Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
6b
ACTION ITEM
Date of Meeting
June 23, 2020
DATE: June 12, 2020
TO: Stephen P. Metruck, Executive Director
FROM: Wayne Grotheer, Director Aviation Project Management
James Schone, Director Aviation Commercial Management
Dawn Hunter, Senior Manager Airport Dining and Retail
SUBJECT: Airport Shared Kitchen Food Trucks Design Authorization (CIP #C801111)
Amount of this request:
$1,150,000
Total estimated project cost:
$5,500,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to: (1) execute a professional
services contract for design; (2) pay an honorarium to shortlisted design firms who do not win
the award to develop concept proposals; (3) utilize Port crews for preliminary work; (4) and
complete the design for the Airport Shared Kitchen Food Trucks Project at Seattle-Tacoma
International Airport for an estimated cost of $1,150,000. The total estimated project cost to
the Port is $5,500,000.
EXECUTIVE SUMMARY
This project creates opportunities for small food and beverage businesses within the Airport
Dining and Retail (ADR) Kiosk Program. The ADR Kiosk Program, started in 2014, provides
locations for small businesses to experience operating in the airport retail environment without
a significant capital investment or long-term lease. Currently, the program has 6 kiosks, all of
which are designed for small business retailers.
This project will create two kiosks with faux food truck façades and suitable facilities for the
preparation and sale of food and beverages. Food trucks have been rising in popularity
nationally, and incorporation of this concept provides a fun new addition to the passenger
dining experience.
In order to select the best design for these kiosks, Port staff are planning a design competition
among a shortlist of selected firms so that design concepts may be evaluated as part of the final
selection process. An honorarium will be provided to shortlisted candidates who prepared a
design as part of the competition but did not win. This would not exceed $10,000 per design
firm, or a total aggregate sum of $40,000.
COMMISSION AGENDA – Action Item No. _6b___ Page 2 of 6
Meeting Date: June 23, 2020
Template revised June 27, 2019 (Diversity in Contracting).
These kiosks will add to the diversity of food and beverage offerings at Seattle-Tacoma
International Airport as well as aid in the effort to meet the Commission’s goal of increasing
revenue generated by small, disadvantaged and/or local businesses to 40% of total Airport
Dining and Retail sales. The kiosks would be leased for shorter durations than a standard lease
that would allow for new opportunities and flexible dining offerings to the traveling public.
This project was considered for deferral due to COVID-19, but the recommendation is to move
forward with this project now. Prior to COVID-19, Seattle-Tacoma International Airport was
deficient in food service amenities for the number of passengers travelling through. Assuming
a return to those levels of passenger traffic in 2 to 3 years, which aligns with current industry
outlook, then the need for additional food service space will be present by the time this project
is completed. The project creates an additional source of non-aeronautical revenue which may
not be recognized if the space is left vacant. In addition, the creation of two food and beverage
spaces requiring minimal up-front capital investment from tenants will be an important and
positive effort toward restarting the economy for small and local business.
JUSTIFICATION
The goal of this project is to create new opportunities for small businesses by reducing the
barriers to entry for food and beverage operators within the Airport Dining and Retail Program.
Small businesses will be offered short term, flexible leases for the use of these fully-built-out
units to prepare and sell food and beverages. This allows the small business to determine
whether their concept might thrive in the Airport environment without having to make a
significant capital investment and commit to a much longer lease term. These units will also
provide the Port with additional non-aeronautical revenue.
Diversity in Contracting
The project team is working with the Diversity in Contracting team to conduct outreach and the
setting of a women- and minority-owned business enterprise (WMBE) aspirational goal for this
project. In addition, this project may participate as a pilot project for an enhanced mentoring
(PortGen Trainings) with facility & infrastructure department of WMBE sub-tier consultants to
the prime architect, such as mechanical or electrical engineering firms.
DETAILS
The project consists of two locations in the airport terminal, one in Concourse B and the other
in the Central Terminal.
The first location will use a vacated dining facility on Concourse B. The second location is a
vacated dining facility in the Central Terminal. Tenants will be offered short-term leases (6 to 18
months) for these kiosks to maximize the number of businesses that can take advantage of
these opportunities. The Port will construct and maintain the infrastructure and equipment.
COMMISSION AGENDA – Action Item No. _6b___ Page 3 of 6
Meeting Date: June 23, 2020
Template revised June 27, 2019 (Diversity in Contracting).
The Concourse B location was previously used as a commissary kitchen for temporary food and
beverage kiosks in the Central Terminal. A completed partial tenant improvement was already
done in this location which brought utilities to this space for a full restaurant cook line including
a hood and grease duct. These existing utilities will be re-assessed at each design phase as the
project progresses. The completion of the tenant improvement requires the existing closed-off
storefront to be modified for passenger walk up service, including addition of a service counter
behind a new decorative food truck façade. A small seating area will also be created within the
space.
The Central Terminal location, formerly the Anthony’s Grab and Go Fish Bar, requires new
cooking equipment, finishes, and utilities. The façade at this location will need to integrate
seamlessly into the adjacent new Salty’s restaurant storefront, which will be the primary
backdrop for the north side of the Central Terminal. Due to the small size of this location, it will
utilize existing seating in the Central Terminal.
These storefront façades are highly visible, prominent design features which will impact the
overall aesthetic of the airport, especially within the Central Terminal. The inclusion of an
honorarium is intended to incentivize design competition to receive the best aesthetic
storefront concepts for panel review and selection. The honorarium process will begin by short
listing design firms, likely three to five firms. These selected firms will participate in a
competitive presentation of concepts to a handpicked selection panel. The short-listed firms
who participate in the design competition and are unsuccessful will be awarded a lump sum
amount to be determined prior to advertising the solicitation, not more than $10,000 for their
work to create their proposed concept design and presentation. This storefront design element
is paramount to the passenger experience at these locations, and this honorarium ensures that
the best available concepts are put forward for evaluation of design firms.
