 Non-Operating Expenses (237,963) (413,477) (300,420) (319,552) (374,140) NET NON-OPERATING 1,583,897 1,366,510 1,586,019 1,044,592 1,464,255

Net Income Before Environmental 1,629,687 1,379,311 2,162,563 2,442,968 1,983,197

Environmental Grants & Recoveries 1,828,126 4,166,136 4,120,589 372,467 434,700 Environmental Expenses (2,481,533) (4,358,380) (5,148,460) (502,622) (584,000) GASB 49 Costs Previously Accrued - - 3,080,407 4,785,509 302,000 NET ENVIRONMENTAL (653,407) (192,244) 2,052,536 4,655,354 152,700

Capital Grants - All Departments 2,440,800 526,250 352,450 - 546,153

NET INCOME $ 3,417,080 $ 1,713,317 $ 4,567,549 $ 7,098,322 $ 2,682,050

2021 Budget: Supplemental Comparisons - Airport

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING REVENUES Building and Ground Leases $ 153,544 $ 151,771 $ 150,966 $ 149,665 $ 146,109 T Hangar Storage 121,943 110,333 110,858 104,741 113,000 Fuel Sales 143,750 131,973 149,800 172,187 115,500 Parking and Tie-Downs 10,200 9,875 9,500 9,857 7,750 Miscellaneous 1,200 1,217 900 708 800 Operating Grants - 164,455 - 383,013 - Total Operating Revenues 430,637 569,624 422,024 820,171 383,159

OPERATING EXPENSES Water/Sewer/Garbage 14,700 13,261 13,200 12,794 13,000 Power 12,000 12,453 12,000 12,430 14,000 Storm Sewer Assessment 363 311 9,000 257 9,000 Permit Compliance 4,316 3,936 4,120 3,249 4,815 Repair & Maintenance 30,719 110,994 84,055 486,163 93,250 Fuel for Resale 125,000 109,574 140,000 153,800 105,000 Bank/Card Fees 4,450 3,737 4,605 5,046 1,500 Operating & Other Supplies 13,300 504 350 786 500 Office & Computer Supplies 15,810 13,750 9,525 10,183 13,915 Safety 500 1,200 1,200 546 2,000 Legal Services 2,000 4,521 6,000 1,594 6,825 Other Outside Services 4,000 159,280 17,600 35,518 5,000 Environmental Services 1,110 313 - 1,244 - Telephone - 334 - 949 900 Travel & Other Business Expenses 3,536 - 1,000 3,536 1,850 Promotional Hosting & Trade/Business/Community Dev - - - 87 - Marketing/Events - - - 389 - Membership Dues/Publications 250 250 250 332 500 Insurance 35,000 28,946 29,000 24,350 24,000

2021 Budget: Supplemental Comparisons - Airport

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING EXPENSES (continued) Business Taxes $ 1,200 $ 1,172 $ 1,300 $ 1,221 $ 1,000 Facilities Payroll 99,168 52,598 94,630 36,483 88,977 Facilities Allocation 58,803 33,252 53,937 57,896 51,264 G&A Allocation 141,205 184,157 119,194 104,855 106,521 Total Operating Expenses 567,430 734,543 600,966 953,708 543,817

Net Income (Loss) Before Depreciation (136,793) (164,919) (178,942) (133,537) (160,658)

Depreciation 311,751 293,835 289,385 304,187 301,940

NET LOSS $ (448,544) $ (458,754) $ (468,327) $ (437,724) $ (462,598)

2021 Budget: Supplemental Comparisons - Marina

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING REVENUES Moorage $ 5,052,895 $ 5,019,091 $ 4,935,588 $ 4,877,235 $ 4,787,666 Fuel Sales 2,553,842 2,197,515 3,454,642 3,488,363 2,870,040 Boat Launches 124,500 121,640 146,400 135,351 117,000 Electricity Sales 306,884 319,967 311,507 304,841 315,000 Web Locker & Outside Storage 101,891 104,962 95,990 93,229 93,020 Vehicle Parking 25,200 30,445 28,000 30,546 20,000 Overnight Camping/RV Parking 37,000 39,674 45,000 47,997 40,000 Laundry/Showers 38,393 30,341 35,000 43,589 34,400 Passenger Fees 15,000 7,723 30,000 25,927 35,000 Pumpout Fees 40,500 37,260 32,400 30,115 17,100 Environmental Fees 25,200 25,089 25,200 25,556 25,200 Reservation & Wait List Fees 29,740 29,100 28,685 31,010 26,000 Retail Sales 19,545 16,307 22,091 21,742 18,000 Miscellaneous 18,430 13,404 17,800 18,372 24,428 Operating Grants 3,780 3,375 14,625 2,695 9,000 Total Operating Revenues 8,392,800 7,995,892 9,222,928 9,176,568 8,431,854

