Fort Worden PDA Finance & Audit Committee June 24, 2020 - - PowerPoint PPT Presentation

Fort Worden PDA

Finance & Audit Committee June 24, 2020

Reopening Budget Scenarios & Cash Flow Considerations

Considerations

• Scenario 1: Limited Reopen of Hospitality Services August

2020

• Scenario 2: Do not reopen until April 2021. Fort managed

with very limited staffing.

• Scenario 3: Dissolution

Fort Worden Financial History and 2020 Budget

Scenario 1 and 2 Overview: Net Revenues

$(1,500) $(1,300) $(1,100) $(900) $(700) $(500) $(300) $(100) $100 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Cumulative Net Revenue Quarterly Net Revenue Scenario 2 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Cumulative Net Revenue (596) $ (836) $ (1,039) $ (1,248) $ (1,502) $ Quarterly Net Revenue (596) $ (240) $ (203) $ (209) $ (254) $ Scenario 1 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Cumulative Net Revenue (596) $ (836) $ (712) $ (693) $ (886) $ Quarterly Net Revenue

• 596
• 240

124 19

• 193

$(1,500) $(1,300) $(1,100) $(900) $(700) $(500) $(300) $(100) $100 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021

(700,000) (600,000) (500,000) (400,000) (300,000) (200,000) (100,000)

• 100,000

200,000 300,000 July Ending Aug Sept Oct Nov Dec Jan Feb Mar Reopen August 2020 Reopen April 2021

Overview: Cumulative Cash Position

Scenario 1: Fort Worden Services Open August 2020 General Assumptions

• Phase 3 reopening for Jefferson County likely to occur in early July
• Fort Worden Campgrounds are now Open
• Recovery Plan and FEMA funds provide some financial support for PPE

expenses required to reopen

• Makers Square construction stays on schedule
• LCP grant reimbursements is expected in late July; providing some potential

cash flow for reopening

Scenario 1--Opens August 2020: Advantages & Risks

• Opening Taps and Canteen restaurants will be a value-add for community

members and people staying overnight at Fort Worden.

• Brings back some staff for the limited reopen period.
• Builds community support and public confidence that PDA will survive crisis.
• Enables the PDA’s to provide more service support to partner businesses

(minimally, F&B, security, maintenance)

• Strong accommodation revenues forecasted for August through Nov (net

$321,500) Advantages

Scenario 1 Opens August 2020: Advantages & Risks

• A COVID case at the Fort could shut down affected/contaminated unit(s) for 3 weeks.
• A COVID surge could result in additional cancelled reservations.
• Costs to operate under COVID may be greater than anticipated
• Potential for emergency or compliance repair is a risk given recent history and may affect

financial sustainability for a limited reopening. (e.g., HVAC, Fire Alarms, electrical outages)

• There is the potential that maintenance and repair costs can potentially be double of what is

budgeted.

Risks

Scenario 1 Opens August 2020: Advantages & Risks

• Inability to accommodate groups that are 50 persons or more will result in additional

cancellations for larger group business.

• Accommodating groups that include 50 (unrelated) persons or less may pose risk of a

COVID spread at the fort.

• Adhering to the Governor’s group gatherings restriction is estimated to be a service and

cost challenge as well as safety challenge (i.e., managing social distances and masks protocols inside buildings)

• Opening Taps could yield low revenue margins.

Risks

Scenario 1: Lodging Accommodations Projection Assumptions

2020 Projections Q3: Current Business on the Books (BOB) revenue for Aug & Sept is 16% of average revenues ($745,313) for past 3 years.

• Average occupancy on BOB is estimated at 18%. Last 3 years average has

been 65%.

• Projected revenue is 6% more than BOB with a projected occupancy

increase of 5%. Q4: Current BOB revenue is 29.6% of average revenues ($543,000) for past 3 years.

• Average occupancy on BOB is estimated at 10%. Last 3 years average has

been 35%.

• Projected occupancy is doubled from 10 to 20% and total revenues as well.

Scenario 1: Lodging Accommodations Projection Assumptions

2021 Projections Q1: Current BOB revenue is .04% of average revenues from past 3 years.

• Average occupancy on BOB is estimated at less than 1%. Last 3 years

average has been 30%.

• Projected occupancy is increased to 12% and revenues to 40%.

