Template revised September 22, 2016.
COMMISSION
AGENDA MEMORANDUM
Item No.
6a
ACTION ITEM
Date of Meeting June 27, 2017
DATE: May 5, 2017
TO: Dave Soike, Interim Executive Director
FROM: Jeffrey Brown, Director Aviation Facilities and Capital Programs
James Schone, Director Aviation Business Development
Wayne Grotheer, Director Aviation Project Management
SUBJECT: Central Terminal Infrastructure Upgrade (CIP #C800722)
Amount of this request:
$4,032,000
Total estimated project cost:
$16,834,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) transfer ADR Infrastructure
Modifications project scope and associated budget of $6,190,000 (CIP C800638) to the Central
Terminal Infrastructure Upgrade project (CIP C800722); (2) increase this combined CIP budget
by $4,032,000 for the construction of the project; (3) use Port crews and small works contracts
for construction work; and (4) advertise and award a major works construction contract for the
Central Terminal Infrastructure Upgrade project. This authorization is for $4,032,000 for a total
estimated project cost
of $16,834,000.
EXECUTIVE SUMMARY
The purpose of the Central Terminal Infrastructure Upgrade project is to provide the shell space
and associated vertical circulation for expansion of and improvements to the Airport Dining and
Retail (ADR) space in the Central Terminal in order to improve customer service and increase
non-aeronautical revenues.
In August 2016, the ADR Infrastructure Modifications project was advertised and the single bid
received was 127 percent above the engineers estimate. Similarly, in October 2016, the Central
Terminal HVAC Upgrade project was advertised and the single bid received was 197 percent
above the engineers estimate. Both procurements were cancelled in October 2016. In an effort
to attract multiple bidders and obtain competitive bids, the two projects will be re-advertised as
one project with revisions made to address concerns expressed by the single bidder for both
projects.
COMMISSION AGENDA – Action Item No. _6a_ Page 2 of 5
Meeting Date: June 27, 2017
Template revised September 22, 2016; format updates October 19, 2016.
JUSTIFICATION
Improvements to the Central Terminal infrastructure support economic growth and future
passenger demands for products and services. Developing spaces that are currently unused
and repurposing and reconfiguring existing spaces will enable the Port to meet future
passenger demands. Current space demand analysis shows there is a need in the Central
Terminal for an additional 12,000 square feet of Airport Dining and Retail space to meet the
anticipated 2025 passenger projections. This project will add approximately 10,000 square feet
of new Airport Dining and Retail space to the Central Terminal. This project will also ensure
that the base building systems and all points of connection for utilities are code compliant.
Small Business
Under the current scope of work, this project presents a number of opportunities for small
businesses to participate. The Small Business team along with the Port’s Project Management
staff will be promoting this project under the Port’s Small Business Generator Program (Port-
Gen) to maximize small business knowledge of this project. The aspirational goal is 30 percent
small business participation and the Small Contractors and Suppliers requirement will be
determined by the Small Business team.
Scope of Work
Upgrade the infrastructure in the Central Terminal to include adding new Heating Ventilation
Air-conditioning air handling units, variable air volume boxes, plumbing, electrical, mechanical
systems demising walls, elevators and stairways, demolition in order to prepare the mezzanine
and all Central Terminal spaces for future tenant build-out projects. This will require closing all
Central Terminal tenant spaces in multiple phases in order to accomplish the work.
Schedule
Activity
Design start
4
th
Quarter 2016
Construction start
1
st
Quarter 2018
In-use date
4
th
Quarter 2019
Cost Breakdown
This Request
Total Project
Design
$0
$1,851,000
Construction
$4,032,000
$14,983,000
Total
$4,032,000
$16,834,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Do not upgrade the Central Terminal Infrastructure
COMMISSION AGENDA – Action Item No. _6a_ Page 3 of 5
Meeting Date: June 27, 2017
Template revised September 22, 2016; format updates October 19, 2016.
Cost Implications: $1,851,000 in design effort would need to be expensed. This combined
design is 90% complete.
Pros:
(1) No capital investment required.
(2) The need to invest in upgrading the Central Terminal Infrastructure could be deferred if
the Central Terminal mezzanine spaces will remain unoccupied and not developed for
public use.