OPERATING EXPENSES Wages 747,941 713,090 731,943 642,969 818,513 Payroll Taxes 85,776 89,308 112,043 76,302 146,466 Employee Benefits 229,754 198,403 245,222 191,325 239,992 Hiring Expense 1,900 2,246 800 1,813 - Total Salary Related Expenses 1,065,371 1,003,046 1,090,008 912,409 1,204,971

Equipment Rent 500 2,075 1,000 3,029 - Water/Sewer/Garbage 140,730 142,321 150,700 132,244 166,293 Power 254,249 285,137 293,500 258,476 285,346 Storm Sewer Assessment 36,650 32,565 4,500 25,151 4,500 Pumpout 37,500 36,026 30,000 30,009 15,300 Repair & Maintenance 231,300 380,362 355,900 415,579 351,500

2021 Budget: Supplemental Comparisons - Marina

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING EXPENSES (continued) Fuel for Resale $ 2,000,660 $ 1,669,974 $ 2,925,120 $ 2,786,442 $ 2,428,000 Bank/Card Fees 192,000 183,856 214,000 203,564 193,000 Damage Claims 4,500 4,500 4,500 2,643 3,000 Operating & Other Supplies 127,050 118,681 129,800 114,737 94,100 Retail Items for Resale 18,500 15,303 16,000 15,282 15,400 Office & Computer Supplies 48,485 54,669 69,425 42,612 46,625 Laundry & Uniform 7,800 8,970 8,400 4,066 1,000 Safety 9,560 14,242 9,825 6,106 9,900 Legal Services 6,000 10,774 9,000 1,398 4,850 Other Outside Services 13,500 8,540 7,500 67,092 62,150 Environmental Services 25,714 15,334 20,725 17,901 25,700 Telephone 11,020 16,141 14,200 14,171 12,600 Travel & Other Business Expenses 21,397 5,588 12,000 17,630 10,000 Training 13,250 5,718 13,930 12,793 13,725 Trade/Business/Community Dev 10,000 - 25,000 - - Marketing/Events 64,000 27,944 61,500 72,483 71,500 Membership Dues/Publications 725 265 715 265 715 Insurance 195,000 164,944 158,000 137,407 135,000 Bad Debts - 7,455 - 1,349 - Lease Payments 17,640 18,659 17,640 17,748 19,000 Business Taxes 39,500 30,173 43,400 43,296 41,475 Facilities Payroll 330,561 231,466 315,430 174,714 296,592 Facilities Allocation 212,949 160,100 195,690 206,702 184,281 G&A Allocation 1,660,550 1,569,839 1,501,560 1,266,739 1,357,263 Total Operating Expense 6,796,661 6,224,667 7,698,968 7,004,037 7,038,386

Net Income before Depreciation 1,596,139 1,771,225 1,523,960 2,172,531 1,393,468

Depreciation 965,692 893,251 882,065 960,729 948,693

NET INCOME $ 630,447 $ 877,974 $ 641,895 $ 1,211,802 $ 444,775 46

2021 Budget: Supplemental Comparisons – Marine Terminal

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING REVENUES Handling $ 2,265,226 $ 1,852,548 $ 3,467,375 $ 3,414,146 $ 3,000,053 Dockage 422,556 398,756 730,056 754,531 634,524 Wharfage 536,052 469,595 683,040 730,960 646,520 Service & Facilities 569,520 495,655 662,300 783,316 627,480 Environmental Fees 122,928 108,291 218,040 91,649 198,750 Security Revenue 40,500 36,700 91,125 109,125 88,875 Building & Ground Leases 536,386 512,354 530,191 491,855 491,196 Storage & Lay Down 227,416 306,621 166,960 217,990 139,669 Miscellaneous 16,940 32,226 24,680 37,050 38,250 Operating Grants - 50,000 50,000 - - Total Operating Revenues 4,737,524 4,262,745 6,623,767 6,630,622 5,865,317

