PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No.
5b
Date of Meeting
October 11, 2011
DATE: September 30, 2011
TO: Tay Yoshitani, Chief Executive Officer
FROM: David Soike, Director, Aviation Facilities and Capital Program
Wayne Grotheer, Director, Aviation Project Management Group
SUBJECT: Phase II Mechanical Energy Conservation Project at Seattle-Tacoma International
Airport (CIP # C800268)
Amount of This Request: $3,204,400 Source of Funds: Airport Development Fund
State and Local Taxes Paid: $223,000 Jobs Created: 12
ACTION REQUESTED:
Request Port Commission authorization for the Chief Executive Officer to execute a contract
with the Washington State General Administration Engineering and Architectural Services
Department for the Stage II Mechanical Energy Conservation project and to proceed with the
design and construction of these energy saving initiatives identified by the State’s Energy
Service Company (ESCO) audit report of June 2011 at Seattle-Tacoma International Airport
(Airport). The amount of this request is $3,204,400. The total cost of the project is $3,289,900.
SYNOPSIS:
This project will improve the energy performance of the mechanical infrastructure systems at the
Airport and reduce the Airport’s energy consumption. It demonstrates the Airport’s long-term
commitment to minimizing the Airport’s environmental impact on the region. The initial phase
of the project measured and calculated the energy savings and determined the requirements and
initiatives required to achieve those savings. This phase of the project will design and construct
those initiatives. The Interagency Agreement between the Port of Seattle and the State of
Washington General Administration allows the Port to use the Washington State contracting
procedures to execute an ESCO contract. This project will not require the Port to solicit for
Architecture/Engineering services or advertise and execute a construction contact. The ESCO
will self-perform all design and construction services. The ESCO guarantees the costs for design,
construction and the energy savings as identified in the audit report.
BACKGROUND:
On July 2, 2009, the Port of Seattle Commission authorized the Interagency Agreement between
the Port of Seattle and the State of Washington for Energy Conservation Project Management
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
September 30, 2011
Page 2 of 5
Services. That project included the installation of sensors that gathered energy usage data from
mechanical systems throughout the airport. That data was used to inform the Airport of viable
energy conservation projects. The State General Administration Office (GA) has contracts with
ESCO which allows these firms to assess and produce a detailed study outlining mechanical
systems that could be upgraded and or modified to improve their performance and reduce energy
consumption. The ESCO guarantees a minimum amount of energy savings as identified in the
audit so that any shortfall in those guaranteed savings is paid for by the ESCO. The ESCO
guarantees a maximum project cost for design and construction.
The Port has an interagency agreement with the State GA office which allows the Port to use the
ESCO to design and construct these energy savings initiatives. For this project, the annual utility
savings guaranteed is $173,000. In addition to the annual savings, the Airport will be eligible for
one-time energy incentives in the amount of $238,000 under the Bonneville Power
Administration's customer incentive program. Finally the on-going annual operational cost
savings to the Airport have been estimated to be $18,000 as a result of the interconnection of 100
terminal air delivery boxes to the central control and monitoring system and elimination of
manual changeover for plate frame free cooling.
PROJECT JUSTIFICATION:
This project will reduce the Airport’s mechanical systems energy usage.
Project Objectives:
Improve the energy performance of the mechanical infrastructure systems at the Airport in order
to reduce the energy costs to the Airport and its tenants.
PROJECT SCOPE OF WORK AND SCHEDULE:
Scope of Work:
Replace Constant Volume distribution boxes with Variable Air Volume distribution
boxes and provide New Direct Digital Controls
Isolate Central Mechanical Plant Cooling Towers to allow for extended Plate & Frame
Operation that includes replacement and installation of new isolation control valves and
associated Direct Digital Controls and piping modifications
Sequencing and Optimization of Central Mechanical Plant Chiller Programming
Modification of Airside Economizing to allow for increased heat recovery in the Main
Terminal building
Schedule:
Commission Authorization to Start Design October 2011
Start Design November 2011
Design Complete March 2012
Construction Start April 2012
Construction Complete December 2012
Performance Monitoring and Verification December 2012 - December 2013
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
September 30, 2011
Page 3 of 5
FINANCIAL IMPLICATIONS:
Budget/Authorization Summary:
The original budget did not include Port of Seattle costs for Project and Construction
Management, design reviews, Central Procurement Office charges and Regulated Material
Management. The Design and Construction costs for this project are a guaranteed maximum
based on the State of Washington GA contracting procedures for ESCO contracts.
