Transcript PCC Capital Investment & Business Planning

Capital Investment &
Business Planning
Prepared for the
34th PCC Annual Conference
Vancouver, British Columbia
April 18, 2008
By BST Associates
BST Associates
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Agenda
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Case Study
Issues for Consideration
Q&A
BST Associates
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Des Moines Marina
Lines of Business
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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
BST Associates
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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)
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Des Moines Marina
Methodology
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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
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Des Moines Marina
Revenues
Other
1% of Total in 2005, parking fines and interest income
Leases
2% of Total in 2005
Utilities
3% of Total in 2005
Services & Retail
34% of Total in 2005; includes fuel
Storage
5% of Total in 2005
Moorage
55% of Total in 2005
0
500,000
1,000,000
2003
BST Associates
2004
1,500,000
2,000,000
2005
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Des Moines Marina
Gross Profit
Other
2% of Total in 2005
Leases
2% of Total in 2005
Utilities
-1% of Total in 2005
Services & Retail
14% of Total in 2005; includes fuel
Storage
7% of Total in 2005
Moorage
-500,000
75% of Total in 2005
0
500,000
2003
BST Associates
1,000,000 1,500,000 2,000,000
2004
2005
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Des Moines Marina
Net Profit
-32% of Total in 2005
Other
4% of Total in 2005
Leases
Utilities
-2% of Total in 2005
Services & Retail
-10% of Total in 2005; includes fuel
Storage
12% of Total in 2005
128% of Total
in 2005
Moorage
-800,000
-400,000
0
2003
BST Associates
400,000
2004
800,000
1,200,000
2005
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Des Moines Marina
Key Considerations
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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
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Des Moines Marina
Key Considerations
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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
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Des Moines Marina Master Plan
BST Associates
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Sources of Capital Finance
for Marina Development
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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
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Alternative Development Strategies
Dry Stack Storage
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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
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Everett 12th Street Marina
The new 12th Street
Marina in Everett
provides 156 slips for 40’
to 70’ yachts with endties 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
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Triple Bottom Line
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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
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BST Associates
Thank you!
If you would like a copy of this presentation please ask!
Paul Sorensen
BST Associates
18414 103rd Avenue NE, Suite A
Bothell, WA 98011
[email protected]
(425) 486-7722
BST Associates
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