Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8d
ACTION ITEM
Date of Meeting
September 26, 2023
DATE: September 18, 2023
TO: Stephen P. Metruck, Executive Director
FROM: Rick Duncan, Director Airline Affairs & Aviation Properties
Eileen Francisco, Director, Aviation Project Management Group
SUBJECT: Post IAF Airline Realignment Enabling Work Construction Authorization
(CIP #C801158)
Amount of this request:
$14.4 million
Total estimated project cost:
$102 – $140 million
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) authorize enabling
construction work for the Post IAF Airline Realignment project at Seattle-Tacoma International
Airport, (2) procure long lead items, (3) increase the project authorization by $14,400,000, and
(4) execute a project labor agreement. The range of the total estimated cost of this project is
$102 million to $140 million.
EXECUTIVE SUMMARY
The project is facilitating the relocation of United Airlines’ (UA) domestic only operations from
Concourse A to Concourse B. This allows for airlines with international flights to use the vacated
international capable gates on Concourse A. Associated office and support spaces to support
both relocations, a ticket counter reconfiguration in the main terminal and United Airlines Lounge
renovation on Concourse B will be delivered as part of the project. This request is to authorize
funding for the construction of enabling work, facilitating initial existing infrastructure
relocations, and building code upgrades necessary to initiate the base program work.
As briefed on September 12, this project has four main packages of work being completed by the
Port, beginning with a package of enabling work and three packages of base program work. The
enabling work addresses code deficiencies, completes initial existing utility and infrastructure
relocations and includes demolition and reconfiguration at the ramp level of the A, B and S
Concourses. The enabling work delivers approximately 14,900 square feet of renovated Port and
tenant leasable space. The project team will return in December 2023 to request construction
COMMISSION AGENDA – Action Item No. 8d Page 2 of 8
Meeting Date: September 26, 2023
Template revised June 27, 2019 (Diversity in Contracting).
authorization for the remaining 47,500 square feet of base program work included in the
remaining packages.
The amount of this request is $14,400,000 for enabling work construction. The current cost
estimate range for the full program is $102 - $140 million.
JUSTIFICATION
Construction authorization for the enabling work is required to make way for base program work
and support the Port’s overall airline realignment project progress and future gate allocation by
advancing the relocation of airlines as planned.
Significant phasing and sequencing are required to provide the spaces necessary to deliver the
base program scope. Initiating key infrastructure and existing systems relocations on Concourse
B ramp through the enabling work allows the GCCM to streamline construction durations and
avoid periods of time where no work is performed.
This program supports the Port’s Century Agenda’s strategic goal of “Advancing this region as a
leading tourism destination and business gateway” by:
(1) Continuously improving operational efficiency and customer experience at the Airport.
(2) Strengthening the competitiveness of the Airport in the regional and global marketplace.
(3) Meeting the region’s air transportation needs by delivering vital facilities and
infrastructure in sustainable and cost-effective manner.
Diversity in Contracting
The project team has worked with the Diversity in Contracting team to establish the following
women- and minority-owned business enterprise (WMBE) goals for the project’s contracts as
outlined in the table below.
Contract
Goal
Commitment
PM
14%
98%
CM
30%
30%
Design
15%
17%
Testing & Special Inspection
TBD
TBD
GCCM (Construction)
13%
TBD
DETAILS
The project team has been coordinating extensive site investigation and verification to confirm
existing conditions and continue development of a 3D Model of project premises. The 3D Model
COMMISSION AGENDA – Action Item No. 8d Page 3 of 8
Meeting Date: September 26, 2023
Template revised June 27, 2019 (Diversity in Contracting).
has informed the design and supported the acceleration of key areas of enabling work that are
captured in this first construction authorization.
The design for the base program scope of work for the project has progressed through 60%
development. The project team will return to the Commission in December when the design has
been progressed through 90% and the full construction cost determined through public
procurement.
To execute the program, the project team intends to inform and request the necessary
authorizations according to the schedule below:
September 26, 2023 – Enabling Work Construction Authorization (this request)
December 2023 – Base Program Construction Authorization
December 2023 – United Lounge Briefing
Quarter 2 2024 – United Lounge Construction Authorization
The airline realignment construction work is currently broken down into two distinct phases.
