Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8c
ACTION ITEM
Date of Meeting
June 11, 2019
DATE: June 4, 2019
TO: Stephen P. Metruck, Executive Director
FROM: Melinda Miller, Director, Portfolio & Asset Management, Economic Development
Fred Chou, Capital Program Leader, Seaport Project Management
SUBJECT: Pier 66/Bell Harbor International Conference Center Modernization (CIP #C800889)
Amount of this request:
$10,350,000
Total estimated project cost:
$11,560,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to: (1) proceed with the
construction phase of the Pier 66/Bell Harbor International Conference Center Modernization
Project; (2) advertise and execute major public works contract; (3) execute purchasing
contracts; (4) employ a project labor agreement for the project; and (5) approve additional
funding of $10,350,000 for a total estimated cost of $11,560,000.
EXECUTIVE SUMMARY
The original request for design funding combined a redesign of the exterior of Paul Schell
Center at Pier 66 with the interior modernization of Bell Harbor International Conference
Center (BHICC). As design development proceeded, the team and executive leadership decided
to postpone the exterior project and move forward with only the interior. The $2.5 million
design budget was segregated and $1.21 million was allocated to the interior project.
The rebuilding of the Seattle Waterfront over the next few years presents a distinct opportunity
to leverage the historical financial success and iconic heritage of Bell Harbor in anticipation of
renewed regional and international interest.
Columbia Hospitality (CHI), our manager, has been an essential part of the project team from
identifying the current market trends to developing the design guidelines and working with the
design team. Through CHI’s prudent management and assertive marketing, Bell Harbor has
been profitable every year since opening.
The intent of this project is to protect the Port’s original investment at Pier 66 by refreshing and
modernizing BHICC in response to evolving market expectations. We will achieve this objective
through changes to layout and furnishings, by better integrating the third-floor conference
COMMISSION AGENDA – Action Item No. 8c Page 2 of 6
Meeting Date: June 11, 2019
Template revised September 22, 2016; format updates October 19, 2016.
center with the newly expanded cruise terminal spaces on the first and second floor, enabling
them to function more cohesively and effectively for events, and by maximizing views and
natural light.
A major accessibility improvement is adding an ADA-compliant communicating ramp between
the 3
rd
floor Conference Center and the 2
nd
floor Cruise space that is used for events. Currently
wheelchair or disabled guests have to go down an elevator, north to another door and elevator
up to the second floor. In the same manner, the proposed communicating stair between the 3
rd
floor conference center lobby and 1
st
floor on the south side will prevent attendees from having
to go outside to get from the conference center to the 1st and 2
nd
floor spaces.
Design development has been completed and City of Seattle has issued the building permit.
This project is ready to transition into the construction phase with the Commission’s approval.
In light of the challenging construction bid environment, the project team is doing the following
to mitigate risk:
• Ensuring maximum awareness in contracting community prior to advertising
• Closing the 3
rd
Floor Conference Center during construction (mid-Nov to mid-May) to
allow easy access for the contractor
• Providing thorough pre-bid walkthrough and 360-degree images to enhance
understanding of work areas prior to bid
• Allocating higher construction contingency (15%)
• Providing a bid alternate
• Co-locating the Construction Management team inside conference center space
JUSTIFICATION
When BHICC opened in 1996, it was considered a state-of-the-art facility. BHICC was one of the
few stand-alone conference centers not attached to a hotel. Its location on the newly
developed central waterfront fulfilled a distinct and as yet unanswered need for a mid-sized
event space while enhancing the region’s destination profile (smaller and more intimate than
Washington State Convention Center and Century Link Field Event Center yet larger than most
hotel event facilities). Subsequently, the conference and cruise spaces were successfully
integrated to provide expanded access to waterfront views and venues enhancing its
competitive position and overall marketability as an event destination. Today, the Pier 66
facility remains one of the few cruise terminals in the country which operates as an event
destination when the ships are not calling, generating revenue and providing economic benefit
to the Port year-round.
However, the conference and event industry in Puget Sound and worldwide has matured and
the minimum facility standards required to host premier, high-quality conferences and events
have evolved dramatically. People convene quite differently today than 25 years ago; more
flexible and collaborative spaces along with state-of-the-art technology and impactful audio-
visual display to enhance experience creation are now mission-critical to successful events.
COMMISSION AGENDA – Action Item No. 8c Page 3 of 6
Meeting Date: June 11, 2019
Template revised September 22, 2016; format updates October 19, 2016.
The regional marketplace is rapidly evolving, and multiple new and compelling event spaces are
being introduced in Seattle, Bellevue and other nearby communities. Though our facility is
iconic and enjoys the distinct advantage of a showcase position on the central waterfront, it is
showing its age and a refresh of furniture, fixtures and finishes is required.
The modernization project will increase rentable capacity; add more flexible and customizable
spaces; incorporate new finishes; advance the technology and audio visual infrastructure;
incorporate sustainable and environmentally friendly features; link levels one through three of
the facility with a new interior open staircase and a new ADA-compliant ramp; install interior
and exterior wayfinding signage; procure new furniture; and upgrade the kitchen equipment.
DETAILS
Project Goals
• Protect investment; ensure BHICC remains a relevant regional event destination
• Refresh and renew necessary elements whilst also enhancing the waterfront/pacific
northwest aesthetic and the sense of place of this iconic facility
• Respond to evolving market demand for more flexible and collaborative event spaces
o Less plenary space and more room for interaction and connection
o More networking spaces and work stations adjacent to event spaces
o Improve/update technological and audio-visual infrastructure and enhance
experience creation potential
• Further leverage waterfront views and natural light
• Improve the visitor experience (for cruise and event guests) with better wayfinding,
more unified design, and improved flow and integration
• Expand capacity and increase revenue generation
• Improve competitive position, enhance visitor loyalty and continue to grow repeat
business
Scope of Work
The following are the major project elements that are included in the construction package:
• Connections, flexibility, and transparency: Increase the size and character of rentable
areas and add more flexible, adaptable and customizable spaces - visually, audibly, and
physically. This includes movable operable glass walls and flexible spaces to take
advantage of the water views and create larger and more flexible pre-function areas.