OPERATING EXPENSES Wages 25,399 35,589 91,603 76,511 - Payroll Taxes 4,087 6,126 23,812 13,020 - Employee Benefits 3,298 8,307 11,793 11,527 - Employee Hiring - - - - - Total Salary Related Expenses 32,784 50,022 127,208 101,058 -

Longshore/Stevedoring 2,266,126 1,861,254 3,463,555 3,410,567 3,012,053 Equipment Rent 4,400 3,386 3,800 2,229 500 Water/Sewer/Garbage 89,750 84,853 75,400 77,758 73,594 Power 44,125 45,153 39,960 37,828 35,166 Storm Sewer Assessment 14,820 12,420 48,525 10,852 39,960 Permit Compliance 10,632 10,934 9,850 5,254 9,550 Repair & Maintenance 62,000 217,844 157,100 121,919 115,800 Operating & Other Supplies - 3,741 - 428 300 Office & Computer Supplies 23,800 19,073 11,500 14,130 12,300 Laundry & Uniform - - - 217 -

2021 Budget: Supplemental Comparisons – Marine Terminal

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING EXPENSES (continued) Safety $ 1,000 $ 1,399 $ 2,500 $ 115 $ 2,500 Legal Services 10,000 23,580 15,000 7,678 1,825 Other Outside Services 14,700 141,798 141,200 58,558 120,800 Environmental Services 25,600 17,258 28,800 19,942 19,385 Telephone - 1,087 1,260 1,196 1,260 Travel & Other Business Expenses 7,300 - 7,300 604 7,000 Training 5,000 1,335 4,000 1,060 5,000 Promotional Hosting & Trade/Business/Community Dev - 79 - 154 1,000 Marketing/Events 1,500 - - 500 16,500 Membership Dues/Publications 13,300 8,870 9,700 8,960 11,800 Insurance 186,000 158,126 149,000 131,499 126,000 Business Taxes 10,900 9,449 16,200 17,083 14,500 Facilities Payroll 66,112 31,670 63,086 30,774 59,318 Facilities Allocation 42,590 29,325 39,138 47,422 36,856 G&A Allocation 945,430 938,703 1,066,551 904,744 887,169 Total Operating Expenses 3,877,869 3,671,359 5,480,633 5,012,529 4,610,136

Net Income before Depreciation 859,655 591,386 1,143,134 1,618,093 1,255,181

Depreciation 835,980 822,779 842,963 1,019,407 927,785

NET INCOME (LOSS) $ 23,675 $ (231,393) $ 300,171 $ 598,686 $ 327,396

2021 Budget: Supplemental Comparisons – Properties

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING REVENUES Building & Ground Leases $ 1,487,384 $ 1,491,585 $ 1,430,452 $ 1,399,350 $ 1,441,480 Venue Rentals 45,270 8,695 89,375 81,895 89,700 Event Sponsorships 5,500 - 39,000 37,960 33,000 Utilities Sales 8,704 9,825 8,994 10,615 10,734 Miscellaneous 30,430 14,322 12,000 34,757 12,000 Operating Grants 12,000 - 12,000 12,000 12,000 Total Operating Revenues 1,589,288 1,524,427 1,591,821 1,576,577 1,598,914

OPERATING EXPENSES Wages 378,446 376,065 365,935 348,658 338,753 Payroll Taxes 31,542 30,417 31,538 27,420 29,350 Employee Benefits 122,669 112,789 138,169 122,255 134,323 Employee Hiring - - - 47 - Total Salary Related Expenses 532,657 519,271 535,642 498,380 502,426

