Template revised January 10, 2019.

COMMISSION

AGENDA MEMORANDUM

Item No.

10a

ACTION ITEM

Date of Meeting

December 8, 2020

DATE: December 1, 2020

TO: Stephen P. Metruck, Executive Director

FROM: Dave McFadden, Managing Director Economic Development 

Stephanie Jones-Stebbins, Managing Director Maritime Division

Kyra Lise, Director Real Estate Development

Elena Franks, Capital Project Manager

SUBJECT: Fishermen’s Terminal Development Program - Maritime Innovation Center (CIP

#C801084)

Amount of this request:

Total estimated project cost:

$16,000,000

ACTION REQUESTED

Request Commission authorization for the Executive Director to:

(1) Execute an Interagency Agreement with the Washington State Department of Commerce

for the $5,000,000 grant offered by the Clean Energy Fund Program to fund Fishermen’s

Terminal (FT) Maritime Innovation Center (MInC).

(2) Authorize Construction of the Maritime Innovation Center, which is the condition for

executing the Interagency Agreement with Washington State Department of Commerce.

There is no request for funding associated with this authorization at this time. Staff will add an

additional authorization step for the MInC and come back to the Commission to authorize bid

and funding for the project when design work is finished, and we are ready to start construction.

This extra step protects the Port’s interest in the event unforeseen challenges impact

development of the historic Ship Supply Building.

EXECUTIVE SUMMARY

As part of efforts to redevelop Fishermen’s Terminal, staff is working to develop a Maritime

Innovation Center that will help the region’s maritime industry adopt advanced technologies and

stimulate innovative entrepreneurship. Successful innovation centers can help sustain maritime

industries and help modernize operations and key lines of business. This is a significant

opportunity for the region:

• The global “Ocean Economy” is growing. It is valued on a conservative basis by the

Organization for Economic Cooperation and Development (OECD) at $1.5 trillion (2010)

and growing to $3.0 trillion by 2030;

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• The Seattle region is rich in maritime resources and heritage, but this is under

recognized by the general public and policy makers being overshadowed by high-tech.

The maritime industry is also not particularly innovative;

• Public and private partners are interested in the Maritime Innovation Center as focal

point to help advance: 1) electrification; 2) ship and vessel design innovation; 3) marine

renewables; and 4) seafood product development;

• Promoting knowledge transfer, business incubation, and workforce development are

the biggest needs in terms of addressing maritime innovation challenges (and

opportunities).

In 2018 the Port worked with the Department of Commerce to secure a state capital

appropriation of $5,000,000 to help fund development of the Maritime Innovation Center. The

Department of Commerce is now prepared to grant $5,000,000 to the Port of Seattle through an

Interagency Agreement. Commerce requires the Port of Seattle’s Commission’s Authorization of

Construction as a condition for executing the agreement. While there have been multiple years

of pre-work leading up to executing this contract, it is Commerce’s preference to execute it by

the end of 2020 in order to move this project forward in a timely manner in 2021.

The approval of the requested authorization will support the completion of the renovation and

historic restoration of the Port’s former Seattle Ship Supply Building to house the approximately

15,000 SF Maritime Innovation Center: a home port business incubator to support the work of

the Maritime Blue Accelerator, in formal partnership with the State of Washington’s Department

of Commerce.

With this project the Port is also committing to showcase a sustainable and productive maritime

economy that protects the very fishing industry it serves, in alignment with the Port of Seattle’s

Century Agenda goals to support and strengthen the region’s economy, while maintaining the

Port’s triple bottom line – balancing environmental, financial, and societal goals.

Prior to coming to the Commission for MInC design funding in April 2019, the Port:

• Completed a feasibility study in 2018 to garner community input on maritime innovation,

identify potential facility services, operating options, space and physical planning

considerations and facility revenue/expense assumptions.

