Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8e
ACTION ITEM
Date of Meeting
April 13, 2021
DATE: February 22, 2021
TO: Stephen P. Metruck, Executive Director
FROM: James Jennings, Director AV Business & Properties
Wayne Grotheer, Director Aviation Project Management
SUBJECT: Main Terminal Space Conversions Phase 2 (CIP #C801055)
Amount of this request:
$400,000
Total estimated project cost:
$3,500,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) construct a single office as
the second phase of the Main Terminal Space Conversion project at Seattle-Tacoma International
Airport, and (2) utilize Port of Seattle crews and Small Works on-call contracts to perform
construction work. The amount requested is $400,000 of the total project estimate of
$3,500,000.
EXECUTIVE SUMMARY
Seattle-Tacoma International Airport (SEA) has limited pre-security office space ready and
available for new entrant airline tenants. When completed, this multi-phased, Main Terminal
Space Conversion project will house up to six new tenants. The first phase completed two spaces
in 2019 and 2020, now occupied by Singapore Airlines and Qatar Airlines, respectively. This
request is to construct a single office as the second phase, adding to two offices completed in the
first phase. A future Commission request would be required to complete additional offices for a
third phase of the Main Terminal Space Conversion project. If completed in the future, Phase 3
would add several new offices to the mezzanine second floor, along with required egress and
restroom improvements.
JUSTIFICATION
This project supports critical objectives of the Port’s Century Agenda to meet the region’s air
transportation needs at the airport and encourage the cost-effective expansion of domestic and
international passengers and cargo service. This provides SEA with much needed leasable space
to meet the needs of our growing airline partners. It also supports the Aviation Division’s financial
performance by increasing occupancy of leasable space without constructing new facilities.
COMMISSION AGENDA – Action Item No. _8e_ Page 2 of 4
Meeting Date: April 13, 2021
Template revised June 27, 2019 (Diversity in Contracting).
SEA has added at least one new international route annually over the past decade. Although the
pandemic has significantly slowed current international traffic levels, having at least one office
available for lease is a best practice, as there is not adequate time to complete improvements
once an international airline announces new services.
Diversity in Contracting
Work performed will draw from existing executed Small Work rosters and/or performed in-house
with Port Construction Service crews. The Small Works roster offers opportunity for women-and
minority business enterprise (WMBE). As such, no additional aspirational goal will be set for this
construction project.
DETAILS
The second phase space to be constructed is located on the ticketing level near passenger
Security Checkpoint 3. Construction will include electrical, lighting, data, heating and ventilation,
and standard office finishes to provide an office suitable for future occupancy. This construction
will be completed using a combination of Port Construction Services crews and Small Works
contractors.
Scope of Work
Phase 2 Construction of Ticketing level space:
(1) Modify heating, ventilation and air conditioning (HVAC), electrical, communications and
lighting system.
(2) Construct basic interior including finished walls, ceilings and flooring.
Schedule
Activity
Second Phase Construction Start
Q2 2021
Second Phase In use date
Q4 2021
Cost Breakdown
This Request
Total Project
Design
$0
$720,000
Construction
$400,000
$2,780,000
Total
$400,000
$3,500,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Stop the entire project. Do not construct the second phase (ticketing) and cease
further work on the third phase (second floor).
Cost Implications: $0 further cost (approximately $350,000 of cost to date would be expensed)
Pros:
(1) Vacant space could be re-designed for another purpose in the future.
(2) Remaining budget could be re-allocated.
COMMISSION AGENDA – Action Item No. _8e_ Page 3 of 4
Meeting Date: April 13, 2021
Template revised June 27, 2019 (Diversity in Contracting).
Cons:
(1) No new spaces would be available for any new entrant the short term.
(2) Would not meet Port Century Agenda Objectives.
This is not the recommended alternative.
Alternative 2 – Construct the second phase (ticketing) and continue evaluation work on the third
phase (second floor).
Cost Implications: $400,000
Pros:
(1) One new tenant space will be ready by end of 2021.
(2) Remaining budget could be re-allocated.
Cons:
(1) No second-floor code improvements would be made by this project.
(2) Further new tenant spaces would not be created and may impact new entrants in 2022
or 2023.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Total
COST ESTIMATE
Original estimate
$2,515,000
$2,515,000
Previous changes – net
$985,000
$985,000
Revised Estimate
$3,500,000
$3,500,000
Art (Transfer to Art CIP)
($7,000)
($7,000)
Revised Total
$3,493,000
$3,493,000
AUTHORIZATION
Previous authorizations
$1,465,000
$1,465,000
Current request for authorization
$400,000
$400,000
Total authorizations, including this request
$1,865,000
$1,865,000
Remaining amount to be authorized
$1,635,000
$1,635,000
Annual Budget Status and Source of Funds
This project (CIP C801055) was included in the 2021-2025 capital budget and plan of finance with
a budget of $3,500,000. $3,000 has been transferred into the Art Pool (C102066) with an
additional $4,000 to be transferred pending this request. The funding source would be Airport
Development Fund (ADF) and revenue bonds. The previous change cost increase shown in the
table above was driven by the need to provide more office space to new airline tenants.
COMMISSION AGENDA – Action Item No. _8e_ Page 4 of 4
Meeting Date: April 13, 2021
Template revised June 27, 2019 (Diversity in Contracting).
Financial Analysis and Summary
Project cost for analysis
$3,500,000
Business Unit (BU)
Terminal Building
Effect on business performance
(NOI after depreciation)
NOI after depreciation will increase due to inclusion of
capital (and operating) costs in airline rate base.
IRR/NPV (if relevant)
N/A
CPE Impact
Less than $0.01 in 2022
Future Revenues and Expenses (Total cost of ownership)
Once occupied, maintenance of exclusive premises is the responsibility of the lessee, thus freeing
the Port of our current obligation to maintain the space. In addition, these premises are currently
leased to signatory airlines at the rate of $177.17 per square foot per year. The final billable lease
area is dependent on exactly how the space gets divided, and how much space is consumed to
create a shared access vestibule (which would not be leased premises).
ADDITIONAL BACKGROUND
Preliminary design work on the project’s third phase has uncovered building code deficiencies
and additional study is underway to determine the impact of these deficiencies.
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
February 26, 2019 – The Commission authorized design of all phases and construction of first
phase.
