Template revised April 12, 2018.
COMMISSION
AGENDA MEMORANDUM
Item No.
8b
ACTION ITEM
Date of Meeting
February 26, 2019
DATE: February 15, 2019
TO: Stephen P. Metruck, Executive Director
FROM: Michael Ehl, Director, Airport Operations
Wayne Grotheer, Director, Aviation Project Management
SUBJECT: Rental Car Facility Bus Purchase (CIP #800810) and Employee Parking Bus Purchase
(CIP #800956)
Amount of this request:
$16,275,000
Total estimated project cost:
$16,838,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) procure new buses for the
rental car facility shuttle operation at Seattle-Tacoma International Airport; (2) procure new
buses for the employee parking shuttle operation at Seattle-Tacoma International Airport; and
(3) enter into a long-term agreement to establish a contract for future bus requirements for a
period of 10 years. The amount of this request is $16,275,000. The total estimated cost for
both projects is $16,838,000.
EXECUTIVE SUMMARY
The purpose of this project is to purchase 24 new compressed natural gas (CNG) buses to be
fueled by renewable natural gas (RNG)—18 buses for employee parking and six for the Rental
Car Facility (RCF) shuttle operation. The principal motivators for the fleet purchase are (a) the
mandatory retirement of model-year 2002 CNG buses from employee parking and RCF shuttle
fleets, (b) modest growth in rental car transactions, and (c) potential expansion of employee
parking.
In evaluating options, the port considered cost, feasibility, and environmental impacts. The bus
fleet contributes about 12 percent of port-controlled (scope 1 and 2) greenhouse-gas
emissions at the airport. Alternatives focused on Century-Agenda carbon-reduction goals and
included procuring new electric buses, refurbishing CNG buses to be fueled by RNG, and
procuring new CNG buses to be fueled by RNG. These are described further in the alternatives
analysis below.
The Rental Car Facility project (CIP #C800810) and the Employee Parking project (CIP
#C800956) were included in the 2018-2022 capital budget and plan of finance as a business
COMMISSION AGENDA – Action Item No. _8b___ Page 2 of 8
Meeting Date: February 26, 2019
Template revised September 22, 2016; format updates October 19, 2016.
plan prospective project with a total combined budget of $19,881,000. The original CIP budget
was higher due to the assumption of purchasing electric buses.
JUSTIFICATION
Rental Car Facility
Although Sea-Tac rental car activity has experienced mixed results over the past three years,
overall rental transactions have increased about 20 percent since 2012—the initial operating
year for the consolidated RCF. The growth in transaction activity translates into increased
shuttle bus passengers, and without additional buses, presents a challenge to Aviation
Operations commitment to meet the five-minute peak service standard agreed upon by the
Port and rental car industry.
Employee Parking
More than 12,000 airport and airline employees park in the Airport’s North Employee Parking
Lot and use the Port’s employee bus system to travel to and from work. The current fleet of 11
CNG buses is approaching its 20-year useful life and must be replaced by Q2 2022. The lead
time for new buses is 24 months, so the Port must execute a contract to order 18 new buses
by Q3 2019. The quantity of 18 new buses includes the 11 replacement buses, three additional
buses for maintenance (industry standard practice of 20 percent), and four additional buses to
support future expansion of employee parking. At the request of the airlines, Aviation
Operations could expand its employee parking offerings to other lots with four new buses. The
new buses would be integrated into the employee parking fleet and coordinated with the
existing operation.
The port’s carbon-reduction goals, described in Century Agenda Strategy 4 (be the greenest
and most energy-efficient port in North America), were an important factor in the alternatives
analysis for this procurement.
Diversity in Contracting
Century Agenda Strategy 3 calls for use of the Port’s influence as an institution to promote
women and minority business enterprise (WMBE) growth, small business growth, and
workforce development. We have engaged the Diversity in Contracting Department to assist in
identifying potential Woman and Minority Business Enterprise (WMBE) vendors to help inform
them of this potential procurement. This effort, through PortGen activities, is in support of
Resolution 3737 to increase WMBE participation in Port’s contracting efforts.