• Created an advisory committee to guide development of maritime innovation center;

• Contracted with DNVGL to update MInC business plan including revised revenue/expense

projections, preferred site/location analyses, and recommended operating benchmarks’

At this point the Port has advanced the following MInC design work:

• Conducted an Eco-Charette to provide context for a comprehensive evaluation of preferred

sustainability objectives for the various projects within the FT Redevelopment program.

• Completed 30% design and completed an updated project cost estimate based on the 30%

building designs and preferred sustainability options.

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Template revised June 27, 2019 (Diversity in Contracting).

• Presented alternative designs and recommendations to the Energy and Sustainability

Committee at 30% design.

• Determined a series of feasible environmental sustainability objectives that have been

incorporated into the project’s construction scope while nearing completion of 60% Design.

JUSTIFICATION

The Maritime Innovation Center project is designed to help foster innovation and showcase the

region’s maritime sector’s start-up ecosystems using advanced technologies. The redevelopment

of the former Seattle Ship Supply building, the oldest building in the Port’s existing portfolio, is

designed to achieve the highest level of sustainable design and construction through earning a

Living Building Challenge (LBC) certification.

Pursuing LBC with this project, the Port is committing to showcase a sustainable and productive

maritime economy that protects the very fishing industry it serves, in alignment with the Port of

Seattle’s Century Agenda goals to support and strengthen the region’s economy, while

maintaining the Port’s triple bottom line –balancing environmental, financial, and societal goals.

While there may be additional, up-front capital costs to invest in some of these efficient building

systems, their lifetime efficiencies will reduce operational costs. Supporting resources from the

Clean Energy Fund will help make it possible to not only invest in a climate-smart building for the

Port, but perhaps more importantly, will represent a shift in the maritime industry and show

other ports what is possible now.

By taking this action, the Port Commission is committing to complete the construction of the

Maritime Innovation Center, and formally entering a financial partnership with the Washington

State Department of Commerce, without allocating new resources at this time. Staff will return

to the Commission once the project is fully designed, and estimates refined to factor more exact

economic condition information into costs, to request funds to construct.

There are several strategic advantages to accepting additional source of capital support in the

form of a State grant:

• Continue a successful collaboration with the State of Washington’s Commerce Division to

create the Maritime Innovation Center in the former Ship Supply Building.

• Fully realize the potential of the Port’s investment in the Maritime Blue Accelerator by

the Port’s Economic Development Division, the goal of which is to increase the level of

support to innovative start-ups in the Maritime sector for years to come.

• Contribute to the Port of Seattle’s Century Agenda in supporting and strengthening the

region’s economy, while maintaining the Port’s triple bottom line – balancing

environmental, financial, and societal goals.

• Support the recovery of the maritime sector as we move out of the economic crisis

brought on by COVID-19 global pandemic.

COMMISSION AGENDA – Action Item No. 10a Page 4 of 10

Meeting Date: December 8, 2020

Template revised June 27, 2019 (Diversity in Contracting).

DETAILS

Scope of Work

The Port of Seattle is developing a business incubator at Fishermen’s Terminal that can support

and drive innovation within the maritime sector. They have chosen the 100+ year old Seattle Ship

Supply Building for the new home for this incubator, transforming it into a resilient, sustainable

facility that can support both entrepreneurs and established companies for the next 100 years.

Fishermen’s Terminal is in one of the few remaining industrial areas within the city of Seattle at

Ballard-Interbay, directly west of the Ballard Bridge and east of the Hiram M. Chittenden Locks

along the Lake Washington Ship Canal. The North Pacific commercial fishing fleet operates out of

the freshwater terminal.

Built in 1918, the Seattle Ship Supply Building (Maritime Innovation Center) is one of the oldest

structures on the Fishermen’s Terminal site. The original building’s heavy timber structure is a

classical basilica form with a central two-story nave and gable roof, flanked by two side shed

structures. At over 45 FT at the top of the gable, Seattle Ship Supply is the tallest existing building

on the Fishermen’s Terminal site and is prominently visible from the Ballard Bridge. The existing

building suffers from years of ad hoc modifications and needs substantial improvements to meet

current building codes.