Scenario 1: Fort Worden Services Open Aug 2020 Lodging/Accommodations July 2020 –March 2021

Assumptions

• There is potential for increased leisure travelers due to pent-up demand from I-5 corridor.
• 60% of reservations’ weekly communications have been closed since February
• Fort Worden’s lodging facilities, location and open space for outdoor activities makes it a

very desirable spot to come and stay.

• The Cottage Collection, NCO Row, Officers Row, Bricks and the Lofts will be reserved at

no more than 50%. Dorms will be off line. Approximately 40% of bookings for these units have been leisure.

• The ADR is over $500 for Aug with a current 20% occupancy for all units represents

strong sales opportunities.

Scenario 1: Fort Worden Services Open Aug 2020 Lodging/Accommodations July – December 2020

Assumptions Overall operating costs are planned to be lower than if the Commons and Front Desk were open and despite increased cleaning requirements. Examples of a few are:

• Leisure travelers will check in on the porch of the Sales office in house 15.
• Cleaning a unit will wait one day before housekeeping enters, providing a wait

period that reduces extra-ordinary efforts for cleaning. We plan to purchase ultra- violet ray cleaning equipment that will reduce the labor time and provide better sanitization.

• Dishes and other kitchenware will be reduced to a minimum. At check-out all

kitchen wares will be removed and sterilized through our commercial

• dishwashers. The dishwasher labor cost is included in the restaurant budget.

Reservations on the Books

Month Group Leisure Standard Leisure NR Third Party Total Leisure Total Aug $3,730 $106,856 $124,306 $923 $232,085 $235,815 Sept $21,236 $32,347 $87,327 $112 $119,786 $141,022 Oct $12,172 $7,773 $32,167 $408 $90,348 $102,520 Nov $27,218 $7,222 $19,034 $0 $46,256 $73,474 Dec $17,840 $7,101 $6,325 $0 $28,426 $46,266 2020 $82,196 $161,299 $269,159 $1,443 $516,901 $599,097 Jan $2,998 $1,749 $5,848 $0 $7,597 $10,595 Feb $99,786 $0 $0 $0 $0 $99,786 Mar $9,000 $598 $6,408 $0 $7,006 $16,006 Q1 2021 $111,784 $2,347 $12,256 $0 $14,603 $126,387

Scenario 1: Occupancy Rates

PRODUCT TYPE: OCC % Leisure COTTAGE 41.67 OROW 30.64 NCO 48.51

2017

PRODUCT TYPE: OCC % Leisure COTTAGE 54.49 OROW 34.36 NCO 56.19

PRODUCT TYPE: OCC % Leisure COTTAGE 52.51 OROW 34.53 NCO 57.09 * Jan-April 2019 NCO was offline

2018 2019

2017 2018 2019 ADR OCC % REV ADR OCC % REV ADR OCC % REV Total $385 41.10% 2,627,240 $ $219.45 46.75% 2,816,363 $ $405 44.35% $2,997,541

Annual Revenue and Rates for Product Types

Scenario 1: Lodging Reservations Overview

Business On Books 2020 ADR OCC % REV August 525 $ 20% $232,085 September 556 $ 15% $119,786 October 495 $ 10% $90,348 November 428 $ 5% $46,256 December 322 $ 3% $28,426 Total $516,901 2021 Jan 584.38 0.49%

7,597 $

Feb March 333.45 1%

7,006 $

$14,603

Business On the Books 2017 2018 2019 2020 BOB Projection Q3 1,172,101 $ 1,203,742 $ 1,326,706 $ 351,871 $ 430,050 $ Q4 494,172 $ 543,693 $ 558,024 $ 165,030 $ 330,060 $ 1,666,272 $ 1,747,435 $ 1,884,731 $ 516,901 $ 760,110 $ 2017 2018 2019 2021 BOB Projection Q1 294,799 $ 433,794 $ 332,913 $ 14,603 $ 141,534 $ Actual Quarterly Revenues

Scenario 1: Fort Worden Services Open Aug 2020 Lodging/Accommodations 2020

2021 Revenues Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Quarter 1 Accommodations 266,387 430,050 305,000 1,001,437 141,534 Other Revenue 12,119 16,302 14,250 42,671 1,000 Total Revenues 278,506 446,352 319,250 1,044,108 142,534 Expenses Personnel Salaries & Wages Pre Covid Staffing 123,211 123,211 Post Covid Skeleton Crew 37,486 28,980 28,980 95,446 28,980 Post Covid Reopening Crew 47,320 67,020 114,340 67,020 Total Personnel 123,211 37,486 76,300 96,000 332,997 96,000 Benefits & Payroll Costs 33,381 17,286 22,434 22,434 95,535 22,434 Repairs & Maintenance 10,000 12,500 22,500 12,500 Utilities 131,225 57,000 54,000 72,000 314,225 72,000 Contracts

