November 10 SM Min

An audio of the meeting proceedings and meeting materials are available on the Port of

Seattle web site -

http://www.portseattle.org/about/organization/commission/commission.shtml

(The approximate point in the audio recording for the specific item is identified by

minutes and seconds; example: 01:30)

APPROVED MINUTES

COMMISSION SPECIAL MEETING NOVEMBER 10, 2009

The Port of Seattle Commission met in a special meeting at 2:00 p.m., Tuesday,

November 10, 2009 in the Commission Chambers at Pier 69, 2711 Alaskan Way, Seattle,

WA. Commissioners Bryant, Creighton, Davis, Hara and Tarleton were present.

1. CALL TO ORDER

The special meeting was called to order at 2:10 p.m. by Bill Bryant, Chair and President.

2. EXECUTIVE SESSION pursuant to RCW 42.30.110

None.

PLEDGE OF ALLEGIANCE

3. APPROVAL OF MINUTES

Motion for approval of the minutes of the October 8, 2009 special meeting –

Creighton

Second – Hara

Motion carried by the following vote:

In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5)

Commissioners

Bill Bryant

Chair and President

John Creighton

Patricia Davis

Lloyd Hara

Gael Tarleton

P.O. Box 1209

Seattle, Washington 98111

www. portseattle.org

206.787.3000

Tay Yoshitani

Chief Executive Officer

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4. SPECIAL ORDER OF BUSINESS

Commissioner Bryant noted that present at the meeting was Commissioner-elect Rob

Holland.

5. (00:01:55) UNANIMOUS CONSENT CALENDAR

a. Approval of outstanding Claims and Obligations for the period of October 1

through October 31, 2009 in the amount of $56,023,187.46

b. Authorization for Port Commission to modify the scope of previous

authorizations to complete construction of necessary improvements to the

fendering and terminal systems at Terminal 25, Pier 28 and Terminal 46 for no

net change in the current $300,000 authorization.

Request document: Commission agenda memorandum dated November 4, 2009 from

Mike McLaughlin, Director, Cruise & Industrial Properties and Mark Longridge, Capital

Project Manager

Motion for approval of Consent Items 5a and 5b – Creighton

Second – Tarleton

Motion carried by the following vote:

In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5)

Item 7a was advanced on the agenda as follows:

7. STAFF BRIEFINGS

a. (00:03:36) Briefing on the Draft Plan of Finance

Presentation documents: Commission agenda memorandum dated November 2, 2009

and computer slide presentation from Dan Thomas, Chief Financial Officer and Elizabeth

Morrison, Senior Manager, Corporate Finance

Presenters: Mr. Thomas and Ms. Morrison

Mr. Thomas commented on the Plan of Finance which is prepared annually as part of the

budget process, noting that the assumptions imbedded in the Plan at this time are based

on the preliminary budget which was presented last month.

Ms. Morrison stated that the Plan of Finance rolls up all of the work that has been done

by the operating divisions in developing their operating budgets and forecasts, their

capital improvement plans, and the assumptions on the tax levy as presented in the

preliminary budget document.

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Regarding the funding sources in the Plan include the net operating income from all of

the operating divisions and existing fund balances, passenger facility charges, customer

facility charges, existing and new revenue bond proceeds, expected grant receipts, as well

as assumptions about new bonds and tax levy funding.

Specific areas reviewed included:

 Aviation Capital Funding, 2010-2014

 Seaport Capital Funding, 2010-2014

 Real Estate Capital Funding, 2010-2014

 Corporate Capital Funding, 2010-2014

 Debt service coverage

 Port-wide Revenue Bond Debt Service Coverage, 2010-2014 – Forecast

 2010 Planned Finance Activity

Item 6e was advanced on the agenda as follows:

6. DIVISION, CORPORATE AND COMMISSION ACTION ITEMS

e. (00:17:01) Resolution No. 3631 and Resolution No. 3632, First Readings and

Public Hearing. 2010 Budget and Tax Levy

Presentation documents: Commission agenda memorandum dated November 2, 2009

and computer slide presentation from Michael Tong, Corporate Budget Manager

Presenters: Mr. Tong; Dan Thomas, Chief Financial Officer; Elizabeth Morrison, Senior

