Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
10b
ACTION ITEM
Date of Meeting
October 25, 2022
DATE : October 18, 2022
TO: Stephen P. Metruck, Executive Director
FROM: Keri Stephens, Director, Aviation Facilities and Capital Programs
Eileen Francisco, Director, Aviation Project Management
SUBJECT: South Concourse Evolution Project Authorization Request
Amount of this request:
$100M
Total estimated project cost:
$1.4B-$1.7B
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) advertise and execute
project specific contracts for project management including Airline Technical Representative
(ATR), construction management (CM), design services, and commissioning services to proceed
with design of the project, (2) utilize, authorize, advertise, and execute a General
Contractor/Construction Manager (GC/CM) contract to proceed with pre-construction services
and the delivery of the project, and (3) utilize Port crews for the South Concourse Evolution
Project at Seattle-Tacoma International Airport. The total amount of this request is
$100,000,000.
EXECUTIVE SUMMARY
The South Concourse Evolution project proposes the renovation of the existing South
Concourse, located at Seattle-Tacoma International Airport (SEA), using a multi-phase
implementation strategy. The capital improvement project will extend the useful life of the
South Concourse and meet current code requirements. This includes structural, seismic, and
building system upgrades as well as modernization of passenger spaces. The scope addresses
the Port’s two-tiered objectives:
(1) Addressing critical code requirements, including structural and building systems
upgrades.
(2) Providing enhancements to the passenger experience through a repurposing of the
existing Federal Inspection Service (FIS) area, Concourse Level renovations, and an
expanded Penthouse Level.
COMMISSION AGENDA – Action Item No. 10b Page 2 of 9
Meeting Date: October 25, 2022
Template revised June 27, 2019 (Diversity in Contracting).
JUSTIFICATION
The South Concourse Evolution project has completed the Project Definition Document (PDD)
and has reached a design milestone of approximately 15% design. The team is ready to
assemble its full delivery team and to begin full design and execute the project. This
commission action will provide the authorization and funding necessary to progress the project
to approximately the 90% design level, at which time the Maximum Allowable Construction
Contract value will be determined. The project team will return in the future for further
authorizations outside of and beyond this authorization.
Project Delivery Selection:
The team has selected an alternate delivery method, GC/CM, for this project. The project team
met with stakeholders and analyzed multiple delivery methods and has selected GC/CM as it
has proven to be an effective and successful delivery process for the Port as well as other public
agencies. This delivery process partners with the designer and the general contractor while
allowing the Port to maintain separate contracts throughout the design and construction of the
project. Staff are currently developing and preparing to begin procurements for the project
management, design, commissioning, and GC/CM contractor teams to kick-off the design
phase, a collaborative effort.
General Contractor/Construction Management Project Specific Contract:
The GC/CM delivery method will allow for the contractor to be part of the complex design and
intricate construction phasing and sequence development that will minimize risk to airport
operations, provide the highest level of customer service during construction, and gain earlier
insight to and control of construction costs. The GC/CM is anticipated to aid the team with
construction techniques, validating the schedule phasing and sequencing, and preparing
subcontract packages for the MACC.
Project Management Project Specific Contract:
The team is anticipating hiring an external project management firm with expertise in using the
GC/CM delivery method and with projects of this scope and complexity. The contract will
include a project specific ATR. ATR’s have played a critical role in successfully delivering
previous mega projects and are recommended to represent the 25 airline carriers that utilize
the South Concourse. The project would benefit from having a project specific ATR contract
through the life of the project to serve as a liaison between the project and Airlines. Having a
dedicated ATR engaged through the life of the project is critical to the success of delivering the
project in such ways as decision making, communications, and implementation of plans.
