PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No.
6c
Date of Meeting
June 14, 2011
DATE: June 3, 2011
TO: Tay Yoshitani, Chief Executive Officer
FROM: Michael Ehl, Director, Airport Operations
Wayne Grotheer, Director, Aviation Project Management Group
SUBJECT: Gate Aircraft Utilities Improvements Projects (CIP # C800019)
Amount of This Request: $3,498,000 Source of Funds: Airport Development Fund
State and Local Taxes Paid: $736,000 Jobs Created: 21
Total Estimated Cost of Project: $13,211,000 (including expense)
ACTION REQUESTED:
Request Port Commission authorization of an additional $3,498,000, bringing the currently
authorized capital amount to $12,883,000, and authorizations for the Chief Executive Officer to
proceed with the final design and execute a contract to purchase equipment for the Seattle-
Tacoma International Airport (Airport) Gate Aircraft Utilities Improvements Project (#C800019).
SYNOPSIS:
Currently there are 31 Airport-owned gates on Concourses B and C, and the North and South
Satellites that do not have full utility capabilities. There are varying amenities at these gates,
including 400 Hz ground power supply and potable water. Airlines are paying the same lease rate
regardless of the amenities provided. This project would bring the thirty-one “utility deficient”
Port-owned gates up to the same standard, including 400 Hz power and potable water. This
project has been coordinated with the air carriers involved in the realignment program and
includes future aircraft requirements. This project would replace three outdated airline-owned
400 Hz motor generator sets with Port-owned 400 Hz motor generator sets, simplifying
operational and maintenance concerns.
BACKGROUND:
This project was authorized in June 2007 under a project wide authorization. Design was
completed to a 90% level in December 2008, at which time the project was placed on hold due to
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 2 of 5
the economic environment and financing uncertainty in the bond market. In July 2010 the project
was reactivated at the 90% level, requiring that a design review be completed to ensure site
conditions had not changed and to coordinate with other ongoing projects. During review it
became apparent that scope needed to be changed to accommodate additional gates, as well as to
move some scope to other projects that were underway in an effort to minimize disruption to
airline operations. Two gates were added to the scope, along with a third 400 Hz motor generator
set for the South Satellite gates, and power centers had to be upgraded to provide additional
electrical capacity. The current project to provide pre-conditioned air to aircraft has taken
advantage of the available electrical capacity at these power centers. Due to the very long lead
time for 400 Hz motor generator sets, prepurchase by the Port is required to reduce the
construction duration.
The additional $3,498,000 is needed for the final design of the additional scope of work,
additional staff resources, and the purchase of the additional motor generator set. The new
project capital budget is $12,883,000.
PROJECT JUSTIFICATION:
Project Objectives:
Enable the Airport to gain more flexibility to maximize the use of each gate
Extend the service life of each gate through refurbishment of major components and systems
to increase reliability
Reduce the possibility of a carrier being assigned to a gate without the same amenities
Advance the Port’s goal of standardizing Port-provided amenities at all gates
Provide sufficient power at International Gates to support the next generation of large aircraft
PROJECT SCOPE OF WORK AND SCHEDULE:
Scope of Work:
The scope of work for this project includes the replacement of 400 Hz and potable water utilities
at 31 Airport owned gates. The Port will purchase and dispose of three airline owned 400 Hz
motor generator sets and prepurchase five new 400 Hz motor generator sets to provide adequate
power at all gates, including new generation wide body aircraft at the South Satellite. Design will
be completed by amending the existing sole source service agreement. Staff will return to the
Commission in September to request final authority to advertise for construction.
Schedule:
Design June - August 2011
Advertise for Equipment Purchase August 2011
Commission Authorization to Advertise September 2011
Advertise Construction Project October 2011
Award Equipment Contract October 2011
Equipment Manufacturing November 2011–April 2012
Notice to Proceed December 2011
Construction Complete December 2013
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 3 of 5
FINANCIAL IMPLICATIONS:
Budget/Authorization Summary:
$9,385,000
$3,498,000
$12,883,000
$328,000
$13,211,000
$9,385,000
$3,498,000
$12,883,000
$ 0
Project Cost Breakdown:
Construction Costs
$ 6,144,000
Port prepurchased equipment
$3,332,000
Sales tax
$736,000
Outside professional services
$1,096,000
Port soft costs
$1,575,000
Total
$12,883,000
Budget Status and Source of Funds:
This project is included in the 2011-2015 capital budget and plan of finance within CIP
#C800019 with a budget of $9,385,000. The funding source will be the existing 2010 revenue
bonds. Upon Commission approval of this request, the capital budget increase will be transferred
from the aeronautical allowance CIP so that there will be no change in the total Aviation capital
budget as a result of this cost increase.