Original Budget
$2,100,000
Revised Budget
$3,289,900
Previous Authorizations
$ 85,500
Current request for authorization
$3,204,400
Total Authorizations, including this request
$3,289,900
Remaining budget to be authorized
$ 0
Project Cost Breakdown: This Request Total Project
Construction Costs
$2,182,500
$2,268,000
Sales tax
$ 223,000
$ 223,000
Aviation PMG and other soft costs
$ 798,900
$ 798,900
Total
$3,204,400
$3,289,900
Budget Status and Source of Funds:
This project was included in the 2011 capital budget and plan of finance as a business plan
prospective project within CIP C800268 with a budget of $2.1 million. In 2009 the project was
authorized by the Commission in its preliminary estimation phase prior to full design work and
prior to necessary Port project management additions. As a result of final analysis costs have
increased. The necessary added budget will be transferred from existing available budget within
the Aeronautical Allowance CIP. The funding source will be the Airport Development
Fund. Related construction costs identified as expense costs will also be funded with the Airport
Development Fund.
Financial Analysis and Summary:
CIP Category
New/Enhancement
Project Type
Infrastructure Renewal/Replacement
Risk adjusted Discount rate
N/A
Key risk factors
N/A
Project cost for analysis
$3,289,900
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
September 30, 2011
Page 4 of 5
Business Unit (BU)
Terminal
Effect on business performance
NOI after depreciation will increase
IRR/NPV
NPV is slightly negative, IRR = 5.3%
CPE Impact
Operating cost savings essentially offset increased
capital costs resulting in no impact to CPE.
Lifecycle Cost and Savings:
ENVIRONMENT AND SUSTAINABILITY:
This project demonstrates environmental sustainability by improving existing Port assets and
better utilizing existing resources. This project has a positive effect on the environment through
reduction in energy consumption.
STRATEGIC OBJECTIVES:
This project promotes the Airport’s strategic goals to Reduce Cost per Enplanement and
implement Environmental Innovation by reducing the Airport’s energy consumption. This
project also promotes the strategic objective of leading US Airport industry in environmental
innovation and minimizing the Airport’s environmental impact through the stated goal of
reducing annual energy consumption.
BUSINESS PLAN OBJECTIVES:
The aeronautical business strategy aims to strike a right balance between meeting the needs of
our airline customers and the traveling public through cost effective means. Minimizing new
construction by making new operational improvements with up-to-date equipment and
technology helps to minimize costs to the airlines. The use of technology and thoughtful long-
term planning are key elements of the strategy.
TRIPLE BOTTOM LINE SUMMARY:
This project reduces customers’ utility bills without diminishing comfort for travelers in the
Airport terminal. In addition, the Airport continues to strive to demonstrate innovative
environmental solutions like this project.
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS:
ALTERNATIVE 1: Execute the contract with the State for the Stage II Energy Conservation
Project and have the ESCO design and build the energy savings initiatives outlined in the audit.
This is the recommended action.
ALTERNATIVE 2: Do nothing: Leave the Airport’s mechanical systems unchanged. This action
is not recommended.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
September 30, 2011
Page 5 of 5
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST:
None
PREVIOUS COMMISSION ACTION:
On July 2, 2009, the Commission Authorized the Interagency Agreement between the Port of
Seattle and the State of Washington for Energy Conservation Project Management Services and
a not-to-exceed amount of $ 85,500 to perform the study.