Construction Manager Project Specific Contract:
The team plans to bring on board a CM firm that has expertise using the GC/CM delivery
method and with projects of this scope and complexity. The firm will assist staff in executing
the project from reviewing bid packages, negotiations on schedule and budget for MACC and
other bid packages necessary to construct the project, responding to contractor
COMMISSION AGENDA – Action Item No. 10b Page 3 of 9
Meeting Date: October 25, 2022
Template revised June 27, 2019 (Diversity in Contracting).
communication, and assisting the controls teams to provide the necessary metrics to track and
predict the schedule and cost trends.
Design Services Project Specific Contract:
A project specific design consultant will be procured to provide a comprehensive project design
and design support services through the duration of the construction. The design firm selected
will include architecture, structure, mechanical, electrical, civil, specialty, and other design
professionals to complete an aesthetic and seismically compliant concourse for the port to
utilize for many years to come. The design needs to respond to the needs of the infrastructure
and airlines while providing an elegant design for the region.
Commissioning Manager Project Specific Contract:
The team plans to contract with an independent Commissioning Agent. Staff agree a
Commissioning Agent that is independent provides a unique third-party validation that the
design and construction meet the commissioning requirements by building code, building
commissioning authorities, and best practice. The firm selected is expected to complete the
predesign and design commissioning services required to comply with the United States Green
Building Council LEED requirements for achieving project certification.
Port Construction Crews:
Port construction crews are requested to support the project by providing construction services
outside of the major contract work.
This next airport mega project will be a complex, multi-year effort and include regular and
robust engagement and communication with Commission, the public, the airlines, tenants,
staff, and diverse stakeholders.
Diversity in Contracting
This project has been proposed to the FAA as a recipient for federal grant funding; in
anticipation of that federal funding, the Port will be following the federal Disadvantaged
Business Enterprise (DBE) program guidelines as stated within CFR 49 Part 26, therefore,
Federal DBE goals will be set on this project.
DETAILS
The South Concourse Evolution project scope includes structural, seismic, and building system
upgrades as well as modernization of passenger spaces. The Port’s two-tiered objectives,
addressing critical code requirements, including structural and building systems upgrades; and
providing enhancements to the passenger experience through the lower levels and an
expanded Penthouse for Lounges. The following are some focus areas that will be essential to
the success of the project as the team progress the design:
(1) Partnership and collaboration.
COMMISSION AGENDA – Action Item No. 10b Page 4 of 9
Meeting Date: October 25, 2022
Template revised June 27, 2019 (Diversity in Contracting).
(2) Structural and seismic engineering married with a constructable design concept.
(3) Passenger flow, comfort, and communication.
(4) Phasing and sequencing of a constrained site and airport impact.
(5) infrastructure resilience.
(6) Customer service and operational continuity during construction.
(7) Ability to construct to budget and schedule.
(8) The desired customer experience of blended holdrooms with dining and retail
options.
(9) Collaborating with numerous public agencies and the community.
(10) Implementing the evolution of the South Concourse to balance with surrounding
terminals.
(11) Developing the team that can bring forward creative alternatives to reduce the
project cost.
The airport is challenged to provide the airlines appropriate services while construction is
underway. The project scope and budget has assumed the airport can support a gate outage
strategy allowing for a two-phase project. Staff have been exploring different alternatives to
provide the best customer experience during construction from an airport wide perspective.
The ability of the airport to support this endeavor has not been identified in detail. Temporary
and permanent solutions have been proposed but more effort, collaboration and partnership
are required with our airline partners, stakeholders, and other programs to assure success with
this project. Staff is working on a gating strategy that addresses the airport wide gating and
phasing concerns of the airport and airline community.
The project is currently at 15% design. More design development is needed to understand the
scope, schedule, budget and sustainability initiatives. Staff conducted the Sustainable Project
Assessment and Review Collaboration meeting and developed the Sustainable Design Approach
document for the project. Sustainability strategies were identified for further analyses during
both PDD development and design, including a total cost of ownership analysis. The project
team will evaluate the environmental benefits and total cost of ownership for following
strategies:
(1) Reducing solar heat gain.
(2) Providing on-site food collection to support our food donation program.
(3) Installing dishwashing utility connections to encourage reusable service ware.