Financial Analysis and Summary:
CIP Category
Renewal/Enhancement
Project Type
Renewal & Replacement
Risk adjusted Discount rate
N/A
Key risk factors
N/A
Project cost for analysis
$12,883,000
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 4 of 5
Business Unit (BU)
Terminal – Airline Equipment
Effect on business performance
NOI after depreciation will increase
IRR/NPV
N/A
CPE Impact
CPE will increase by $.09 by 2013, but no
change to the business plan forecast as this
project was included. The additional
operating costs associated with regulated
materials will be incorporated into the 2012
budget, and will add approximately $.02 to
CPE. The airlines will realize lower
operating and maintenance costs.
Lifecycle Cost and Savings:
The additional annual operating and maintenance costs associated with this project has been
calculated by Aviation Maintenance at approximately $10,000 per gate per year based on 2010
actual costs for a total of $310,000 for the first year plus an estimated 3% inflation escalation
thereafter. Budgeted costs for 2011 and beyond will require additional full time equivalent
(FTE) staff members to maintain the added gates utility systems.
ENVIRONMENT AND SUSTAINABILITY:
The project will facilitate greater utilization of gates throughout the Airport, thus reducing the
potential need for, and the environmental impact of, major new and costly construction to
increase the total number of gates and associated holdrooms. Running an aircraft’s auxiliary
power unit (APU) in lieu of utilizing a 400 Hz ground power system is expensive in fuel costs
and is environmentally insensitive. There are significant air quality benefits to installing these
centralized 400 Hz ground power electrical systems at all the gates since these systems will
eliminate the need for the aircraft’s APUs to run and eliminate the diesel powered 400 Hz ground
power units. This project exhibits good environmental stewardship by reducing air emissions and
reducing the airlines’ consumption of fossil fuels. The design life of the systems in this request is
30 years and it is expected after that time they will need to be replaced.
STRATEGIC OBJECTIVES:
The Gate Aircraft Utilities Improvements Project supports two of the Port’s Strategies and
Objectives, notably:
This project promotes the Port’s strategic goals to “Ensure Airport and Seaport Vitality” and “Be
a Catalyst for Regional Transportation Solutions” by providing the airlines and the Airport with
greater facility flexibility. Flexible gate operations will allow for greater and more efficient
utilization of the Airport’s existing facilities.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 5 of 5
TRIPLE BOTTOM LINE SUMMARY:
This project supports the Airport’s initiative to standardize equipment and provides the flexibility
the Airport needs to assign gates and to operate more efficiently. The traveling community will
also benefit from increased airline availability to modern, functional gate equipment.
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS:
ALTERNATIVE 1: Replace the utilities at 31 gates as described in order to optimize gate
flexibility, alleviate conflict between ownership and user, accommodate growth, and add further
Port-owned Gates into the inventory by providing authorization to complete the design scope of
utilities at the 31 Gates at Concourse B, Concourse C, and the North and South Satellites and to
prepurchase long lead 400 Hz motor generator sets. This is the recommended alternative.
ALTERNATIVE 2: Do nothing: Advertise the construction contract at the current state of
design and construct the improvements on the majority of gates. This would cause two gates to
be incomplete and the South Satellite would have insufficient power for new generation aircraft.
This alternative is not recommended.
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST:
None.
PREVIOUS COMMISSION ACTION:
On June 4, 2007, the Commission approved a project wide authorization of $9,385,000 (CIP
#C800018) to replace the 400Hz systems at the South Satellite and Concourse B and to upgrade
the 29 deficient gates with 400 Hz equipment and Potable Water Cabinets.