The Port recognizes the potential to honor the history of Fishermen’s Terminal by restoring and

enhancing the original structure and providing spaces that support the next generation

inventions that drive the competitiveness of Washington State’s Blue Economy. The building will

provide approximately 14,000 SF of light industrial spaces, meeting rooms, classrooms and event

space that will bring together leaders from education, industry, and government to address both

challenges and opportunities within the maritime cluster. The facility will provide classes,

technical assistance, and research and development that ultimately helps the industry innovate

and sustain its competitive advantage. With the goal of being “the greenest and most energy-

efficient port in North America” the Port of Seattle has set ambitious but achievable targets in

energy efficiency, stormwater management and emissions reduction. To meet these goals while

setting a new standard of environmentally sustainable development for ports around the world,

Fishermen’s Terminal is pursuing the world’s most rigorous green building certification – The

Living Building Challenge.

A holistic and performance-based rating system, the LBC requires projects create regenerative

buildings that address site, water, energy, materials and even equity related challenges.

Certification is only awarded once a building has proven its net positive energy and water

performance after a year’s worth of building operations.

Below are just some of sustainable features of The Fishermen’s Terminal project.

To achieve net positive energy and reduce emissions:

• On-site photovoltaic energy production

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Meeting Date: December 8, 2020

Template revised June 27, 2019 (Diversity in Contracting).

• No combustion, all-electric building operation to support greenhouse gas reduction

• Battery backup system to add resiliency for facility operations

• Electric vehicle charging stations, bike parking and shower facilities

To demonstrate the commitment to restoring water quality and improving aquatic life on

industrial property:

• On-site stormwater treatment and detention

• Rainwater catchment for irrigation, toilet flushing and potable water use

• On-site grey water and black water treatment

To improve the health and wellbeing of our community:

• Daylighting and natural ventilation to reduce energy demand and provide a healthier

interior environment

• Reduced chemicals of concern

• Biophilic design that incorporates strategies to enhance the human/nature connection

and reinforces the connection to place

• Community education and outreach

• Urban agriculture

To reduce emissions and build toward the circular economy

• Reclaimed and FSC-certified wood Regional materials

• Landfill waste diversion

• Equitable and diverse workforce

Tenancy

The Maritime Innovation Center is proposed to be tenanted by the Maritime Blue Accelerator

project and other relatively small anchor tenants not yet identified. The master tenant shall run

the Maritime Innovation Center as a business incubator; complete with services and support for

an ongoing set of cohorts of maritime focused enterprises. Subtenants may also be allowed

under the master tenant contract. Selection of the master tenant will be timed in co-ordination

with the construction timetable for the Maritime Innovation Center such that occupancy can

begin with the issuance of an Occupancy Permit by the City of Seattle.

Diversity in Contracting

The LBC is comprised of seven performance areas, or “Petals”: Materials, Site, Water, Energy,

Health, Equity, and Beauty. The LBC now has ten Core Imperatives that address the fundamental

tenets of each Petal; all the Core Imperatives are required for Petal Certification. Inclusion is a

new imperative addressing diversity in hiring and access to training compliance. This establishes

COMMISSION AGENDA – Action Item No. 10a Page 6 of 10

Meeting Date: December 8, 2020

Template revised June 27, 2019 (Diversity in Contracting).

the requirement to include diverse stakeholders from vulnerable or disadvantaged populations

in the design, construction, operations and maintenance phases at the following levels:

• 20% of design contract and/or construction contracts, and 10% of maintenance contracts

must be with JUST organizations that meet required levels for Diversity category, or are

registered Minority, Women, or Disadvantaged Business Enterprises (MWDBE)

organizations, or international equivalent.

• Workforce development/training/community benefits agreements, registered

apprentice programs, and similar programs are employed for 10% of the General

Contractor’s project contracts and/or maintenance contracts.

This imperative may be also satisfied through a donation to appropriate groups that meet the

intent.