(4) Adding power to service new electric vehicle charging stations.
(5) Reducing embodied carbon in construction materials, specifically concrete.
(6) Integrating electric cooking to reduce natural gas use.
(7) Reducing potable water use 10 and 20 percent below 2018 State Plumbing code.
(8) Achieving LEED Silver Certification at minimum and the feasibility of achieving Gold.
COMMISSION AGENDA – Action Item No. 10b Page 5 of 9
Meeting Date: October 25, 2022
Template revised June 27, 2019 (Diversity in Contracting).
The project team will present the results of these analyses and recommendations to the
Commission's Sustainability, Environment And Climate (SEAC) Committee for review and
comment prior to 30% design.
Project Schedule
The team‘s near term focus will be on:
(1) Assembling a full, qualified team of professionals and contractors to deliver this next
airport mega project.
(2) Solidifying the management plans and procedures that will be used to ensure its
successful and collaborative execution.
Design, GC/CM, and Commissioning team
2022 Quarter 4
2023 Quarter 2
2023 Quarter 4
2023 Quarter 4
The team‘s current overall project schedule:
2025 Quarter 2
2025 Quarter 2
2026 Quarter 3
2029 Quarter 1
2031 Quarter 2
2031 Quarter 4
Project Budget
The current estimate is based on the programmatic scope of work defined in the Project
Definition Document (PDD), which has a level of detail equivalent to approximately 15% design.
The estimated cost includes allowances and contingencies. Project risks, operational
mitigations, and environmental objectives will be further developed and are deferred to the
design once professionals are on board. The level of detail for the estimate is normal and
customary at this stage of the project.
Current Estimate Range: $1.4B – $1.7B.
COMMISSION AGENDA – Action Item No. 10b Page 6 of 9
Meeting Date: October 25, 2022
Template revised June 27, 2019 (Diversity in Contracting).
Cost Breakdown
This Request
Total Project
Design Phase
$100M
$100M
Construction Phase
$0
$1.3B-1.6B
Total
$100M
$1.4B-1.7B
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Various refinements of the 15% design were explored over the last year in preparing this design
option to be presented. Port staff has evaluated design options for levels, passenger flow,
customer experience of the final building, and the return on investment of non-aeronautical
revenues to develop the club and ADR requirements for the project. A summary of different
alternatives follows:
Alternative 1 – A fully developed interior and exterior clerestory system provides for
daylighting throughout the concourse and a more refined mass exterior matches the exterior
façade areas high roof building mass of the N Concourse and the International Arrivals Facility.
Cost Implications: $2.2B
Pros:
(1) Provides for daylighting of the entire concourse level.
(2) Complies with the business plans of the concourse.
(3) Meets the program goals for the airport.
Cons:
(1) Anticipated costs cannot be supported by the business plans for the concourse.
This is not the recommended alternative.
Alternative 2 – Improve only the critical code requirements, including structural and building
systems upgrades.
Cost Implications: $1B
Pros:
(1) Complies with the business plans of the concourse.
Cons:
(1) Does not meet the program goals for the airport.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. 10b Page 7 of 9
Meeting Date: October 25, 2022
Template revised June 27, 2019 (Diversity in Contracting).
Alternative 3 – Complete the project as presented in the PDD document.
Cost Implications: $1.4B-1.7B
Pros:
(1) Complies with the business plans of the concourse.
(2) Meets the program goals for the airport.
Cons:
(1) Does not fully commit the concourse to daylighting into the center of the facility on
the east and center areas.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
The initial placeholder value for the project in 2020 was $1B, the current estimate range is
expected to be $1.4-1.7B.
