executive director’s report to the port of portland

EXECUTIVE DIRECTOR’S REPORT TO THE

PORT OF PORTLAND COMMISSION FOR FEBRUARY 2016

SAFETY REPORT

Port of Portland safety performance for January 2016 showed signs of improvement in both frequency and severity, as compared to January 2015. Monthly Report of Injury Incidents

Aviation

There were two incidents reported, one recordable and one non-recordable:

• An employee had a recordable illness identified as loss of hearing, both ears, existent in the December 2015 annual audiogram. January 2016 will necessitate a secondary audiogram (recorded in December, reported in January).

• An employee was assisting a vendor rolling tires off the back of a truck. A tire started to tip over and the employee attempted to catch the tire on its way down, causing strain to the left shoulder, arm and upper back. The employee was counseled about falling items and the vendor was asked to use a truck with a lift gate on future deliveries.

Marine

There were three incidents reported, one recordable and two non-recordable:

• An employee was descending a ladder into a vault and slipped a rung. The left foot landed on the floor first, with a rapid drop of two feet, causing jarring to the lower back.

• An employee was loading ice melt into the hopper by way of a bag hanging by its straps from a forklift. The ice melt started to clump. The employee stooped under the bag to dislodge the clumps. While standing up, the employee’s head struck the bag.

• While loading asphalt into the back of a truck, an employee strained his forearm.

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AVIATION REPORT January 2016 started strong with 7.6 percent growth in passengers compared to January 2015. PDX is seeing double-digit growth in seat capacity, 10.2 percent, which represents about 20 more daily flights than PDX had a year ago. New and expanded services at PDX that have been announced in the past month include:

Start Date Airline Destination Notes 03/21/16 PenAir North Bend, OR Replaces SeaPort flights

04/21/16 PenAir Redding, CA Arcata-Eureka, CA Through-flight to ACV

06/06/16 Alaska Atlanta, GA Seasonal 06/09/16 Sun Country Minneapolis, MN Seasonal 08/06/16 Southwest Burbank, CA 08/06/16 Southwest Ontario, CA 08/06/16 Southwest Houston, TX (Hobby) Expanding from seasonal to year-round

The Port was recognized at the Routes Americas Conference as one of the top two North American airports to provide overall marketing services over the past year in the under 20-million-passenger category. The awards are voted on by the airlines.

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Month % change FYTD % change

January July-January

Passengers 7.6% 8.5%

Concessions Revenue 13.5% 10.4%

Rental Car Revenue 6.0% 2.6%

Parking Revenue 3.8% 7.9%

Concessions Revenue

Combined retail and food and beverage operations reported a 13.5 percent, or $116,000, rent increase on the month, against a 7.6 percent passenger increase. Net plus rent performances from new and transitioning operators of $132,000 were the primary factors impacting this performance. Rental Car Revenue

Rental car operations reported a 6.0 percent, or $82,000, rent increase on the month compared to last year, against a 7.6 percent passenger increase. This reflects all operators reporting revenues at Minimum Annual Guarantee (MAG), with the exception of Ordinance operators, Airport Van Rental and Payless, which have no MAGs. The primary reason for the total increase over last year is Alamo and Budget being invoiced at new, higher MAGs, based upon the previous year’s performance. Parking Revenue by Lot

Parking revenue for the long- and short-term garages continues to reflect the change in operation of not using Level 7 short-term parking spaces for long-term customers. The long-term garage reaches capacity and closes during mid-day on Tuesdays, Wednesdays and often Thursdays. The economy lot and Gold Key Valet continue to have strong growth in transactions and revenue. Total transactions for the month were up 6.5 percent.

Product Revenue Variance YTD Variance

Short-Term $1,345,242 12.0% 13.1%

Long-Term $1,689,493 -3.6% 1.7%

Economy $1,584,266 5.0% 9.6%

Valet $101,020 19.8% 29.3%

Total $4,720,021 3.8% 7.9%

CAPITAL GRANTS

Portland International Airport

Staff submitted a reimbursement request to the Transportation Security Administration for the Law Enforcement Officer program in the amount of $36,800 (Agreement No. HSTS0213HSLR118).

Staff submitted a reimbursement request to TriMet for the Law Enforcement Officer program in the amount of $8,968 (Agreement No. GS150820LG). Marine (Capital Grants

Staff submitted a reimbursement request to the Oregon Department of Transportation (ODOT) for the ConnectOregon III – Terminal 6 (T-6) Crane Upgrades project in the amount of $3,699 (Agreement No. 26915).