DETAILS
Of the 24 buses purchased, 16 buses would replace the existing CNG buses that must be
retired in 2022, 4 buses are required to meet the industry standard practice for maintenance
of 20 percent spare capacity, and 4 buses would support future expansion of employee
COMMISSION AGENDA – Action Item No. _8b___ Page 3 of 8
Meeting Date: February 26, 2019
Template revised September 22, 2016; format updates October 19, 2016.
parking offerings to other locations (if needed). The Port must retire the existing 16 buses in
June 2022 due to the de-certification of the CNG fuel tanks on each bus due to their age.
Rental Car Facility
Due to the immediate need for increased system capacity, five CNG buses were loaned from
the existing employee parking bus fleet in 2015. The on-loan employee parking buses are
model year 2002 and the 20-year legal useful life of the fuel tanks expires in Q2 of 2022. Thus,
five new buses are required to replace these retiring units plus one additional bus for
maintenance. Industry standard practice for fleet operations includes a 20-percent
maintenance factor. In this case the Port recognizes a need for five additional buses plus one
for maintenance for a total of six.
Table 1 describes the composition of the RCF bus fleet now
and as proposed.
Table 1: RCF Bus Fleet Composition Summary
Retirements
New Fleet
(as proposed)
No. of 2011 buses
0
29
No. of 2002 buses on-loan
5
0
No. of new buses
N/A
6
Total No. of RCF Buses
N/A
35
Employee Parking
The procurement will establish an agreement for future RNG/CNG bus requirements for a
period of ten years. This procurement will provide the Port flexibility to buy additional buses as
needed, but subject to future authorization. If battery technology advances within the ten-
year period, and RNG/CNG buses become a less attractive option, the Port will explore an
alternative procurement.
Schedule
The existing model-year 2002 CNG buses face mandatory retirement in June 2022 due to the
de-certification of the CNG fuel tanks on each bus—a regulatory requirement for CNG fuel
systems of a certain age and configuration. To continue the Rental Car Facility and Employee
Parking shuttle operations the established schedule for bus replacement must be met.
Activity
Execute Bus procurement contract
2019 Quarter 3
Bus delivery
2021 Quarter 3
In-use date
2021 Quarter 4
COMMISSION AGENDA – Action Item No. _8b___ Page 4 of 8
Meeting Date: February 26, 2019
Template revised September 22, 2016; format updates October 19, 2016.
Cost Breakdown
This Request
Total Project
Rental Car Facility Bus Purchase
$4,123,000
$4,403,000
Employee Parking Bus Purchase
$12,152,000
$12,435,000
Total
$16,275,000
$16,838,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
All three project alternatives provide significant environmental benefits to the Port. Replacing
the CNG buses with electric buses or CNG buses fueled with RNG will reduce the greenhouse
gas emissions from airport activities by up to four percent. Port staff completed a decision
analysis that resulted in the recommendation for Alternative 3, new CNG buses fueled by RNG
for the RCF and Employee Parking. There is a federal incentive program that supports RNG
production for transportation and many organizations in Washington and other states
routinely purchase RNG for use in their transportation fleets.
The three alternatives were evaluated and scored for the following objectives:
(1) Complies with Century Agenda Scope 1+2 greenhouse gas goals.
(2) Minimizes impacts to current operations.
(3) Minimizes current operational costs, initial capital costs, and 20-year total cost of
ownership (TCO).
Risks were identified for each alternative, including their probability and seriousness. The risk
assessment was used in the final evaluation and selection of the recommended alternative.
Environmental benefits were calculated and compared among the alternatives. TCO was
calculated over a 20-year period that includes Electric and refurbished CNG bus replacements
in year 13, and new CNG bus life of 20 years.
RNG Availability
The Port recently issued a request for proposal (RFP) for RNG that closes on April 12. While the
Port recognizes the uncertainty in procuring RNG, nearly 100 facilities are currently generating
and selling RNG to customers across the nation and dozens more are in a substantial state of
development.