Manager, Corporate Finance; and Borgan Anderson, Senior Manager, Aviation Finance

and Budget

Mr. Thomas provided a summary of information which had been presented to the

Commission thus far related to the budget process, and noted that there had been some

changes since staff presented to the Commission in October. He stated that some of those

changes would be proposed amendments to the budget. He also noted that the meeting

shown on the slide presentation for November 24 had been rescheduled to November 23,

which would be the intended day for Second Reading and Final Passage of the Budget.

Mr. Thomas highlighted some of the budget reduction efforts taken over the past year in

preparation for the 2010 budget. After a review of all key functions, those efforts

included:

 Reduction of programs and functions

 Implementation of voluntary separation program

 Modification of medical benefits

 Elimination of 110 FTE’s

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 Reduction of O&M costs by $15M

As a highlight of major budget changes since the October 8, 2009 presentation, Mr.

Thomas commented on the following:

 Reduced operating revenues by $2.3M

 Reduced OPEB (Other Post Employment Benefits) medical costs by $3,018K

 Reduced worker compensation expense in Aviation Division by $101K

 Total operating costs reduced by $3,119K

Mr. Thomas also provided clarification to a question which had been asked at an earlier

meeting regarding an expense of approximately $780,000 within the Capital

Development Division’s Budget related to the Rental Car Facility. The question that had

been asked was whether that expense was part of the overall Rental Car Facility program

budget, and for the record, Mr. Thomas stated that those costs are part of the overall

program budget; are not part of the actual project authorization, but instead are included

in the operating budget and are paid for by CFC’s (Customer Facility Charges).

Mr. Tong reviewed the Operating Budget, both including and not including

Environmental Reserve expenses. Also reviewed was the Net Operating Income since

the year 2000.

Mr. Anderson reviewed proposed changes to the Aviation Division’s budget which

included:

 Revenues

o Reduce $200K for Ground Transportation due to reduced costs

 Expenses

o Add $1.2M for rental and demobilization costs of emergency backup

generators

o Increase $110K for International Service Incentive program

Also reviewed was a summary of the budget changes and resulting impacts of the three

changes discussed previously.

Mr. Tong then reviewed a summary of the Portwide budget with proposed changes. He

also spoke about the non-operating income summary and explained major variances. He

also clarified that in the slide (#’s 13 and 14) information being presented, the units of

dollar amounts are actually thousands rather than millions as shown on the slides..

Items with significant variances noted by Mr. Tong included:

 Revenue bond interest expense

 Interest income

 Grants and donations

 GO (general obligation) bond interest expense

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Mr. Tong then reviewed the summary of the Capital Budget by Division, commenting on

the process of the review of capital projects to decide which projects could be either cut

or deferred. He provided a breakdown of the 5-year capital plan, noting that the

preliminary business plan prospective numbers may change pending the outcome of tax

levy discussions. The Capital Improvement Plan beginning in the year 2000 was also

reviewed.

Mr. Thomas noted that this presentation does require a public hearing, and also that there

were two separate resolutions for consideration; Resolution No. 3631 which does approve

the Port’s budget and establishes the tax levy as proposed, and Resolution No. 3632,

which a resolution designed to preserve the maximum statutory limit on the tax levy,

which is separate from the actual levy that the Commission sets.

Commission Creighton stated that he believed Budget Resolution as presented, with a

recommended tax levy amount of $75M, would not receive Commission support and that

he would like to see brought forward a Resolution with a recommendation that would

have support.

Prior to further discussion, Commissioner Bryant declared the meeting an open Public

Hearing.

Public Comment regarding Item 6e was received from the following individual:

 David Freiboth, King County Labor Council. Mr. Freiboth stated his support, in

behalf of Labor, of maintaining the current level of financing on the levy, which is

$75 million as he understands it.

There were no further public comments, and the Public Hearing was declared closed.