• General Operating Expenses

22,600 5,800 19,600 24,000 72,000 20,000 PPE/Sanitization Supplies

• Total Expense

310,417 117,572 182,334 226,934 837,257 222,934 Net Revenues

• 31,911
• 117,572

264,018 92,316 206,851

• 80,400

2020

Scenario 1: Fort Worden Services Open August 2020 Restaurants July 2020 – December 2020

Assumptions--TAPS

• There will be a limited menu
• Open hours will be determined by sales and activity. Budgeted to be open Thurs

through Monday.

• Outdoor seating only
• There will be two main sections each served by a server and one bus person

during busy periods.

• There will be one bartender working a shift. Kitchen will need one prep and one

main chef.

• The patio will be reconfigured to have a total of 13 tables and able to seat a total of

42 people.

Scenario 1: Fort Worden Services Open August 2020 Restaurants July 2020 – December 2020

Assumptions--Canteen

• The menu will be the same as last year.
• It will only open if camping is open.
• Open 7 days a week from 12 to 6.
• There will not be any indoor service or seating.
• There is a remodel cost to moving the POS and services to a spot that

accommodates orders that take place outside the building.

• There will not be any retail sales.
• There will be one cashier/runner, a main cook and a prep cook Monday-Thurs.

Friday-Sunday. There is a second part-time runner that assists in standard peak hours.

Scenario 1: Fort Worden Services Open August 2020 Restaurants July 2020 – December 2020

TAPS Jul 20 Aug 20 Sept 20 Oct 20 Nov 20 Dec 20 Total Revenues Food Sales Alcohol Sales (50% of 2019 Sales) 16,000 12,000 9,000 37,000 Food Sales (50% of 2019 Sales) 20,000 15,000 12,000 47,000 Total Revenues 36,000 27,000 21,000 84,000 Expenses Cost of Goods (33%) 11,880 8,910 6,930 27,720 Personnel Salaries & Wages (50% of Revenues) Reopening Crew 1,600 17,100 13,500 10,500 42,700 Benefits & Payroll Costs 240 2,565 2,025 1,575 6,405 Repairs & Maintenance 500 500 500 500 2,000 Utilities 0.00 Contracts 0.00 General Operating Expenses 250 750 750 750 2,500.00 Total Expense 2,590 32,795 25,685 20,255 81,325 Net Revenues

• 2,590

3,205 1,315 745 2,675

Scenario 1: Fort Worden Services Open August 2020 Restaurants July 2020 – December 2020

CANTEEN Jul 20 Aug 20 Sept 20 Oct 20 Nov 20 Dec 20 Total Revenues Food Sales 32,000 30,000 62,000 Total Revenues 32,000 30,000 62,000 Expenses Cost of Goods 9,600 9,000 18,600 Personnel Salaries & Wages Reopening Crew 900 11,650 11,650 24,200 Benefits & Payroll Costs 117 1,515 1,515 3,146 Repairs & Maintenance 1,000 500 500 2,000 Utilities 0.00 Contracts 0.00 General Operating Expenses 250 750 750 1,750 Total Expense 2,267 24,015 23,415 49,696 Net Revenues

• 2,267

7,986 6,586 12,304

Scenario 1: Fort Worden Services Open August 2020

2021 Revenues Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Quarter 1 Accommodations 266,387 430,050 330,040 1,026,477 141,534 $ Catering: Food & Alcohol Sales 105,953 105,953 Restaurant: Canteen 62,000 62,000 Restaurant: Taps 75,117 63,000 21,000 159,117 Restaurant: Reveille 65,492 65,492 Total Food & Alcohol Sales 246,562 125,000 21,000 392,562 Leases 29,400 29,400 29,400 29,400 117,600 29,400 Other Revenue 70,768 33,000 16,302 14,250 134,320 1,000 PPE Reimbursement Grant 33,500 9,840 43,340 590 Grants/Donations 27,000 90,400 9,840 45,000 172,240 Total Revenues 640,117 152,800 644,092 449,530 1,886,539 172,524 2020