In addition, the U.S. Environmental Protection Agency expanded the Renewable Fuel Standard
in 2014 to allow RNG used for transportation vehicles such as fleets to qualify for federal
credits (Renewable Identification Numbers, or RINs). These credits provide additional financial
incentives for developers and potential sources (e.g., wastewater treatment plants) to produce
the fuel.
California provides additional incentives through their state program, the California Low
Carbon Fuel Standard Program. However, many organizations outside California routinely
purchase RNG for use in their transportation fleets, including Dallas Fort Worth Airport, and
Recology Cleanscapes, who run 80 trucks on RNG and operate the second-largest waste
COMMISSION AGENDA – Action Item No. _8b___ Page 5 of 8
Meeting Date: February 26, 2019
Template revised September 22, 2016; format updates October 19, 2016.
hauling fleet in the Seattle region. RNG may be available outside of California due to market
saturation as available supply surpasses current demand. Similarly, some producers outside
California may choose to sell RNG to local or regional customers to limit the cost of
transporting the gas on interstate pipelines.
Alternative 1 – Purchase 26 new electric buses (6 for RCF, and 20 for Employee Parking) and
16 new chargers (6 for RCF, and 10 for Employee Parking), including the associated
infrastructure.
Cost Implications: Total estimated cost for this option is $36.6 million ($9.7 million for RCF, and
$26.9 million for Employee Parking).
Pros:
(1) Reduces approximately 1200 metric tons of CO
2
/year. This alternative emits 20
metric tons more than Alternatives 2 and 3 because Port electricity has some carbon
associated with it, while RNG does not.
(2) Quietest bus operation.
(3) Opportunity for drivers and maintenance staff to learn new skills associated with this
emerging bus electrification technology.
(4) Opportunity to pursue FAA Zero Emissions Vehicle (ZEV) grant funding for the
Employee Parking operation.
Cons:
(1) Bus electrification is an emerging technology, which inherently carries risk. This
technology is likely to improve significantly over the next ten years.
(2) Charging significantly increases the time needed to prepare buses for operation.
(3) Project costs for the electric buses are more than double the costs for CNG.
Comparatively higher costs unique to this alternative include electric buses and the
design and installation of charging infrastructure.
(4) Higher weight of electric buses could require strengthening of RCF 5th floor and
Access Bridge. This is a risk, which will require evaluation by a design consultant
during the design phase.
(5) Additional training will be required for bus drivers and maintenance staff.
This is not the recommended alternative.
Alternative 2 – Purchase 24 Refurbished CNG Buses (6 for RCF, and 18 for Employee Parking),
fueled with RNG.
Cost Implications: An estimated $441,000 in costs to date will need to be expensed if this
option is pursued. The total estimated cost for this option is $11.6 million ($3.1 million for RCF,
and $8.5 million for the Employee Parking).
Pros:
(1) Reduces 1220 metric tons of CO
2
/year.
(2) No operational changes required.
(3) No new infrastructure required.
COMMISSION AGENDA – Action Item No. _8b___ Page 6 of 8
Meeting Date: February 26, 2019
Template revised September 22, 2016; format updates October 19, 2016.
(4) Lowest initial cost and low 20-year TCO due to the lowest bus cost.
(5) Bus electrification is an emerging technology that is likely to improve significantly
over the next ten years. This alternative allows the Port to delay transition to electric
and allow technology to mature. This reduces cost and overall risk.
Cons:
(1) High potential for increased bus down time due to part availability, additional
preventive maintenance and increased risk of failure of original equipment not
replaced as part of the refurbishment (i.e., dashboard components, rebuilt
transmission, original wiring, etc.).
(2) Large variance in quality between the three major bus refurbishment companies.
(3) Delayed opportunity in learning to use an emerging technology (electric buses).
(4) No opportunity to pursue FAA Zero Emissions Vehicle (ZEV) grant funding for the
Employee Parking.
This is not the recommended alternative.