Enabling Work
(1) Renovations to existing Port-occupied and tenant-leased spaces on Concourse A and
South Satellite ramp level to support tenant relocations required for the airline
realignment.
(2) Code upgrades and modifications to existing building systems and infrastructure to
support the future base program work on Concourse B ramp.
(3) Renovation, consolidation, and code upgrades to existing Port mechanical and electrical
spaces on Concourse B ramp, including dedicated rooms and security access control
upgrades to meet Port standards.
(4) Renovation of existing tenant-leased space on Concourse B ramp to consolidate existing
airline operations and allow for construction of a new interior corridor.
(5) New airline tenant cage storage on Concourse B ramp.
(6) Renovated and expanded restroom facilities to address code deficiencies on Concourse B
ramp.
(7) Procurement of mechanical upgrade equipment that has a manufacture and delivery
duration of several months to mitigate the impact to the construction schedule. These
include Air Handling Unit 2 and Air Handling Unit 4.
COMMISSION AGENDA – Action Item No. 8d Page 4 of 8
Meeting Date: September 26, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Base Program
(1) Renovations to existing tenant-leased spaces on Concourse A to support final tenant
relocations required for airline realignment.
(2) Renovated and expanded tenant-leased spaces on Concourse B ramp to create new office
support space for the relocated airline tenant.
(3) Code upgrades to extend the new interior corridor initiated with the enabling work.
(4) Cage storage provided with enabling work will be reconfigured to support final airline
relocations.
(5) Modifications and upgrades to existing Concourse B mechanical system to support the
newly expanded and renovated ramp leasable space, including two new enclosed
penthouses at the roof level.
(6) Renovated ticket counter and tenant-leased space in the central main terminal to provide
ten ticketing positions, an airline break room and Port leasable space for a future tenant.
This division of the scope is advantageous because it:
(1) Allows the project team to begin construction on enabling work that must be completed
to make way for the airline realignment renovation and building expansion.
(2) Value-added leasable space is improved while facilitating a coordinated consolidation of
Delta airlines Concourse B ramp support space. This consolidation makes available the
necessary leasable square footage to deliver like-for-like ramp support spaces for United
Airlines to relocate gate operations from Concourse A to Concourse B.
The project team will continue to gain budget and schedule certainty as the design progresses
through 90% development and the construction is publicly procured in Q4 2023.
Schedule
To facilitate the complex phased delivery of the project, a portion of work was identified, and the
design accelerated to allow the contractor to begin initial work as the base program design
continued development. The base program work will begin in Quarter 1 2024, after the first
phase of enabling work has been completed and makes the space available.
Activity
Enabling Work Construction Start
2023 Quarter 3
Base Program Construction Authorization
2023 Quarter 4
Base Program Construction Start
2024 Quarter 1
United Airlines Lounge Construction Authorization
2024 Quarter 2
United Airlines Lounge Construction Start
2024 Quarter 4
In-use date (Concourse B)
2025 Quarter 3
In-use date (Concourse A)
2026 Quarter 1
COMMISSION AGENDA – Action Item No. 8d Page 5 of 8
Meeting Date: September 26, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Other Key Project Milestone Current Delivery Dates:
United Airlines Gates operating on B Concourse
2025 Quarter 3
United Airlines Lounge opening on B Concourse
2026 Quarter 1
Cost Breakdown
This Request
Total Project
Design
$0
$33,000,000
Construction
$14,400,000
$69,000,000 – $107,000,000
Total
$14,400,000
$102,000,000 – $140,000,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternatives Considered:
Alternative 1 – Delay the procurement and construction of enabling work and combine with final
airline realignment design documents procured in Q4 2023.
Cost Implications: ~$1 million increase to the overall project budget.
Pros:
(1) Delays capital and expense investment for 3-5 months, allowing for a single construction
authorization for all airline realignment work.
(2) Potentially allows for improved cost certainty.
(3) Combining procurement packages into larger, more desirable, scopes of work to increase
the subcontractor participation.
Cons:
(1) Does not allow the project team to mitigate schedule delays through identification of
unforeseen conditions that would be identified during the enabling work.
(2) Delays United Airlines Gate allocation on Concourse B in September 2025
(3) Delays the GCCM from beginning work in tenant lease spaces that are available for
construction now.