Scenario 1: Fort Worden Services Open August 2020

2021 Expenses Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Quarter 1 Cost of Goods 86,813 39,390 6,930 133,133 Personnel Salaries & Wages Pre Covid Staffing 665,866 665,866 Limited Operations Staffing 135,486 79,650 79,650 294,786 79,650 Reopening Staff 140,050 113,850 253,900 103,350 Total Personnel 665,866 135,486 219,700 193,500 1,214,552 183,000 Benefits & Payroll Costs 155,721 129,852 43,460 37,059 366,092 35,484 Repairs & Maintenance 10,950 21,000 20,500 52,450 24,000 Utilities 131,225 57,000 54,000 72,000 314,225 86,400 Contracts 54,690 46,500 46,500 46,500 194,190 91,500 General Operating Expenses 126,451 23,262 44,100 47,250 241,063 46,500 PPE/Sanitization Supplies 4,549 900 51,840 7,090 64,379 1,770 Total Expense 1,236,265 393,000 519,990 430,829 2,580,084 366,000 Net Revenues

• 596,148
• 240,200

124,102 18,701

• 693,545
• 193,476

2020

Scenario 2: Fort Worden Services Open April 2021 General Assumptions

• Current staff gets reduced additional hours and remains at PDA on part-time

basis until April 2021 with expectation of increased staff turn over as a result.

• Makers Square is completed by end of October 2020
• Historic Tax Credits are secured by end of year to fund skeleton crew and April

reopening

Scenario 2-- Opens April 2021: Advantages & Risks

• Less risk to not reopen and need to close due to COVID threats
• Staff can focus on mobilization funding for reopening in April and seek

funding to for repairs and permanent building improvements during closure.

• Staff, board and partners have more bandwidth to work on new business

model for a “new normal” Advantages

Scenario 2-- Opens April 2021: Advantages & Risks

• No summer revenues other than leases; cash flow comes to a halt
• It will be more difficult to secure a credit line without revenues
• FEMA Emergency Covid Funds may no longer be available to cover PPE/sanitizing costs
• More leisure and group cancellations and refunds; increase financial risk
• May lose key staff due to later reopening; Will require payout of employee vacation benefits
• Recruiting new staff in 2021 may be more difficult
• Potential loss of public confidence and increase in uncertainty about Fort’s future
• Glamping construction restarts in 2021and may not be completed for April reopening

Risks

Scenario 2: Fort Worden Services Open April 2021

Initial Draft Presented at Special Board Meeting June 12, 2020

2021 Revenues Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Quarter 1 Accomodations 266,387 266,387 Food Sales 246,563 246,563 Leases 29,400 29,400 58,800 29,400 Other Revenue 70,768 33,000 29,400 29,400 162,568 Grants/Donations 27,000 90,400 117,400 Total Revenues 640,118 152,800 29,400 29,400 851,718 29,400 Expenses Cost of Goods 86,813 Personnel Salaries & Wages 665,861 124,500 79,550 79,500 949,411 79,500 Benefits & Payroll Costs 155,721 140,000 22,500 22,500 340,721 22,500 Repairs & Maintenance 10,950 7,500 7,500 25,950 7,500 Utilities 131,225 57,000 54,000 60,000 302,225 60,000 Contracts 54,690 46,500 46,500 46,500 194,190 91,500 General Operating Expenses 131,000 25,000 22,500 22,500 201,000 22,500 Total Expense 1,236,260 393,000 232,550 238,500 2,100,310 283,500 Net Revenes

• 596,142
• 240,200
• 203,150
• 209,100
• 1,248,592
• 254,100

2020

Cash Flow Considerations

Limited Reopen Aug 2020 Full Reopen April 2021 Additional Cash Flow Required to Carry through to April 2021 $250,000 ($50,000 in 2020 and $300,000 in 2021) $700,000 (400,000 in 2020 and $300,000 in 2021) Advance Deposit Short Term Liability as of 6/15/2020: Total: $226,802 2020 Reservations Balance: $36,275 2021-22 Reservations Balance: $190,527 Compensated Absences (Vacation Payout) Short Term Liability as of 6/15/20: Total estimate: $97,000 $35,000 $62,000

Makers Square

An estimate of at least $1 million in HTC proceeds will become available at the end of Makers Square project By end of July-early August the project will be in a positive cash position of over $500,000 due to reimbursable grants

New Short-Term Credit Line

The credit line will need to be based

• n secured contracts or clear revenue

streams.

Potential Sources of Cash Flow

A new source of funds will need to be secured to continue in either reopen budget scenarios.

Committee Discussion

To convene at the June 24, 2020 Board Meeting