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Staff submitted a reimbursement request to ODOT for the ConnectOregon IV – T-6 Wharf Optimization project in the amount of $24,732 (Agreement No. 28695).

Staff submitted a reimbursement request to ODOT for the ConnectOregon V – T-6 Crane Drive Electronics project in the amount of $2,465 (Agreement No. 30128).

MARINE & INDUSTRIAL DEVELOPMENT REPORT

The figures in the table below show change relative to the prior year.

January 2016 Fiscal Year-to-Date

Total Tonnage -30.8% -36.5%

Containers (TEU) -96.1% -97.7%

Import Full Containers -100.0% -100.0%

Export Full Containers -87.1% -93.7%

Breakbulk -9.1% -60.1%

Autos 27.0% 14.7%

Mineral Bulk -41.8% -23.5%

Grain -3.3% -32.4%

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Marine Business Port marketing staff met with major auto accounts and auto processing firms in Southern California including Nippon Yusen Kaisha, Glovis, Eukor, Mitsui OSK Line, Auto Processing Services and Auto Warehousing Co. There is a general concern within the auto processing industry regarding available space at U.S. West Coast auto ports, including the Port of Portland. Port staff met with stakeholders at the Port of Morrow in Boardman, Oregon, on February 19 to discuss opportunities for expansion of the upriver barge-rail service. The meeting was very positive and well attended by many service providers, potential shippers and local Boardman shippers. The goal is to increase volumes to accommodate weekly rail service and allow greater use of the service by Oregon shippers. Industrial Business Construction continues at Troutdale Reynolds Industrial Park and the project remains on schedule to deliver market-ready lots by the end of this year. Site conditions remain challenging due to the very wet winter and the need to treat the storm water leaving the site.

REAL ESTATE TRANSACTIONS EXECUTED PURSUANT TO DELEGATED AUTHORITY Big Ads, Inc., dba R/West – Permit and Right of Entry

Location: PDX

Term: December 6, 2015 to December16, 2015

Use: Permit for filming on December 16, 2015 in various areas of the airport.

Latrelle's Galley, LP, dba Peet's Coffee – Food & Beverage Concession Lease

Location: PDX

Term: January 13, 2016 to September 30, 2026

Use: Ten-year lease for a specialty coffee concession.

R.L.K. and Company dba Timberline Lodge – Retail Concession Lease

Location: PDX

Term: January 13, 2016 to June 30, 2023

Use: Seven-year lease for a specialty/branded retail concession.

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Latrelle's Galley, LP dba Stumptown Coffee – Food & Beverage Concession Lease

Location: PDX



Taste, Inc. dba Vino Volo – Retail Concession Lease

Location: PDX


Use: Seven-year lease for a specialty/branded retail concession

Portland Roasting Holdings, LLC – Food & Beverage Concession Lease

Location: PDX



Host International, Inc., dba Starbucks – Food & Beverage Concession Lease

Location PDX



Capers Café & Catering Co. dba Capers Farm-to-Table Market – Food & Beverage Concession Lease

Location: PDX


Use: Ten-year lease for a gourmet market concession.

SSP America, Inc., dba Kenny & Zuke’s Delicatessen and Market – Food and Beverage Concession Lease

Location: PDX


Use: Ten-year lease for a gourmet market concession.

House Spirits Distillery LLC – Retail Concession Lease

Location: PDX



Naito Corporation dba Made in Oregon – Retail Concession Lease

Location: PDX



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InMotion Entertainment Group, LLC dba Soundbalance – Retail Concession Lease

Location: PDX



FedEx Ground Package System, Inc. – Agreement for Movement and Transfer of Surplus Soil

Location: Troutdale Reynolds Industrial Park (TRIP)


Use: Agreement allows FedEx to move surplus oil from their property for Port's use on TRIP property.

Special Olympics Oregon, Inc. – Permit and Right of Entry

Location: PDX

Term: February 27, 2016

Use: Permit for access to Port property for parking for the Polar Plunge and run/walk event.

Teleport Communications America, LLC – Permit and Right of Entry

Location: N. Channel Ave.


Use: This permit authorizes the removal of old underground conduit and installing new fiber cable and associated fixtures to service Daimler.

Portland Container Repair Corporation – Permit & Right of Entry

Location: Terminal 4

Term: January 9, 2016 to May 10, 2016

Use: Permit for temporary storage of empty trailers.

Todd Investment Company dba Dollar Rent-A-Car – First Amendment to Facility Lease

Location: PDX

Term: January 12, 2016 to August 31, 2018

Use: This amendment extends the term and deletes language regarding options to extend.