In addition to the honorarium, which incentivizes small business design firms to compete for
the award, this project will participate in a pilot mentoring program for WMBE (Women and
Minority Business Enterprise) architectural and engineering firms during the design phase.
Through creation of Port training specifically for mentoring of WMBE architectural and
engineering firms within the project, we can enable the prime architect to hire WMBE firms as a
part of their team while ensuring they have the means to be successful.
This request also includes funds to use small works contracts and Port crews to erect a
barricade in the Central Terminal around the project site during construction, which will be
required for public safety as well as to preserve the passenger experience within the main
terminal. This barricade must be erected in tandem with the completion of the Salty’s project
as it is necessary to conceal areas of demolished façade surrounding the project site.
Both locations include digital signage to easily promote tenants who will be rotated through
these spaces on short-term leases as well as new cook lines and equipment with Type I grease
exhaust, and new finishes including the faux food truck façade.
COMMISSION AGENDA – Action Item No. _6b___ Page 4 of 6
Meeting Date: June 23, 2020
Template revised June 27, 2019 (Diversity in Contracting).
One identified risk to this project is the availability of enough conditioned air to both spaces.
The final evaluation can only be made after design is complete. Based on the information that is
currently available, staff believes that adequate air is available to condition the spaces. The
conditioned air supply was sufficient for the site’s previous tenants, both of which were food
and beverage services with similar requirements. The project team has identified alternative
potential solutions if the supply of conditioned air is found during the design phase to be
lacking.
Scope of Work
This project includes all typical components of a food service tenant improvement, with Port of
Seattle furnished, owned, and maintained equipment.
Schedule
Activity
Design start
2021 Quarter 1
Commission construction authorization
2022 Quarter 3
Construction start
2022 Quarter 4
In-use date
2023 Quarter 2
Cost Breakdown
This Request
Total Project
Design Phase
$1,150,000
$1,200,000
Construction Phase
$0
$4,300,000
Total
$1,150,000
$5,500,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Reintegrate the Central Terminal space into the larger lease group 4-A package,
CT-01 Salty’s, and leave Concourse B location vacant for a potential new ADR vendor to
complete later.
Cost Implications: $0
Pros:
(1) No capital cost to the Port.
(2) Potential to receive greater non-aeronautical revenue to the Port based on concept
and location.
Cons:
(1) Does not increase opportunity for small, local, and WMBE businesses.
(2) Lease Group 4A (CT-01 Salty’s) project schedule will be impacted by a change in scope.
(3) Possible legal implications since Lease Group 4A is already awarded and in design.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. _6b___ Page 5 of 6
Meeting Date: June 23, 2020
Template revised June 27, 2019 (Diversity in Contracting).
Alternative 2 – Put both locations back out to lease for small business(es).
Cost Implications: $0
Pros:
(1) No capital cost to the Port.
(2) A specific lease group just for small businesses would allow the opportunity for small,
local, and WMBE revenue from these locations.
Cons:
(1) Development costs for these spaces are a high barrier of entry for small businesses.
(2) Less flexibility of food offerings with standard 10-year standard lease terms.
This is not the recommended alternative.
Alternative 3 – Build out two shared kitchens/food truck concepts. The Port will incur the cost
for construction and maintenance for a faux food truck concessionaire space.
Cost Implications: $5,500,000
Pros:
(1) Ability to expand the successful small business retail kiosk program to food and
beverage operators.
(2) Shared kitchen/food truck concepts will allow for greater flexibility in food options for
airport customers – able to change the concept and offerings more frequently.
(3) Supports the Commission’s goal to achieve 40% share of ADR gross sales from small,
local and disadvantaged businesses.
Cons:
(1) Highest capital cost
(2) Removes units from ability to be bid in larger lease groups with the potential to make
more revenue for the port.
(3) Requires an additional maintenance program using a vendor contract.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$5,500,000
$0
$5,500,000
AUTHORIZATION
Previous authorizations
$50,000
0
$50,000
Current request for authorization
$1,150,000
0
$1,150,000
Total authorizations, including this request
$1,200,000
0
$1,200,000
Remaining amount to be authorized
$4,300,000
$0
$4,300,000
COMMISSION AGENDA – Action Item No. _6b___ Page 6 of 6
Meeting Date: June 23, 2020
Template revised June 27, 2019 (Diversity in Contracting).
Annual Budget Status and Source of Funds
This project was included in the 2020 – 2024 capital budget and plan of finance with a budget
of $4,400,000. The capital budget increase of $1,100,000 will be transferred from the Non-
Aeronautical Reserve CIP (C800754) resulting in zero net change to the Aviation capital budget.
The funding source would be the Airport Development Fund (ADF).
Financial Analysis and Summary
Alternative 3 (Preferred)
Alternative 2 (Not Preferred)
Project cost for analysis
$5,500,000
$0
Business Unit (BU)
Commercial Management
Commercial Management
Effect on business
performance (NOI after
depreciation)
NOI will average $875,000 of
non-aeronautical income
through the 10 years after the
asset is in use.
NOI after depreciation will
increase
NOI will average $1.3 million of
non-aeronautical income
through the 10 years after the
asset is in use.
NOI after depreciation will
increase
IRR/NPV (if relevant)
NPV (10 years after asset is in
use) is $300,000.
NPV is $8.7 million.
CPE Impact
N/A
N/A
Future Revenues and Expenses (Total cost of ownership)
A service agreement for yearly maintenance of these spaces of approximately $40,000 per year
will be required after completion of the project. The financial analysis assumes this with an
increase of 3% annually.
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
None