Motion for Resolution No. 3631, First Reading, as presented – Davis

Commissioner Davis read into the record, as follows, a portion of the mission statement

which is included in the Bylaws:

“Commissioners shall safeguard the Port of Seattle as a Public Agency whose primary

mission shall be to invest public resources to advance trade and commerce, promote

industrial growth, stimulate economic development, and create jobs. This mission

depends upon the transportation of people and goods by air, water, and land, and ensures

economic vitality and a sustainable quality of life for the people of King County. The

Commission shall act to preserve scarce maritime and aviation related resources of

unique value for Port uses.”

Commissioner Creighton noted his reasons for not wanting to support a levy at an amount

of $75 million and stated that he would support an amount of $70 million, which had

been suggested by Commission Bryant.

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Commissioner Hara stated that he would also support an amount of $70 million, and

noted that he was more concerned about the levy rate

Commissioner Tarleton stated that her concern was related more to the budget than the

levy, and how the budget allows the Port to accomplish its mission..

Second to motion - Tarleton

Motion failed by the following vote:

In Favor: Davis, Tarleton (2)

Opposed: Bryant, Creighton, Hara (3)

Following further Commission discussion, a new Resolution number (Resolution No.

3634) was assigned to the Budget item, a Resolution which would include an amount of

$70 million.

Motion for Resolution No. 3634, First Reading. 2010 Budget – Creighton

Second – Hara

Motion carried by the following vote:

In Favor: Bryant, Creighton, Hara (3)

Opposed: Davis, Tarleton (2)

Prior to the vote on Resolution No. 3632, Mr. Thomas clarified that in order to pass, this

Resolution required a super majority, or 4-1 vote in favor of the item.

Motion for Resolution No. 3632, First Reading. Setting maximum tax levy capacity

– Creighton

Second – Davis

Motion carried by the following vote:

In Favor: Bryant, Creighton, Davis, Hara (4)

Opposed: Tarleton (1)

Commissioner Hara was excused from the meeting from this point forward.

Item 6d was advanced on the agenda as follows:

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d. (01:47:39) Resolution No. 3633, First Reading, the 2010 Salary and Benefit

Resolution

Request documents: Commission agenda memorandum dated November 3, 2009 from

Tammy Woodard, Senior Manager, Total Compensation

Presenter: Ms. Woodard

Ms. Woodard highlighted changes to the 2010 Salary and Benefit Resolution from the

2009 Resolution noting that changes would be minimal and noted that benefit changes

will impact employees and retirees more significantly than Resolution changes will, and

all changes will reflect a conservative approach to both pay and benefits for 2010.

Highlights reviewed by Ms. Woodard included:

 What the Salary and Benefit Resolution is

 Unique aspects of the Port

 Port salary ranges vs. Typical public employer ranges

 Considerations for 2010

 Proposed changes for 2010

 Non-represented ranges

Commissioner Creighton mentioned it may be prudent to include as a provision of the

Resolution, granting the Chief Executive Officer the authority to implement a voluntary

separation program, depending on the economic situation, should it be necessary to assist

in managing human resource costs, and which would be subject to notifying the

Commission. Ms. Woodard noted that the 2009 Resolution had been amended to include

this provision and it was kept in the proposed Resolution for 2010.

Commissioner Creighton also referred to furloughs which had been implemented in 2009

and whether or not language specific to possible implementation of future furloughs

should be included in the Resolution, and staff noted that this could be done.

Commissioner Creighton then stated that he felt the language regarding the setting of

CEO compensation needs to be further clarified

Motion for Resolution No. 3633, First Reading. 2010 Salary and Benefit Resolution

– Creighton

Second – Tarleton

Motion carried by the following vote:

In Favor: Bryant, Creighton, Davis, Tarleton (4)

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Commissioner Hara was absent for the vote.

a. (02:03:09) Authorization for the Chief Executive Officer to execute the 11

Amendment to Lease between the Port and Louis Dreyfus Corporation at the

Terminal 86 grain terminal to extend decision dates by six months for the Lessee

to notify the Port of its election to exercise its option to extend the lease term on

or before May 14, 2010, and the Port would extend its response time to August

14, 2010. The effective dates of the option period would remain unchanged.

