Motion 2019-09 – Airport Dining and Retail Program Policy Direction Page 1 of 4

MOTION 2019-09:

A MOTION OF THE PORT OF SEATTLE COMMISSION

amending prior policy statements of the Port Commission

regarding street pricing principles for the Airport Dining

and Retail program at Seattle-Tacoma International

Airport; implementing an amended pricing policy for the

Airport Dining and Retail program; and authorizing the

Executive Director to take such necessary actions to

implement the amended pricing policy.

AMENDED AND ADOPTED

JUNE 11, 2019

INTRODUCTION

The Port of Seattle Commission has previously passed two motions directing policy for the

Airport Dining and Retail program (the “ADR Program”) at Seattle-Tacoma International Airport,

including policy direction with respect to prices charged by ADR Program concessionaires for

products and services provided at the Airport.

By motion entitled “Motion of the Port of Seattle Commission Regarding Quality Jobs, Service

and Employment Continuity Assurances for the Airport Dining and Retail Program,” adopted

November 25, 2014, the Commission articulated various guiding principles for operation of the

ADR Program, including one principle calling for “continuation of ‘street pricing’ of products

and services.”

Subsequently, by motion reflected in Port Commission Meeting Minutes dated November 24,

2015, Item 6.d, the Commission approved a temporary, conditional policy to authorize “street”

pricing plus up to ten percent (10%), with subsequent steps down year by year, to return to

strict street pricing effective January 1, 2020.

This motion revises the street pricing principle in the motion adopted on November 25, 2014,

repeals the temporary street pricing policy authorized by the motion adopted November 24,

2015, and establishes an amended pricing policy allowing ADR Program concessionaires to

charge street pricing plus a maximum of five percent in 2020 and ten percent in 2021.

Motion 2019-09 – Airport Dining and Retail Program Policy Direction Page 2 of 4

TEXT OF THE MOTION

(1) The Commission hereby amends the principles of ADR Program redevelopment within

the Statement of Policy Direction section of the Commission motion adopted November

25, 2014, to delete, in its entirety, the following principle:

5. Continuation of ‘street pricing’ of products and services

(2) The Commission hereby repeals, effective January 1, 2020, the temporary street pricing

policy established by the Commission motion adopted November 24, 2015 (Port

Commission Meeting Minutes dated November 24, 2015, Item 6.d).

(3) Amended Pricing Policy for ADR Concessionaires.

(a) The Commission hereby adopts and authorizes the Executive Director to implement

an amended street pricing policy to allow concessionaires in the ADR Program to set

prices at not more than five percent (5%) in 2020 and not more than ten percent

(10%) in 2021 above “street” prices for all products and services sold at the Airport

(“Amended ADR Pricing Policy”); provided, that this Amended ADR Pricing Policy will

only be extended to concessionaires if they offer:

1. Wages equal to or exceeding the minimum wage standards set forth in Chapter

7.45 of the City of SeaTac Municipal Code;

2. Payment of sick and safe time, which shall be accrued at the rate of one hour for

every 40 hours worked;

3. Health insurance to full-time employees, consistent with the Affordable Care

Act; and

4. Comply with any reasonable request from Port staff for verification of actual

wages paid to the tenant's employees.

The above requirements (1.) through (4.) may be waived for employers with a bona

fide collective bargaining agreement.

(b) The Executive Director is directed to begin implementation of this Amended ADR

Pricing Policy, including review and processing of ADR Program concessionaire

requests for approval of price adjustments based on the Amended ADR Pricing

Policy.

1. Beginning on January 1, 2020, eligible ADR Program concessionaires may charge

approved street pricing plus up to a maximum of five percent (5%) and beginning

on January 1, 2021, up to a maximum of ten percent (10%) under this Amended

ADR Pricing Policy.

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2. Until January 1, 2020, concessionaires shall continue to adhere to the current

street pricing policy established by the Commission motion adopted November

24, 2015 (Port Commission Meeting Minutes dated November 24, 2015, Item

6.d). Concessionaires who do not satisfy requirements (1.) through (4.)

identified in paragraph (a) above, as verified by the Port, shall be limited to

charging strict street pricing for their products and services commencing

January 1, 2020.

implement the Amended ADR Pricing Policy described herein, including:

1. Development of (or adjustment to) procedures for review and confirmation of

proposed concessionaire pricing;

2. Revision to operational policies and procedure relating to pricing requirements

for ADR Program concessionaires;

3. Preparation and execution of necessary lease amendments, addenda and/or

other documentation necessary to approve pricing of ADR Program

concessionaire products and services and adherence to the Amended ADR

Pricing Policy.

STATEMENT IN SUPPORT OF THE MOTION

In taking this action the Commission intends to support the Executive Director’s

recommendation to establish an amended policy to allow ADR Program concessionaires to

charge street pricing plus not more than five percent (5%) in 2020 and not more than ten

percent (10%) in 2021 for products and services offered at the Airport. The Commission and

staff have heard from large prime operators as well as small, local and minority-owned

concessionaires who have expressed concern regarding the increased cost of doing business

at the Airport and the impact of those higher costs on their ability to operate viable

businesses. However, the Commission is aware of the effect of price increases on airport

customers and wants to ensure that any prospective increases are stepped in over two years.

These cost pressures are evident in the building out and refurbishing their units, the wages and

benefits paid to their employees and the services that are necessary to operate their businesses

at the Airport (for example, security badging, parking, common area maintenance fees, unified

pest management, trash recycling, and adherence to Commission Resolution No. 3725).

Higher costs in these areas, together with the scheduled return to required strict street pricing

in January 2020, has decreased the interest of new firms in bidding for leasing opportunities at

the Airport and has led several current concessionaires to express concerns about their ability

to operate profitable businesses.

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The Commission recognizes that circumstances at the Airport will continue to evolve and

flexibility may be necessary to reach our mutual goals of excellent customer service and

attractive dining options. However, by this motion, and consistent with these goals, allowing

street plus 5% pricing in 2020 and 10% pricing in 2021, gives time for the airport to

understand the impact greater pricing flexibility has on the price of consumer goods at the

airport, provides concessionaires with an enhanced ability to recover their higher costs,

improves the opportunity for concessionaires to procure quality products and staff resources,

and will likely increase the number and variety of small-business and other proposers for

future concessions opportunities at the Airport.