Cons:
(1) Increased passenger demand for food service in the Central Terminal cannot be met
without expansion into the undeveloped spaces on the mezzanine levels.
(2) The planned ADR Lease Group 3 tenant spaces in the Central Terminal would not be
remodeled as part of the Central Terminal Infrastructure Upgrade project. That scope of
work would need to be completed by another project
This is not the recommended alternative.
Alternative 2 – Upgrade the Central Terminal Infrastructure
Cost Implications: $16,834,000
Pros:
(1) Design for Central Terminal Infrastructure Upgrade project is 90% complete.
(2) Enables the ADR Lease Group 3 expansion into the mezzanine spaces not currently
being used by the traveling public.
(3) Concerns expressed by the single bidder for the prior design have been addressed.
Cons:
(1) Requires capital investment by the Port of Seattle.
(2) Project will require complex construction in support of the planned expansion that will
affect the traveling public; closure of tenant spaces during construction.
(3) An additional $4,032,000 is required to complete the project.
(4) Estimated total cost to complete this project is $16,834,000.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate, CTE HVAC
$6,589,000
$23,000
$6,612,000
Original estimate, ADR Infrastructure (transfer)
$6,190,000
$0
$6,190,000
COMMISSION AGENDA – Action Item No. _6a_ Page 4 of 5
Meeting Date: June 27, 2017
Template revised September 22, 2016; format updates October 19, 2016.
Current change
$4,032,000
$0
$4,032,000
Revised estimate
$16,811,000
$23,000
$16,834,000
AUTHORIZATION
Previous authorizations
$12,779,000
$23,000
$12,802,000
Current request for authorization
$4,032,000
$0
$4,032,000
Total authorizations, including this request
$16,811,000
$23,000
$16,834,000
Remaining amount to be authorized
$0
$0
$0
Annual Budget Status and Source of Funds
This project, CIP C800722, was included in the 2017-2021 capital budget and plan of finance
with a budget of $6,589,000. The revised estimate includes a scope transfer for the ADR
Infrastructure Modifications project from CIP C800638 Concession Infrastructure with a budget
amount of $6,190,000 and a budget increase of $4,032,000 transferred from the Aeronautical
and Non-aeronautical Allowance CIPs. The funding source will be 2018 revenue bonds.
Financial Analysis and Summary
Project cost for analysis
$16,811,000
Business Unit (BU)
Terminal Building (HVAC) and Terminal Non-Aeronautical
(vertical circulation)
Effect on business performance
(NOI after depreciation)
NOI after depreciation will increase
IRR/NPV (if relevant)
14% / $19.6 million
CPE Impact
$0.05 in 2020
Future Revenues and Expenses (Total cost of ownership)
Aviation Maintenance anticipates only a minimal increase in Operations & Maintenance costs
with respect to the additional 13 Variable Frequency Drives and the Light Emitting Diode
lighting for the sides of the two staircases which will be absorbed with current resources. No
impact is anticipated as a result of the renewal and replacement of existing equipment. There
will be an increase in O&M costs related to the two additional elevators of approximately
$35,000/year on the current elevator service contract, and a total annual increase of $8,000 for
the two additional HVAC units as a result of this project.
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
(2) Video presentation
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
August 9, 2016 – Central Terminal Expansion Heating Ventilating and Air-conditioning
Upgrade Construction Authorization (CIP C800722)
COMMISSION AGENDA – Action Item No. _6a_ Page 5 of 5
Meeting Date: June 27, 2017
Template revised September 22, 2016; format updates October 19, 2016.
June 28, 2016 – Airport Dinning & Retail (ADR) Infrastructure Modifications Construction
Authorization (CIP C800638)
May 26, 2015 – the Port Commission authorized design and construction documents for
Central Terminal HVAC Upgrade Project
October 28, 2014 – Authorization for Airport Dining and Retail Infrastructure Modifications
(CIP C800638)
June 25, 2013 – Authorization for United Services Organization Northwest Lease and
Associated Second Floor Utilities Preparations (CIP C800615)
January 22, 2008 – Authorization for the upgrade of heating, ventilation, and air-
conditioning (HVAC) system to the north side of the second floor of Main Terminal
Administration Building/CTE (CIP C800249)
