Template revised September 22, 2016.
COMMISSION
AGENDA MEMORANDUM
Item No.
8b
ACTION ITEM
Date of Meeting
June 26, 2018
DATE: June 8, 2018
TO: Stephen P. Metruck, Executive Director
FROM: Jeffrey Brown, Director, Aviation Facilities and Capital Programs
Jim Schone, Director Commercial Management
Wayne Grotheer, Director, Aviation Project Management Group
SUBJECT: C1 Building Project Planning Funds Request (CIP #C800845)
Amount of this request:
$500,000
Total estimated project cost:
To be determined at conclusion of
planning and programming phase
ACTION REQUESTED
Request Commission authorization for the Executive Director to proceed with program
development, advance planning, and project definition for an expansion of the C1 Building at
Seattle-Tacoma International Airport for an amount not to exceed $500,000.
EXECUTIVE SUMMARY
The C1 Building Project will construct four additional floors on top of the existing C1 Building,
which is located adjacent to Gate C3 and between Concourses C and D at Sea-Tac Airport (see
Attachment A, Slide 2). This proposed building expansion will provide additional airport dining
and retail opportunities on the concourse level, as well as provide needed office space and
premium lounge space to answer the unmet demand from our existing tenants on the upper
levels.
JUSTIFICATION
Over the last decade, leasable space post-security at Sea-Tac has become almost non-existent
due to the continued growth of airlines and tenants’ operational and administrative needs.
Additionally, the demand for increased airport dining and retail space post-security has
significantly outpaced availability across the airport. Therefore, staff has identified the C1
Building area as a key location where the terminal can be expanded without the consumption
of additional real estate (building up rather than out). There are no other viable options for
expanding the terminal without significant negative impacts to existing capacity or operational
areas.
COMMISSION AGENDA – Action Item No. _8b_ Page 2 of 5
Meeting Date: June 26, 2018
Template revised September 22, 2016; format updates October 19, 2016.
Staff has developed a preliminary business case that shows a positive return on investment.
Further detailed planning, programming, and project definition is needed to ensure both costs
and revenues are feasible and viable.
DETAILS
The C1 Building is an existing three-level structure that was built to house the C1 in-line
baggage screening system (on the baggage claim and bridge levels) that supports Alaska
Airlines. Additionally, the building currently houses over 12,000 square feet of concession space
and nearly 12,000 square feet of administrative and operational space on the Concourse Level
leased by the Transportation Security Administration (see Attachment A, Slide 3).
During the design of the building, the airport contemplated a larger building with additional
floors. While it was not constructed this way, the building did incorporate the capacity to add
additional floors at a later time. However, the current plan adds more floors than were in the
original design and seismic codes have changed significantly. With that said, staff believes that
the C1 Building is currently the best and most cost-effective opportunity to expand for Airport
Dining and Retail (ADR), Tenant, and Passenger needs at Sea-Tac.
Airport staff has received specific requests from multiple tenants for expanded space currently
unavailable at Sea-Tac. Additionally, staff has validated demand for this expanded space as part
of the Airport Dining and Retail redevelopment plan, as well as early findings from a Terminal
Office Space study. This C1 Building project will provide needed space to meet the current
demand level, and additional future expansion will be required to meet future demand
forecasts.
A potential expansion concept has been developed as part of a previously authorized Planning
Services IDIQ. (see Attachment B, video)
With this authorization the project team will be able to confirm the project justification and
business case, tenant program requirements, preferred alternative, project budget, and a
detailed phasing and delivery program.
The proposed C1 Building expansion project would provide expanded airport dining and retail
opportunities, expanded passenger restroom facilities, and a public meditation room on the
concourse and mezzanine levels. Demand for additional tenant office space and premium
passenger lounge amenities to meet existing demand, would be accommodated on the upper
levels.
Through this detailed C1 Building expansion project development, we will develop a phased
sequencing schedule and staff will be able to determine potential impacts to the current C1
Building tenants including ADR concessionaires.
COMMISSION AGENDA – Action Item No. _8b_ Page 3 of 5
Meeting Date: June 26, 2018
Template revised September 22, 2016; format updates October 19, 2016.
