Port of Grays Harbor Commissioners approved a preliminary 2013 budget on Tuesday that projects overall revenues of $34.8 million and expenses of $33.9 million, including $23.3 million in operating costs.
It reflects $2.1 million in debt service (principal and interest) payments on more than $19 million of outstanding bonds, with more than $13 million maintained in Port reserves at the end of 2013, according to a draft of the document presented to commissioners by Mary Nelson, the Port’s director of finance and administration.
The budget, however, does not yet include operations at the Satsop Business Park, which commissioners on Tuesday also agreed to take on by accepting a formal tender offer from the business park’s Public Development Authority.
Port Executive Director Gary Nelson told the PDA last week that the Port would add the business park’s budget to its operations once the consolidation is completed. The action taken Tuesday essentially transfers the business park’s assets and liabilities to the Port “subject to reasonable due diligence,” said Port attorney Art Blauvelt, also the attorney for the PDA.
The PDA operates the business park with an operating budget of $2.3 million for 2012, with $6 million in cash and investments, total debt of $805,940, and a total value of $56 million for combined assets after depreciation.
For the overall 2013 Port spending plan, Mary Nelson said the top priorities in the preliminary budget center on the Port’s customers and tenants.
The outstanding bonds — $11.6 million issued in 2011 to finance the Marine Terminal rail project and refinanced 1999 bonds — took advantage of low interest rates “and saved the Port quite a bit of money on future payments,” Mary Nelson said.
“So the debt service needs to be paid right out of our operations,” Mary Nelson said.
The budget includes an estimated property tax collection of $2.25 million, based on the 2011 property tax levy collected this year.
“As property valuation and new construction values become available from Grays Harbor County, the property tax budget amount will be updated,” the preliminary budget states.
“We will follow the Port Commission’s directive that the property taxes shall only be used for capital investments that support the generation of jobs by our customers and tenants,” Mary Nelson said.
The Port’s capital improvement plan for 2012 is about $8.4 million, and it includes money for a remodeled 28th Street Boat Launch, Terminal 4 cargo yard paving and pile cap replacement, jet array renovation, bankline reconstruction at the Westport Marina and improvements at Bowerman Airport, among other items.
“We have a lot of assets that need to be kept up,” Mary Nelson said.
On the plus side, operating revenue is projected to continue to grow next year, largely driven by activity at the marine terminals.
Marine terminal revenue is projected to be $22.7 million, up from the $19.6 million projected for this year and the $12.2 million in revenue for 2011. Most of that will be driven by increasing exports of grains and autos. Operating income is expected to double from $1.8 million this year to a project $3.7 million for 2013.
“The greatest accomplishment that the staff all feels is the diversification now of the marine terminals with many different types of commodities, including our old friend log exports,” Nelson said. She noted that last year included the addition of new grain silos for Ag Processing Inc.
Trade volumes grew 75 percent in 2012 and are expected to increase 19 percent during 2013 “with a diversified mix of cargo and customers,” the budget projects.
“Global trade conditions and development opportunities have been strong for Port customers,” states the budget’s financial goals and market conditions report. “This trend is expected to continue through 2013.”
Nelson said industrial properties, including those in Hoquiam and Westport, include more than 100 leases, with operating revenue projected to be $2.36 million, compared to a projected $2.47 million this year.
“Over the past four years, we have had moderate growth and very stable business for our tenants in this area,” she said.
Revenues from the Westport Marina also are up slightly, from a projected $888,727 this year to $908,052 for 2013.
“The marina has been very busy during the summer months and actually filling to capacity,” Mary Nelson said, noting the Port also revised tariffs that helped provide more revenue.
The commissioners will set a formal budget hearing for their next regular meeting on Nov. 13.
Nelson noted it was important to get the general fund balance up to provide more operating capital.
“As we’re growing, we need to ease into a better cash position,” she said.