Todd Investment Company dba Dollar Rent-A-Car – Second Amendment to Rental Car Concession Lease and Operating Agreement

Location: PDX


Use: This amendment extends the term and clarifies certain environmental responsibilities.

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EAN Holdings, LLC dba Enterprise Rent-A-Car – Second Amendment to Rental Car Concession Lease and Operating Agreement

Location: PDX



EAN Holdings, LLC dba National Car Rental – Second Amendment to Rental Car Concession Lease and Operating Agreement

Location: PDX



EAN Holdings, LLC dba National Car Rental – First Amendment to Facility Lease

Location: PDX



EAN Holdings, LLC dba Alamo Rent-A-Car – Second Amendment to Rental Car Limited Service Kiosk Lease

Location: PDX



Hoffman Construction Company of Oregon – Second Amendment to Permit and Right-of-Entry

Location: Port Center; Swan Island

Term: January 1, 2016 to December 31, 2016

Use: This amendment extends the term and replaces language for workers’ compensation insurance.

Todd Investment Company dba Dollar Rent-A-Car – Second Amendment to Ground Lease for Excess Parking

Location: PDX

Term: Effective January 12, 2016

Use: This amendment deletes the term Premises.

EAN Holdings, LLC dba Enterprise Rent-A-Car – First Amendment to Facility Lease

Location: PDX



Contracts Over $50,000 Pursuant to Delegated Authority

Monthly Report for February 2016 (January Activity)

TitleRequestor

DepartmentVendor Name

P.O. Amount

Purchase parts for revolving doors. PDX Maintenance ASSA ABLOY Entrance Systems USA, Inc.

$51,092

Purchase pavement deicing chemicals if unable to obtain from primary supplier.

PDX Maintenance Nachurs Alpine Solutions Corp.

$85,554

Obtain construction services for the Terminal 2 Gate Automation and Access Control Project.

Engineering Project Development

Town and Country Fence Co. of Oregon

$167,300

Purchase pavement deicing chemicals from primary supplier.

PDX Maintenance Cryotech Deicing Technology

$421,227

Obtain services for assisting the Port with media strategies and placements.

Corporate Marketing & Media Relations

Eckrosh Marketing LLC

$500,000

Obtain modifications to the Dredge Tender Ivanoff hull and propulsion system.


JT Marine, Inc. $785,878

Obtain construction services for a pipe connecting McBride Slough to Columbia Slough.


K&E Excavating, Inc.

$1,843,275

New Purchases

APPROVAL LIMITS (Administrative Policy 7.2.3)

All expenditures require management approval:

BUDGET Approval by managers in an amount delegated by Directors $ 0 - $ 25,000

APPROVAL Approval by Directors $ 25,001 - $250,000

Approval by Executive Director $ 250,001 +

Contracting authority is limited to the following:

CONTRACTING Directors Up to $ 10,000

APPROVAL Buyers Up to $ 50,000

Manager of Contracts & Procurement Up to $ 250,000*

Executive Director Up to $ 500,000*And any amount approved by Commission

Obtain Construction Manager / General Contractor services related to the PDX Terminal Balancing Project.


Skanska USA Building, Inc.

$25,000,000

TitleRequestor


Original Amount

Previous Changes to

Contract

Current Change to Contract

New Contract Total

Administrative action to add funding to obtain continued support for financial planning software.

Information Technology

Longview Solutions

$60,000 $120,240 $60,180 $240,420

Amendment No. 2 to obtain additional software services for project portfolio management system.

Development Services Administration

Aurigo Software Technologies, Inc.

$1,000,000 $208,000 $303,108 $1,511,108

Amendment No. 1 to obtain additional services related to the rebuilding of the swing gear box for the Dredge Oregon .

Navigation Lufkin Industries, Inc.

$83,412 $73,512 $156,924

Change orders Nos. 16 and 18 to obtain additional construction services for the Troutdale Reynolds Industrial Park Phase 2 site work.


Goodfellow Brothers, Inc.

$17,461,493 $122,502 $17,583,995

Amendment No. 4 to obtain additional engineering services for the PDX Terminal Grease Separation Project.


Carleton Hart Architecture PC

$598,000 $2,673,869 $369,856 $3,641,725

TitleRequestor


Original Task Order Amount

Previous Changes to Task

Order

Current Change to Task Order

New Task Order Total

Total Contract Activity -

All Task Orders

Task order against contract No. 952 to obtain on-call cleanup of illegal dumping on various Port properties.