Depending on how the construction phasing is established, some buyout of concessionaires
may be necessary. The project will work to develop alternatives to limit those impacts.
Although an approved project sequencing will take time to develop, staff is currently discussing
this possibility with the potentially affected tenants. With the current understanding of the
schedule, construction could potentially impact these areas in late 2021 or early 2022.
This project has no linkages to the Sustainable Airport Master Plan (SAMP). The requirements
for the project have been developed from existing ADR, passenger experience, and tenant
office and lounge space demand criteria.
Scope of Work
Perform a thorough investigation of the preliminary business case justification to affirm
positive opportunity and a sufficient return on investment.
Develop the project definition manual (PDM) that will capture the Aviation Division’s
requirements for hand-over to Aviation Project Management Group for further design
development and project execution.
Develop a phased sequencing plan for existing building operation and tenant
repositioning to be used in developing the project delivery schedule.
Provide and validate a detailed cost estimate based on scope, schedule and project
sequencing.
Analyze and determine most effective project delivery method.
Schedule
Activity
Commission authorization to continue
planning and programming effort
Alternative concepts analysis complete
Return to Commission with preferred
alternative, delivery method and overall
project budget and schedule
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Defer Action
Cost Implications: Approximately $250,000 of preliminary project planning and concept
development funds spent to date would need to be expensed.
Pros:
(1) Postpones further investment potentially making funding available for other priorities
Cons:
(1) Does not deliver needed space for new concessions and passenger amenities.
COMMISSION AGENDA – Action Item No. _8b_ Page 4 of 5
Meeting Date: June 26, 2018
Template revised September 22, 2016; format updates October 19, 2016.
(2) Does not realize an opportunity for improved passenger experience and growth in
non-aeronautical revenue
(3) Does not answer the significant outstanding tenant demand that exists for additional
office and lounge space that the Airport currently cannot accommodate.
(4) Does not provide additional jobs need to support the Port’s Century Agenda
This is not the recommended alternative.
Alternative 2 – Authorize additional funds for project definition and delivery details
Cost Implications: $500,000, Total project budget estimate $200 million - $300 million
Pros:
(1) This project shows a positive business case and provides additional lounge, Airport
Dining and Retail, office and passenger amenity space that is in short supply and
greatly needed.
(2) Additional engineering and planning funds will allow us to further define the project
and provide a more precise project definition, budget and the delivery and phasing
specifics that are required to be understood for a facility that has critical operations
and spaces currently inside the footprint.
(3) Secures a significant opportunity in Airport Dining and Retail, passenger amenity and
tenant lease space in one project.
(4) Advances the realization of supporting job creation and economic opportunities
Cons:
(1) This expansion project could constrain future financial flexibility in the support of
other priorities.
(2) This project will most likely require the relocation or buyout of existing tenants, which
will be factored into the business case evaluation. We are communicating with
tenants about the possibility.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
AUTHORIZATION
Previous authorizations
$300,000
$300,000
Current request for authorization
$500,000
0
$500,000
Total authorizations, including this request
$800,000
0
$800,000
Remaining amount to be authorized
TBD
TBD
TBD
COMMISSION AGENDA – Action Item No. _8b_ Page 5 of 5
Meeting Date: June 26, 2018
Template revised September 22, 2016; format updates October 19, 2016.
Financial Analysis and Summary
This project was approved for inclusion in the Aviation capital plan in 2016 with an estimated
cost of $50 million for a substantially smaller and simpler project. Recent planning work
indicates the need for a larger project due to increased demand, and will cost significantly more
($200 million - $300 million). This initial project planning and definition work will be funded by
the Airport Development Fund.
The financial implications of this project, including the impact on passenger airline cost per
enplaned passenger (CPE), and the validation of the business case, will be done upon the
completion of this preliminary project planning scope of work.
Future Revenues and Expenses (Total cost of ownership)
An important part of the exploration of the design concept will be development of total cost of
ownership estimates. Therefore, no total cost of ownership information is available at this time
but will be included in future requests for commission action.
ATTACHMENTS TO THIS REQUEST
A. Presentation Slides
B. Video - C1 Conceptual Walk-through
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
None