Equipment Rent 5,000 10,004 7,500 3,611 - Water/Sewer/Garbage 23,100 52,475 16,900 19,678 13,900 Power 23,727 30,695 19,744 19,794 20,974 Storm Sewer Assessment 9,450 7,263 - 6,410 - Repair & Maintenance 104,620 81,775 33,585 78,754 94,255 Bank/Card Fees 905 138 1,700 1,153 2,000 Operating & Other Supplies 8,500 2,003 7,400 14,133 - Tenant Relocation/Demolition - 300 - 5,605 - Office & Computer Supplies 4,300 3,109 5,500 7,664 5,800 Laundry & Uniform - - - 123 - Safety - 400 400 80 2,200 Legal Services 20,000 22,098 23,000 17,595 16,000 Other Outside Services 20,886 127,294 110,266 83,889 40,037 Telephone 4,000 2,200 3,800 2,000 2,560

2021 Budget: Supplemental Comparisons – Properties

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING EXPENSES (continued) Travel & Other Business Expenses 3,000 1,236 7,500 8,095 6,000 Training 3,000 452 3,000 3,462 2,500 Promotional Hosting & Trade/Business/Community Dev - - 3,000 53 1,000 Marketing/Events 77,650 2,384 74,000 71,952 66,000 Membership Dues/Publications 500 488 500 872 500 Insurance 72,000 59,241 58,000 50,731 45,000 Bad Debts - - - 1,305 - Business Taxes 1,200 337 2,200 2,114 2,200 Facilities Payroll 99,168 61,164 94,630 85,229 88,977 Facilities Allocation 63,886 47,723 58,707 98,272 55,285 G&A Allocation 349,150 362,850 259,255 239,972 231,749 Total Operating Expenses 1,426,699 1,394,900 1,326,229 1,320,926 1,199,363

Net Income before Depreciation 162,589 129,527 265,592 255,651 399,551

Depreciation 322,377 304,553 162,787 230,039 190,182

NET INCOME (LOSS) $ (159,788) $ (175,026) $ 102,805 $ 25,612 $ 209,369

2021 Budget: Supplemental Comparisons – General & Administrative

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING EXPENSES Wages $ 1,700,305 $ 1,667,542 $ 1,591,530 $ 1,501,789 $ 1,371,217 Capitalized Labor (176,964) (158,733) (150,546) (74,840) (144,036) Payroll Taxes 156,461 146,593 167,860 131,119 133,199 Employee Benefits 646,592 529,537 636,355 386,991 582,698 Hiring Expense 2,000 187 2,400 - 5,000 Total Payroll Related Expenses 2,328,394 2,185,126 2,247,599 1,945,059 1,948,078

Water/Sewer/Garbage 1,400 1,919 1,200 1,450 8,400 Power 14,000 12,430 16,000 16,258 16,181 Permit Compliance 8,024 9,263 12,900 6,920 18,000 Repair & Maintenance 6,500 25,263 21,800 4,693 7,665 Bank/Card Fees 600 856 3,000 1,031 - Operating & Other Supplies 1,000 10,211 3,500 3,226 7,000 Office & Computer Supplies 132,880 136,921 122,580 98,158 119,370 Laundry & Uniform 500 1,461 1,800 1,602 1,416 Safety 52,575 40,331 3,405 1,423 3,700 Legal Services 35,000 89,662 39,500 14,040 13,700 Other Outside Services 142,213 128,217 125,500 71,613 145,570 Environmental Services 5,062 4,656 4,700 4,326 4,100 Telephone 21,830 22,296 17,750 17,277 17,250 Travel & Other Business Expenses 60,900 34,062 85,540 93,131 63,500 Training 27,190 22,644 31,610 24,995 25,840 Promotional Hosting & Trade/Business/Community Dev 60,000 30,051 35,000 720 1,000 Marketing/Events 19,000 26,858 19,000 13,923 32,000 Membership Dues/Publications 53,761 49,607 38,725 47,918 42,148 Insurance 31,000 25,511 28,000 21,738 25,000 Lease Payments 13,280 11,201 12,000 12,506 11,250 Business Taxes 500 648 449 1,000

2021 Budget: Supplemental Comparisons – General & Administrative

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING EXPENSES (continued) Facilities Payroll $ 33,056 $ 74,512 $ 31,543 $ 64,072 $ 29,659 Facilities Allocation 47,670 111,769 43,908 49,782 40,876 Total G&A before Depreciation 3,096,335 3,055,475 2,946,560 2,516,310 2,582,703

