CObIhZISSION
AGENDA
PORT OF SEATTLE
hIEhIORANDUb1
Item
No. 6f
Date
of
Meeting
Aligtist
25,2009
DATE:
July
7,
2009
TO:
Tay Yoshitani, Chief Executive Officer
FROM:
Joan Knutson, Assistant Manager, Industrial P
.
pertiesl
Scott Pattison, Manager, Industrial Propertie$@
SUBJECT:
Fourth Amendment to City Ice Cold Storage Company's Lease #13
1
at Terminal
9
1
REQUESTED ACTION:
Request for Port Commission authorization for the Chief Executive Officer to execute .the
Fourth Amendment to Lease #LO0013 lwith CityIce Cold Storage Company allowing
subleases and assignments subject to Port's prior written approval and conditions of such
approval.
BACKGROUND:
CityIce Cold Storage Cornpany (
"
CityIce
"
) is a long
-
term tenant of the Port of Seattle
(
"
Port
"
) at Terminal
9
1. CityIce holds four leases with the Port
-
for land, cold storage
facilties and dry warehouse buildings.
CityIce entered into lease
#LO00 13 1 with the Port on November 10, 1987. This lease
was subsequently
amended on May 14, 199 1, June 8, 1993 and May 30, 2003. The lease
has strict lirnitations on the ability to sublease or assign the lease which hamper the
interests of the Port and CityIce.
This proposed Fourth Amendment to the lease affords CityIce the ability to sublease or
assign the lease to other parties subject to prior written approval of the Port and subject to
any cotlditions
OF
such approvril.
1)ESCRIYTION AND JUSTIFICArTION:
CityIce curscntly has several subtenants under this lease. which is not in
conlpliance with suhlcase tcrnls of the lease as currently written.
Anlending the lease to allow sitbleases or an assig~lnlent
of
the lease, sub.jcct to
prior
written approval
of
the Post and s~tb.jcct to any conditions
of
s11c.h approval,
COhIILlISSION LIGENDA
Tay
Y
mhitani, C11it.L' Esccut i\,c Ot't'iccr
July
07,
2009
Page
2
of
3
would cnahle Cityice
to
bring the agrccnicnt inlo compliance wit11 terms
of
the
lease, while retaining key business partners.
Affording CityIce the ability to propose sublease and
or
assign~nent of the lease
woilld allow the Port to entertain alternative co~n~nercial arrangements that may
better serve Port interests over time.
Upon approval of the Fourth Amendment, Port staff would draft
"
Conditional
Consent to Sublease
"
documents for existing subleases under this lease.
The Port and CityIce would then work collectively to ensure the lease is brought
into, and maintained in full
compliance
with these lease terms and conditions.
The
"
Assignment and Sublease
"
sections of the lease would be co~lsistent with
current Port practices.
STRATEGIC' OBJECTIVES:
Ensure lease terms and conditions are monitored and maintained in full
compliance over the lease term.
Establish lease terms and conditions that are commercially viable and serve the
interests of the Port.
BUSINESS PLAN OBJECTIVES:
Proceeding with this Amendment would allow this tenant to bring its lease into
compliance, while retaining strategic subtenants that serve the mutual interests of
CityIce and Port in the short and long term.
FINANCIAL IMPLICATIONS:
-
--
-
brrent request for authll
BudgetIAuthorization Summary
brevious Authorizations
Source of Funds
None
I
I
Total Authorizations, including this request
Remaining budget to be authorized
No funds
needed.
None
I
None
1
COTIIhIISSION
'1GENDA
Tay Yo\hitani. C'hic't' Excci~ti\.c OUficcr
July 07,
ZOOC)
Pagc
3
oL'
3
Financial Analysis Summary
Kisk adjusted
Discount rate
CIP Category
Proiect
Tv~e
N/ A
N/A
Key
risk factors
Project cost for
analvsis
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS:
Assigri~nent, subletting, or license by CityIce does not
relieve tenant of any obligation under the lease thereby
mitigating default
risk of potential assignees.
None
Business Unit (BU)
Effect on business
performance
Do not revise lease terms for subleases or assignments. CityIce would be required
to terminate and evict existing subtenants, and the Port would not have the ability
to assess
.the nierits of such subtenancies. This may not serve the Port's short or
long-term objectives and is therefore not recommended.
Amend the current lease agreement's sublease and assignment terms to those
more consistent with Port lease agreements, .thereby: enabling the Port to bring
the current lease into
full compliance while retaining those subtenants deenned in
the Port's interest; and
lo~lger term, the Post would have the ability to consider
proposed sublease or assig~l~nent alternatives and accept. condition, or deny on
a
case
-
by
-
case basis. This is the recommended a1 ternative.
Industrial Properties
This a~nendment waives the obligation of CityIce to provide
the Port with a percentage of excess rent in the event a
subtenant pays CityIce
inore than the rent they pay to the
Port.
I'KEVIOUS CONIlCIISSION ACTIONS OK BKIE=FIN<;S:
Noveniber 10, 1987
-
CityIce entered into leasc
#LOO0
13
1
with the Port
May
14.
199
1
-
First Aniendmcnt
J~lne 8. 1993
-
Second Aniendincnt
May
30,
2003
-
Thirtl Amendment