Meeting this imperative supports the Port of Seattle’s goal to triple the number of WMBE firms

that contract with the Port and increase the percentage of dollars spent on WMBE contracts to

15 percent within 5 years of program implementation of the Diversity in Contracting Program.

Community Outreach and Communications

Initial community outreach and engagement around the Maritime Innovation Center and the

Gateway Building unfolded during the Port’s Fishermen’s Terminal Master Planning process in

2016 and 2017. Staff hosted multiple planning sessions, open houses and stakeholder meetings

as part of developing new plans for FT. During the process, stakeholders cited a need for light

industrial facilities with smaller spaces for maritime manufacturers and suppliers. Several

participants also suggested that FT develop space for meeting rooms/conference center.

Extensive outreach and engagement also supported the Maritime Innovation Center planning

project (2016 and 2017):

• Hosted a Strength, Weakness, Opportunities and Threats (SWOT) workshop with 25

maritime stakeholders

• Developed on online survey that solicited input from 150+ stakeholders

• Hosted outreach meetings with partners in Anacortes and Port Hadlock

• Interviewed 35 Maritime stakeholders (28 distinct organizations)

• Facilitated a design eco-charrette focused on adaptive reuse of the Port’s Ship Supply

building

As the Maritime Innovation Center plan was completed, the state’s Maritime Blue initiative

started. It generated significant outreach and engagement in 2018 and the Maritime Innovation

Center was a central part of the strategy they shared with hundreds of maritime and community

stakeholders.

COMMISSION AGENDA – Action Item No. 10a Page 7 of 10

Meeting Date: December 8, 2020

Template revised June 27, 2019 (Diversity in Contracting).

Schedule

Activity

Commission design authorization (initial FT

Development design)

2016 Quarter 4

Shoreline and Building Permits from SDCI

2021 Quarter 4

Commission construction authorization

2021 Quarter 4

Construction start

2022 Quarter 3

In-use date

2023 Quarter 4

Cost Breakdown

This Request

Total Project

Design/Permitting

$2,150,000

Construction

$13,850,000

Total

$16,000,000

SUSTAINABLE EVALUATION FRAMEWORK

The FT Development project was identified as a priority pilot project for the Sustainable

Evaluation Framework. Miller Hull Partnership was hired to serve as designer and sustainability

facilitator. Three meetings were held in August and September between consultants and the Port

of Seattle project staff to create a project vision and identify opportunities. An eco-charette was

held on October 10, 2019 with various representatives from across the Port to identify preferred

project goals, targets, and priorities. The identified goals and strategies through the charette

were innovation, resilience, jobs/workforce, legacy/future, process, water, energy, carbon, and

health/materials.

Project goals and strategies were incorporated into design alternatives and evaluated further.

The sustainable design goals, alternatives, and recommendations were presented to project

Sponsors and to the Energy and Sustainability Committee on June 16

. Based on the

recommended design strategies, the Maritime Innovation Project is targeting LBC Certification.

The project team is moving forward with refining design and costs. Further design decisions will

be incorporated into a final “Sustainable Design Strategy” for the Maritime Innovation Center

will be provided to Commission before the construction funding authorization.

ALTERNATIVES AND IMPLICATIONS CONSIDERED

Alternative 1 – Do nothing: pass on Authorization for Construction and associated grant and

execution of the Washington State Department of Commerce Clean Energy Fund Interagency

Agreement.

Cost Implications:

Loss of $5,000,000 State funding towards completion of Maritime Innovation Center project.

Pros:

None.

COMMISSION AGENDA – Action Item No. 10a Page 8 of 10

Meeting Date: December 8, 2020

Template revised June 27, 2019 (Diversity in Contracting).

Cons:

(1) Jeopardizes financial partnership with the State of Washington, for regional innovation

initiative and achieve Port objectives of advancing maritime industry.

This is NOT the recommended alternative.

Alternative 2 – Postpone Authorization for Construction to when Design and Permitting are close

to completion (est. 2021 Quarter 4).

Cost Implications:

Loss of $5,000,000 State funding towards completion of Maritime Innovation Center project.