Environmental Terra Hydr, Inc. $55,000 $55,000 $262,446

Change Orders and Amendments to Project-Specific Contracts

Contracts in this category are initially awarded with a specific work scope and an identified not-to-exceed project total.

New Task Orders and Changes to Task Orders Against Non-Project Specific Contracts

Items in this category are issued against contracts that were initially awarded with no specific work scope or product quantity identified (e.g., "requirements" or "on-call" contracts). These contracts establish pricing or rates for products or work that may be needed over a stated term. Estimated quantities may be identified, but no guarantee of actual contract compensation or work is made. Contract durations may be short-term or for multiple years with optional renewal/extension terms.

Task order against contract No. 757 to obtain on-call air quality support services.

Environmental Bridgewater Group, Inc.

$63,000 $63,000 $152,761

Task order against contract No. 898 to obtain fender repair services at Berth 607.


Bergerson Construction

$77,628 $77,628 $77,628

Task order against contract No. 952 to obtain on-call waste materials management services.

Environmental Terra Hydr, Inc. $89,000 $89,000 $262,446

Task order against contract No. 744 to obtain inspection services for various Port projects.


URS Corporation $173,299 $173,299 $1,542,730

Port of Portland Operating & Financial Results

FY 2015-16 through January 31, 2016

General Fund

Marine

Annual Adopted

Budget

Actual

Amounts Variance Adopted

Budget

VOLUMES

Autos (Units) 150,054 165,874 10.5% 267,000

Breakbulk (Short Tons) 57,871 124,891 115.8% 110,232

Containers (TEUs) 56,964 2,033 (96.4%) 94,000

Grain Bulk (Short Tons) 2,619,093 1,677,614 (35.9%) 4,409,247Mineral Bulk (Short Tons) 2,984,979 2,371,692 (20.5%) 5,389,200

Industrial Development

Navigation

General Aviation

Current Year-to-Date

The General Fund includes Marine, Industrial Development, Navigation, General Aviation, Environmental, Financial &

Administrative Services, Executive, Public Affairs, Human Resources, Legal, and Project & Technical Services (IT, Engineering,

and the Project Portfolio Office).

Comments:

Operating revenues (including land sales) are tracking well against the budget for the month, but lag on a fiscal year-to-date

(YTD) basis primarily due to timing of land sales. The sale of TRIP lot 1 is expected to occur in the second half of the fiscal

year; lots 11 and 12 are now forecast to close in FY 16-17.

YTD expenses excluding depreciation are almost $21.9M under budget due to the delays in TRIP land sales and the

corresponding cost of property sold. Operating expenses excluding land sales are $8.2 million under budget due to:

• container carrier incentive payments ($2.0M under budget)

• position vacancies (personnel $2.0M under budget)

• timing of contracts, professional & consulting services expenses ($3.6M under budget)

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Marine Volumes:

Autos – YTD auto volumes are 11% higher than forecast and 15% higher than last year due to Toyota imports and Ford

exports.

Breakbulk – Two ship calls (steel rail and lead) at T-2 in January has resulted in YTD tonnage increasing 116% higher than

forecast and 1% higher than last year.

Containers – TEUs are down almost 100% from the forecast and last year now that Westwood is the only carrier calling

Portland amid the labor issues at T-6.

Grain Bulk – YTD grain volumes are 36% less than forecasted and 32% lower than last year. Demand is currently very low. In

addition, a strong dollar means buyers can purchase grain elsewhere at a lower relative price.

Mineral Bulk – Overall, volumes are down 21% from the forecast and 23% from last year due primarily to lower than

expected potash volumes. Portland Bulk was offline for the first two months of the fiscal year while their new shiploader was

installed.

YTD operating revenues excluding land sales are in line with the Adopted Budget. Land sale revenues are $15.1M under

budget due to timing of the sales of TRIP Lots 1, 11 and 12, which were all expected to close before November. The sale of

TRIP lot 1 is now expected to occur in the second half of the fiscal year; lots 11 and 12 are not expected to close until FY 16-

17. YTD operating expenses are $1.6M under budget, with the largest variances listed below:

• Contracts, professional & consulting services are $805K under budget due to the timing of Gresham Vista traffic study and

mitigation expenses ($250K), Hayden Island environmental expenses ($182K), expenses related to TRIP land sales ($100K),

and Government Island management fees ($50K).

• Personnel services are $236K under budget due to position vacancies.

• Interdepartmental charges are $388K under budget due to lower than anticipated services received from Marine and

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YTD operating revenues are $176K higher than budgeted due to Dredge repower loan reimbursements from the Corps of

Engineers that were not assumed in the budget. YTD operating expenses before depreciation are $165K under budget.