Request document: Commission agenda memorandum dated October 22, 2009 from

Scott Pattison, Manager, Industrial Properties and Mike McLaughlin, Director, Cruise

and Industrial Properties.

Presenter: Mr. McLaughlin

Mr. McLaughlin stated that the proposed amendment would revise the date when the

Lessee may elect to exercise its next five-year option to extend their lease term. It would

also revise the date when the Port must respond to the Lessee’s notice. He stated that this

would simply allow the parties a greater length of time to negotiate a longer term

alternative, which would be beneficial to each side. Mr. McLaughlin noted that staff

would return to Commission at a future date early next year to propose a terminal

upgrade amendment or an entirely new lease proposal.

Motion for approval of Item 6a – Tarleton

Second: Davis

Motion carried by the following vote:

In Favor: Bryant, Creighton, Davis, Tarleton (4)

Commissioner Hara was absent for the vote

b. (02:11:17) Authorization for the Chief Executive Officer to enter into a

solicitation process and execute a contract for Financial Advisory Services for

five years with the right to extend for two additional years at an estimated cost

of $3,000,000.

Request document: Commission agenda memorandum dated October 29, 2009 from

Craig J. Kerr, Treasury Manager and Elizabeth Morrison, Senior Manager, Corporate

Finance

Presenter: Ms. Morrison

Ms. Morrison noted that the Port’s current financial advisory contract with Seattle-

Northwest Securities will expire April 1, 2010 and stated that staff hopes to have a new

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contract in place prior to that date so that the financial advisor can assist with letters-of

credit that expire in 2010. To be consistent with the current contract term and consistent

with the Port’s financial management practices, Ms. Morrison stated that staff is

requesting that the term of the contract be set at five years.

Motion for approval of Item 6b – Tarleton

Second – Davis

Motion carried by the following vote:

In Favor: Bryant, Creighton, Davis, Tarleton (4)

Commissioner Hara was absent for the vote

c. (02:15:33) Request for the Commission, in accordance with RCW 53.19.020(5)

to (1) grant an exemption from competition for procuring semi-annual

environmental liability support using Environmental Risk Communication Inc.

(ERCI) Defender File or Pro Form software; and (2) authorization for the Chief

Executive Officer to execute and administer a three-year contract with two one-

year options for semi-annual environmental liability support and software

upgrade and maintenance. The contract will be $150,000 per year with the total

Not-to-Exceed $750,000.

Request document: Commission agenda memorandum dated October 26, 2009 from

Stephanie Jones Stebbins, Senior Manager, Seaport Environmental Programs and David

Kleiber, Seaport Environmental Finance Manager.

Presenter: Ms. Jones Stebbins

Motion for approval of Item 6c, part 1 – Davis

Second - Creighton

Motion carried by the following vote:

In Favor: Bryant, Creighton, Davis, Tarleton (4)

Commissioner Hara was absent for the vote

Motion for approval of Item 6c, part 2 – Creighton

Second – Davis

Motion carried by the following vote:

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In Favor: Bryant, Creighton, Davis, Tarleton (4)

Commissioner Hara was absent for the vote.

8. NEW BUSINESS

Ralph Graves, Director, Capital Development Division provided a brief update on a

declaration of emergency which had been issued on this day due to an incident at Harbor

Island Marina, where a 65’ tugboat sank. He noted that the emergency declaration had

been issued due to concern of leaking fuel and the need to recover the vessel, which was

tied to a Port pier. He also stated that the owner did not have the resources necessary to

recover the vessel and that the State will reimburse the costs up to 90% if the owner is not

able to do so.

9. POLICY ROUNDTABLE – BUDGET WORKSHOP

10. ADJOURNMENT

There being no further business, the meeting was adjourned at 4:37 p.m.

(A digital recording of the meeting is available on the Port’s website)

Gael Tarleton

Vice-chair and Vice President