Depreciation 59,800 74,033 76,500 135,731 121,700

TOTAL G&A EXPENSES $ 3,156,135 $ 3,129,508 $ 3,023,060 $ 2,652,041 $ 2,704,403

Get to know your Port of Anacortes…

Employee of the Year 2020 Marina Operations, New Full-Time Hire Executive Assistant, New Full-Time Hire Jenkins Dossen Justin Parkins Jennifer Tottenham

2021 Budget: Supplemental Comparisons – Facilities

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 OPERATING EXPENSES Wages $ 584,959 $ 465,817 $ 533,444 $ 474,990 $ 498,361 Payroll Taxes 76,162 65,396 97,416 66,683 94,821 Employee Benefits 200,681 150,632 177,628 153,947 170,851 Hiring Expense 750 150 615 701 - Total Payroll Related Expenses 862,552 681,995 809,103 696,321 764,033

Equipment Rent 500 325 - 197 14,200 Water/Sewer/Garbage 8,300 9,530 10,000 8,322 4,200 Power 4,325 5,832 4,100 4,074 9,950 Permit Compliance - - - 272 - Repair & Maintenance 33,159 37,413 34,800 37,329 24,000 Operating & Other Supplies 52,100 31,355 39,500 40,720 14,500 Office & Computer Supplies 24,600 15,226 16,650 17,988 7,500 Laundry & Uniform 1,800 3,612 4,400 1,896 500 Safety 4,403 4,130 6,850 2,314 4,300 Legal Services 5,000 - - 1,039 - Other Outside Services 1,200 1,835 2,500 1,979 16,850 Telephone 12,050 9,537 9,450 8,862 24,150 Travel & Other Business Expenses 8,825 1,450 10,000 3,556 7,500 Training 14,150 13,992 25,346 11,569 17,402 Lease Payments - - - 351 15,000 Insurance 21,000 17,321 18,000 14,558 8,000 Total Facilities before Depreciation 1,053,964 833,553 990,699 851,347 932,085

Depreciation 50,800 51,049 47,700 46,067 40,200

TOTAL FACILITIES EXPENSES $ 1,104,764 $ 884,602 $ 1,038,399 $ 897,414 $ 972,285

2021 Budget: Supplemental Comparisons – Non-Operating

Budget Projected Budget Actual Budget 2021 2020 2020 2019 2019 NON-OPERATING REVENUES Taxes Levied $ 1,673,000 $ 1,616,866 $ 1,588,000 $ 1,552,517 $ 1,550,000 Other Taxes 7,500 6,334 9,000 17,222 7,500 Miscellaneous Revenues - - - 145 - Interest Income 114,360 73,845 218,000 227,568 197,720 Build America Bonds Subsidy - 65,939 63,439 69,930 73,175 Sale of Scrap and Waste 4,500 3,350 - 4,203 - Gain (Loss) on Disposal of Assets - - - (531,062) - Late Charges/Rebates 22,500 13,653 8,000 23,621 10,000 Total Non-Operating Revenues 1,821,860 1,779,987 1,886,439 1,364,144 1,838,395

NON-OPERATING EXPENSES GO Bond Interest Expense 234,063 277,314 300,420 315,206 349,890 Bond Issue Costs - 124,999 - - - Election Costs - 7,732 - - 24,000 Business Taxes 300 230 - 399 250 Fees Paid to the County 3,600 3,202 - 3,947 - Total Non-Operating Expenses 237,963 413,477 300,420 319,552 374,140

NET NON-OPERATING INCOME 1,583,897 1,366,510 1,586,019 1,044,592 1,464,255

ENVIRONMENTAL ITEMS Environmental Grants Received 1,089,517 2,117,167 2,148,536 212,665 240,000 Environmental Costs Recovered 738,609 2,048,969 1,972,053 159,802 194,700 Environmental Expenses (2,481,533) (4,358,380) (5,148,460) (502,622) (584,000) GASB 49 Costs Previously Accrued - - 3,080,407 4,785,509 302,000

NET ENVIRONMENTAL ACTIVITY $ (653,407) $ (192,244) $ 2,052,536 $ 4,655,354 $ 152,700