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$1,000,000,000
$0
$1,000,000000
Previous changes – net
$370,00,000
0
$370,000,000
Current change
0
0
Revised estimate
$1.4B - $1.7B
0
$1.4B - $1.7B
AUTHORIZATION
Previous authorizations
$2,750,000
0
$2,750,000
Current request for authorization
$100,000,000
0
$100,000,000
Total authorizations, including this request
$102,750,000
0
$102,750,000
Remaining amount to be authorized
TBD
$0
TBD
Annual Budget Status and Source of Funds
This project, CIP C801203, was included in the 2022-2026 capital budget and plan of finance
with a budget of $1 billion. A budget increase of $370,000,000 was transferred from the
Aeronautical Reserve CIP (C800753) resulting in zero net change to the Aviation capital budget.
The funding source would be revenue bonds, Airport Development Fund (ADF), and the
Bipartisan Infrastructure Law (BIL) grant funding through the FAA-AIP program.
Financial Analysis and Summary
Business Unit (BU)
Terminal
Building
Terminal
Building
Project cost for analysis
$1.4B
$1.7B
Infrastructure grants
$250M
$250M
NPV incremental to Base
$(4.8)M
$(136)M
COMMISSION AGENDA – Action Item No. 10b Page 8 of 9
Meeting Date: October 25, 2022
Template revised June 27, 2019 (Diversity in Contracting).
Non-aero cashflow in 2031
Non-aero cashflow positive
$(5.4)M
In year 2038
$(12.5)M
In year 2044
CPE Impact in 2031
$2.24
$2.92
The financial analysis looked at the implications of this project on both the aeronautical and
non-aeronautical businesses. For the aeronautical business, this project will add significant
costs (primarily debt service on the bonds to fund the project) to the airline rate base, resulting
in an increase to the passenger airline cost per enplaned passenger (CPE). The project will also
allocate significant costs to the non-aeronautical business as a result of the space attributable
to airport dining and retail. The table above shows a net present value (NPV) of the
incremental net revenues compared to the costs for the non-aero business. At $1.4 billion, the
NPV is slightly negative. At $1.7 billion the NPV is much more negative. The other measure we
look at is non-aeronautical cash flow inclusive of the allocated debt service. This is important as
an indicator of the project’s impact on airport debt service coverage. The result will be
negative cash flow in the early years, going positive in 2038 at $1.4 billion, and 2044 for $1.7
billion. Consequently, the project will reduce airport debt service coverage for many years.
The analysis above assumes the project receives $250 million of grant funding. More grant
funding would improve the financial results.
Future Revenues and Expenses (Total cost of ownership)
The cost savings of keeping the current terminal operational would likely present no long-term
savings even with discounting the risk of a potential catastrophic failure; the terminal is still in
need of upgrades driven by code and safety. Balancing the deferral of these costs against the
structural, seismic, and operational needs of the terminal is not recommended.
ADDITIONAL BACKGROUND
The South Concourse facility at SEA was opened in 1973 and is owned and operated by the
Port. The facility depends on building systems that are well past their useful service life,
and further development of the facility has been limited by the authorities having jurisdiction,
owing to concerns stemming from current building code minimum requirements. The building
systems and materials used in the original construction, due to their age and
manufacture, are difficult to maintain.  The facility also contains areas of encapsulated
regulated materials, such as asbestos, complicating maintenance, renovation, and
development. Since the South Concourse was constructed, passenger volumes and aircraft
operations have increased dramatically, security regulations have expanded, passenger level of
service expectations have evolved, and airlines and retailers have changed their marketing
strategies.  Recently, the South Concourse was connected directly to the new International
Arrivals Facility (IAF) across the taxi lane separating it via an above ground pedestrian walkway.
The project will connect the continuity of design from the IAF and walkway to this project for a
seamless continuous terminal aesthetic.
COMMISSION AGENDA – Action Item No. 10b Page 9 of 9
Meeting Date: October 25, 2022
Template revised June 27, 2019 (Diversity in Contracting).
ATTACHMENTS TO THIS BRIEFING
(1) Presentation slides.
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
September 27, 2022 - The Commission was briefed on South Concourse Evolution and
project status.
April 13, 2021 – The Commission was briefed on SSAT Renovation Renewal PDD.