(4) Costs will continue to escalate.
(5) Delaying the work could create unforeseen schedule impacts from adjacent Port projects
performing work in 2024.
(6) Significantly reduces the advantages of the GCCM contracting method by delaying the
work the mechanical and electrical subcontractors could negotiate and perform now.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. 8d Page 6 of 8
Meeting Date: September 26, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Alternative 2 – Authorize funding for the construction of enabling work as requested.
Cost Implications: $14.4 Million
Pros:
(1) Allows enabling work to progress while design is completed for the base program work,
improving schedule.
(2) Enables long lead items to be procured as part of the enabling package to improve
schedule.
(3) Provides greater cost certainty for the enabling package.
(4) Aligns with the current scheduling coordination with adjacent Airport projects.
Cons:
(1) Breaks the project scope up into smaller segments that may not be as attractive to
subcontractor partners.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$35,000,000
$35,000,000
$70,000,000
Previous changes – net
$34,000,000
($2,000,000)
$32,000,000
Current change
$0
$0
$0
Current Budget
$69,000,000
$33,000,000
$102,000,000
AUTHORIZATION
Previous authorizations
$23,400,000
$9,800,000
$33,200,000
Current request for authorization
$1,500,000
$12,900,000
$14,400,000
Total authorizations, including this request
$24,900,000
$22,700,000
$47,600,000
Remaining amount to be authorized
$44,100,000
$10,300,000
$54,400,000
Annual Budget Status and Source of Funds
This project, CIP C801158, was included in the 2023-2027 capital budget and plan of finance with
a capital budget of $69 million and an expense budget of $33 million for a total cost of $102
million. The expense components were $0.6M in 2022 and are estimated to be $2.4M in 2023,
$6.5M in 2024, $11.5M in 2025, $7.3M in 2026 and $4.7M in 2027 and will be included in annual
operating budgets. The funding sources will be Airport Development Fund for operating expense
and revenue bonds for capital.
COMMISSION AGENDA – Action Item No. 8d Page 7 of 8
Meeting Date: September 26, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Financial Analysis and Summary
Project cost for analysis
$102,000,000
Business Unit (BU)
Gates
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
CPE of expenses between $0.09-$0.48 in 2023-2027
CPE of capital $0.22 starting in 2027
Future Revenues and Expenses (Total cost of ownership)
These improvements will replace aging and deficient infrastructure and building systems and
improve overall operation and maintenance of Concourse B Ramp. The project team will continue
to coordinate with Aviation Maintenance as the extents of operating and maintenance costs can
be more accurately evaluated with further design development. Complete upgrade and
replacement of the HVAC system serving the project footprint increases code compliant leasable
space, giving the Port flexibility and potential for increased revenues.
ADDITIONAL BACKGROUND
The project team is meeting with adjacent projects to coordinate project schedules, scope
overlap and other necessary items to limit construction impacts to normal airport and tenant
operations.
• Baggage Optimization Program
• Main Terminal Low Voltage Upgrades
• North Main Terminal Redevelopment
• Concourse HVAC Infrastructure Renewal and Replacement Program (CHIRRP)
• 2024 Airfield Improvement Project
• 2026 Airfield Improvement Project
ATTACHMENTS TO THIS REQUEST
(1) Presentation
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
September 12, 2023 – The commission was briefed on the program status and schedule for future
authorization requests.
February 14, 2023 – The commission authorized $7,000,000 to facilitate the following actions: (1)
amend a project-specific design contract, and (2) execute a Change Order to the General
Contractor/Construction Manager Pre-Construction Services contract.
March 23, 2021 – The Commission authorized $26,000,000 to facilitate the following actions: (1)
execute project specific Service Agreements for project management, construction
COMMISSION AGENDA – Action Item No. 8d Page 8 of 8
Meeting Date: September 26, 2023
Template revised June 27, 2019 (Diversity in Contracting).
management, design services, and testing and special inspections; (2) to utilize a General
Contractor/Construction Manager (GCCM) and execute a GCCM construction contract for pre-
construction services; (3) to use port crews; and (4) to execute a Memorandum of Agreement
(MOA) between the Port of Seattle (Port) and United Airlines.