There were some signficant materials and supplies purchases in the first quarter ($395K over budget YTD), but the timing of

various outside services expenses and lower fuel prices ($898K under budget YTD) help offset these higher expenses.

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YTD operating revenues are above budget by $30K, primarily due to higher than expected rental car revenues and landing

fee revenues at HIO.

YTD operating expenses are over budget by $500K, primarily due to a $470K write-off for Troutdale's Runway 7-25 non-

capitalized costs as well as higher than budgeted water and sewer costs (over $50K).

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Marine Operating Results:

YTD operating revenues are $1.9M less than the Adopted Budget due to lower ICTSI maintenance services reimbursement

revenues; lower than anticipated potash tonnage at T-5; and lower than anticipated grain volumes. YTD operating expenses

are $5.3M under budget, with the largest variances listed below.

• Other expenses are $2.0M under budget due to only $46K in actuals for the T-6 carrier incentive program (budget =

$2M).

• Contracts, professional & consulting services are $1.1M under budget due to Berth 501 & 503 grading projects not

moving forward based on hydrographic survey results ($200K), T-2 and Berth 401 dredging project savings (~$89K), and

timing of master planning and environmental expenses ($534K).

• Longshore labor expenses are $916K under budget due to lower than anticipated crane maintenance activity at T-6.

• Personnel services are $641K under budget primarily due to vacant positions and lower than budgeted maintenance

overtime as a result of lower than anticipated maintenance services.

• Materials & supplies expenses are $446K under budget primarily due to lower than anticipated materials for T-6 cranes.

• Travel and management expenses are $160K under budget due to timing.

Port of Portland Operating & Financial Results

FY 2015-16 through January 31, 2016

Support Services

Portland International Airport

Total Passengers

PDX Airline Cost Center (ACC)

PDX Port Cost Center (PCC)

Support Services is comprised of Financial & Administrative Services, Executive, Public Affairs, Human Resources, Legal, and

Project & Technical Services. Costs for these areas are allocated to the operating areas.

YTD operating expenses excluding depreciation are almost $1.0M under budget, with the largest variances listed below:

• Personnel services are $1.1M under budget due to vacant positions.

• Contracts, professional & consulting services are $587K under budget, mosty due to timing of IT outside services

expenses.

• Travel and management expenses are $170K under budget due to timing.

• Other expenses are $160K under budget due to the timing of software expenses.

• Offsetting these lower expenses, interdepartmental transfers are $1.3M over budget due to lower than anticipated

services provided by Engineering and capitalized labor for both IT and Engineering.

YTD airline revenues are $2.1M higher than budget due to higher than expected landing activity (over $750K), common use

rentals (over $560K), and leased terminal space (over $200K). Retail, food and beverage revenues are $125K higher than

budget as a result of higher than expected passenger activity. Other non-airline revenues are $370K higher than budget as a

result of higher utility reimbursements (over $140K), as well as higher PDX GA landing activity (over $110K), higher revenues

from Boeing, and other miscellaneous and concessions revenues.

YTD ACC expenses are $1.9M below budget. Personnel services expense is $720K under budget due to police, maintenance,

and admin position vacancies. Materials and services are $920K under budget, primarily due to timing of outside services

related to the terminal (down $370K), custodial services (down $180K), and deicing environmental costs (down $155K).

YTD parking revenues are $1.7M higher than budget due to higher passenger volume and higher than expected parking

activity. Rental car revenues are lower than budget $70K due to lower than budgeted rental activity for National, Dollar,

Budget, and Alamo. Other PCC revenues are $880K higher than budget as a result of higher than expected in-flight meal

concessions (over $190K), transportation network companies (over $160K), hotel revenues (over $150K), PIC revenues (over

$110K), as well as other PDX GA and cargo revenues.

PCC expenses are $1.0M lower than budget. Personnel services expense is $315K under budget due to police, maintenance,

and admin position vacancies. Materials and services are $550K under budget, primarily due to timing.

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Passengers traveling through PDX are a key driver of revenues and expenses for the Airport. YTD, nearly 10.4 million total

passengers have utilized PDX, exceeding the prior year by 8.5% (and the budget by 3.7%). Current forecasts are for PDX to

reach a new record of 17.2 million passengers for the fiscal year. The higher passenger levels are a result of the continued

growing economy and new flights added by nearly all carriers serving PDX. As a result of the increased seat capacity and

strong demand for air travel, PDX passenger levels are increasing as carriers are adding flights. 1.0

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executive director’s report to the port of portland

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