Alternative 3 – Purchase 24 new CNG Buses (6 for RCF, and 18 for Employee Parking), fueled
with RNG.
Cost Implications: An estimated $441,000 in costs to date will need to be expensed if this
option is pursued. The total estimated cost for this option is $16.8 million ($4.4 million for RCF,
and $12.4 million for the Employee Parking).
Pros:
(1) Reduces 1220 metric tons of CO
2
/year.
(2) No operational changes required.
(3) No new infrastructure required.
(4) Low initial cost and the lowest 20-year total cost of ownership due to 20-year bus life.
(5) Bus electrification is an emerging technology that is likely to improve significantly
over the next ten years. This alternative allows the Port to delay transition to electric
and allow technology to mature. This reduces cost and overall risk.
Cons:
(1) Higher initial cost than alternative 2, refurbished bus.
(2) Delayed opportunity in learning to use an emerging technology (electric buses).
(3) No opportunity to pursue FAA Zero Emissions Vehicle (ZEV) grant funding for
Employee Parking.
This is the recommended alternative.
COMMISSION AGENDA – Action Item No. _8b___ Page 7 of 8
Meeting Date: February 26, 2019
Template revised September 22, 2016; format updates October 19, 2016.
FINANCIAL IMPLICATIONS
Annual Budget Status and Source of Funds
The Rental Car Facility project (CIP #C800810) was included in the 2019-2023 capital budget
and plan of finance as a business plan prospective project with a total budget of $1,800,000.
The original CIP budget was lower as it only included four buses rather than the current
quantity of six. The budget increase was transferred from the Non-Aeronautical Allowance
#C800754. The funding source for this project will be the Customer Facility Charges (CFC).
The Employee Parking project (CIP #C800956) was included in the 2019-2023 capital budget
and plan of finance as a business plan prospective project with a total budget of $18,081,000.
The original CIP budget was higher due to the assumption of purchasing electric buses. The
budget decrease was transferred to the Non-Aeronautical Allowance C800754. The funding
source for this project will be the Airport Development Fund and future revenue bonds.
Financial Analysis and Summary
Cost Estimate/Authorization Summary
RCF
C800810
Employee Parking
C800956
Total
COST ESTIMATE
Original estimate
$1,800,000
$18,081,000
$19,881,000
Budget Increase/(Decrease)
$2,603,000
($5,646,000)
($3,043,000)
Revised estimate
$4,403,000
$12,435,000
$16,838,000
AUTHORIZATION
Previous authorizations
$280,000
$283,000
$563,000
Current request for authorization
$4,123,000
$12,152,000
$16,275,000
Total authorizations, including this request
$4,403,000
$12,435,000
$16,838,000
Remaining amount to be authorized
$0
$0
$0
RCF
C800810
Employee Parking
C800956
Project cost for analysis
$4,403,000
$12,435,000
Business Unit (BU)
Rental Car Facility
Employee Parking
Effect on business performance (NOI after
depreciation)
NOI after
depreciation will
decrease.
NOI after depreciation will
increase in 2022. Current
NOI will decrease due to
write off of $215,000.
IRR/NPV (if relevant)
Recommended
alternative has
the lowest NPV of
the total cost of
ownership.
Recommended alternative
has the lowest NPV of total
cost of ownership.
CPE Impact
N/A
N/A
COMMISSION AGENDA – Action Item No. _8b___ Page 8 of 8
Meeting Date: February 26, 2019
Template revised September 22, 2016; format updates October 19, 2016.
Future Revenues and Expenses (Total cost of ownership)
Rental Car Facility shuttle bus expenses are recovered through CFCs paid by rental car
customers as part of their rental agreement. Operational and maintenance costs for the RCF
facility are not anticipated to change due to this project if the recommended alternative is
selected.
Employee parking operates on a cost recovery basis and costs for this project will be recovered
through increased monthly parking fees. The operational and maintenance costs for the NEPL
are not anticipated to change due to this project if the recommended alternative is selected.
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
January 8, 2019 – The Commission was briefed on the contents of this action.