Pros:

(1) Commission is not committing to fund the project in the future without final permits or

final cost estimates.

Cons:

(2) Time-sensitivity expressed by Commerce suggests uncertainty on future availability of

the funds if the agreement is not executed by the end of 2020.

This is NOT the recommended alternative.

Alternative 3 – Accept the Washington State Department of Commerce Clean Energy Fund grant.

Approve construction completion for proposed Maritime Innovation Center.

Cost Implications:

Receiving contribution in the amount of $5,000,000 towards the total capital project costs

reduces the Port’s total project costs for completing the Maritime Innovation Center.

Pros:

Significant monetary contribution to the completion of the project and achievement of the

following:

(1) Support the recovery of the maritime sector as we move out of the economic crisis

brought on by COVID-19 global pandemic.

(2) Retain Port capital for other priority projects and financial initiatives.

(3) Redevelopment of existing vacant and dilapidated facility areas.

(4) Honor the history of Fishermen’s Terminal by restoring and enhancing the original

structure and providing spaces that support the next generation inventions that drive the

competitiveness of Washington State’s Blue Economy.

(5) Implement FT Long-Term Strategic Plan objectives of supporting fishing and maritime

clusters as well as improving long-term financial viability of FT.

Cons:

(1) Commission is committing to fund the project in the future, without final permits or final

costs.

This is the recommended alternative.

COMMISSION AGENDA – Action Item No. 10a Page 9 of 10

Meeting Date: December 8, 2020

Template revised June 27, 2019 (Diversity in Contracting).

FINANCIAL IMPLICATIONS

Cost Estimate/Authorization Summary

Capital

Expense

Total

COST ESTIMATE

Previous estimate (15% design level estimate)

$10,500,000

Current change

$5,500,000

Revised estimate (30% design level estimate)

$16,000,000

AUTHORIZATION

Previous authorizations

$2,150,000

Current request for authorization

Total authorizations, including this request

$2,150,000

Washington State Department of Commerce’s

Funding (this authorization)

$5,000,000

Remaining amount to be authorized

$13,850,000

Annual Budget Status and Source of Funds

The project has been included in the approved 2021-2025 CIP with a total project cost of

$16,000,000 and assumes a $5,000,000 contribution from WA Department of Commerce.

The Port-funded portion of this project will be funded by the Tax Levy.

Predesign Financial Analysis and Summary

Project cost for analysis

$11,000,000 (assumes $5 million WA State contribution)

Business Unit (BU)

Maritime Portfolio Management

Effect on business performance

(NOI after depreciation)

The property is expected to contribute approximately

$180K to annual NOI before deprecation. The project will

increase annual depreciation expense by approximately

$220K per year.

IRR/NPV (if relevant)

NPV: ($7.7M)

IRR: 1.7%

CPE Impact

N/A

COMMISSION AGENDA – Action Item No. 10a Page 10 of 10

Meeting Date: December 8, 2020

Template revised June 27, 2019 (Diversity in Contracting).

ATTACHMENTS TO THIS REQUEST

(1) Presentation slides

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS

May 14, 2019 – Commission authorized $1,850,000 design funding and an amendment to the

Fishermen’s Terminal Phased Design Services contract, with Miller Hull Partnership LLP, for

$1,000,000 for final planning, design, and permitting for the Maritime Innovation Center.

January 8, 2019 – Commission received a briefing regarding Maritime Blue Plan and the Maritime

Innovation Center. 

December 13, 2016 –Commission authorized an initial $3,000,000 for the Fishermen’s Terminal

Redevelopment program planning and design; the total preliminarily estimated design cost was

$7,000,000.

May 17, 2016 - Commission received a briefing on the planning strategies comprising the

Fishermen’s Terminal Long-Term Strategic Plan. 

October 27, 2015 - Commission received a briefing about the progress of the stakeholder

outreach program for the Fishermen’s Terminal Long-Term Strategic Plan. 

August 11, 2015 - Commission received a briefing on the proposed scope and goals in advance of

the launch of the planning process. 