Significant amount of spaces will be reconfigured, including the reception and
concierge/entry areas
• Modern look: Refresh the facility with new furnishings, finishes, floor coverings, and
window treatment so it feels current but respects its history and established aesthetic
• Updated technology: Future-proof the technology and audio-visual infrastructure
investments with new equipment to support emerging platforms which enable and
enhance connectivity, interactivity, and productivity
COMMISSION AGENDA – Action Item No. 8c Page 4 of 6
Meeting Date: June 11, 2019
Template revised September 22, 2016; format updates October 19, 2016.
• Sustainability features: Incorporate energy efficiency and green project elements, for
example LED lighting, smart lighting controls, lower energy consumption fixtures and
equipment, and finish materials and furniture made from recycled materials.
• Improved circulation: Add a new open interior staircase that connects Level one’s
Waterlink Gallery and Level two’s Waterlink Atrium to the third-floor conference center
and allows guests to move throughout the facility without going outside as they have to
do now.
• Inclusion and accessibility: Add a new Americans with Disabilities Act (ADA) compliant
ramp connecting the conference center to the International, Olympic, and Waterlink
Atrium spaces that will provide interior access for disabled guests and improve
circulation.
• Better Wayfinding: Install interior and exterior signage to improve way-finding
• An efficient “Back of the House”: Upgrade kitchen equipment and relocate support
spaces
Diversity in Contracting
Diversity in Contracting Department has determined a 10% WMBE aspirational goal for the
construction contact.
Schedule
Q4 2016
Q1 2017
Q2 2019
Q4 2019
Q2 2020
Cost Breakdown
This Request
Total Project
Design
$0
$1,210,000
Construction
$10,350,000
$10,350,000
Total
$10,350,000
$11,560,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Maintain Status Quo. Continue to maintain the facility in its current state
through the operations expense budgets and Bell Harbor International Conference Center’s
Furniture, Fixtures & Equipment budget.
Cost Implications: Revenue Decline Potential of (2.5%) per year
Pros:
(1) Lowest initial capital cost in the short-term (none)
(2) No immediate interruptions of conference center operation
COMMISSION AGENDA – Action Item No. 8c Page 5 of 6
Meeting Date: June 11, 2019
Template revised September 22, 2016; format updates October 19, 2016.
Cons:
(1) Aging facilities that look dated and do not have amenities such as updated audio visual
and zone lighting systems and flexible spaces that are expected with today’s
conference and event centers.
(2) Decreased conference and event revenues as adopting lower pricing becomes the
strategy to secure business in an aged conference facility – revenues are expected to
decline on average by 2.5% per year without additional investment
(3) Increased maintenance costs expected as facilities continue to age and wear out.
Some of the components are obsolete and can no longer be purchased.
(4) Need for modernization is simply deferred
This is not the recommended alternative.
Alternative 2 – Modernization: Proceed with construction funding to modernize the
conference center. Staff has completed project scoping, design development, cost estimating,
financial analysis, environmental review, and permitting.
Cost Implications: $11,560,000 Revenue Increase Potential: Average 5% per year
Pros:
(1) The proposed plans for the modernized conference center facility will better meet the
current market demands and ensure its financial viability
(2) Will enable revenue growth – estimated to increase by an average of 5% per year for
the next 20 years
Cons:
(1) Initial capital investment of $11,560,000 higher in the short term than deferring
improvements
(2) Short-term revenue loss during construction period (November 2019 through April
2020)
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$7,000,000
$0
$7,000,000
AUTHORIZATION
Previous authorizations
$1,210,000
0
$1,210,000
Current request for authorization
$10,350 ,000
0
$10,350,000
Total authorizations, including this request
$11,560,000
0
11,560,000
Remaining amount to be authorized
$0
$0
$0
COMMISSION AGENDA – Action Item No. 8c Page 6 of 6
Meeting Date: June 11, 2019
Template revised September 22, 2016; format updates October 19, 2016.
Annual Budget Status and Source of Funds
This project was included in the 2019 Plan of Finance under CIP C800889 BHICC Interior
Modernization with a total project cost of $11,000,000. The current total project estimate is
$11,560,000.
This project will be funded by the Tax Levy.
Financial Analysis and Summary
Project cost for analysis
$11,560,000
Business Unit (BU)
Portfolio Management
Effect on business performance
(NOI after depreciation)
The interior improvements are expected to increase
revenue by 5% annually over the next 20 years. This
project will generate the Net Cash Flow of $15,168,742
and increase the Net Operating Income by $26,728,742
based on 20-year cash flow projections.
IRR/NPV (if relevant)
NPV = $2,408,779 using a discount rate of 6.6%
MIRR = 7.4%
Payback = 10.3 years
CPE Impact
N/A
Future Revenues and Expenses (Total cost of ownership)
Modernizing our existing assets readies them for current and future changes, extends their
useful life, and preserves the economic vitality of our operations. This project would increase
the size of the rentable areas, add more flexible and customizable spaces, and improve its
amenities for guests. If approved, it would better meet the current market demands, preserve
its financial stability and generate incremental revenues with an estimate growth rate of 5%
annually over the next 20 years.
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
October 11, 2016 – The Commission authorized $2.5 million design funding for the
modernization of the Bell Harbor International Conference Center and the façade of the Paul
Schell Center at Pier 66.