Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8e
ACTION ITEM
Date of Meeting
October 24, 2023
DATE: September 12, 2023
TO: Stephen P. Metruck, Executive Director
FROM: Jeffrey Wolf, Director, Aviation Commercial Management
Khalia Moore, Senior Manager, Airport Dining and Retail
SUBJECT: Lease and Concession Termination Agreements for Airport Dining and Retail (ADR)
locations affected by the Concourse C Expansion Project (CCE) and Concourse A Duty-
Free (Duty-Free) Construction.
Amount this request: $2,479,145
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) execute Termination
Agreements; (2) payout where applicable Net Book Value (NBV) associated with the Termination
Agreement; (3) execute new Lease and Concession Agreements for certain ADR Tenants
impacted by the upcoming CCE and Duty-Free projects.
Termination Agreements
Termination Agreements associated with the CCE project effective January 8, 2024:
• Seattle Air Ventures JV, locations CC-03 (Hudson) and CC-04 (Elliot Bay Books)
• Terminal Getaway Spa Seattle, LLC location CC-05 (Terminal Getaway Spa)
• LaTrelle’s Express, Inc., location CC-06A (Subway)
• Beecher’s Homemade Cheese, LLC, locations CC-06B (Beecher’s Handmade Cheese) and
CC-07 (Beecher’s Beer & Wine)
• Planewear, location CT-27 (Planewear)
• Host BF Foods, location CT-06 (Stonehouse Café)
Termination Agreements associated with the Duty-Free Expansion Project anticipated to be
December 31, 2025 (actual termination date will be determined following the completion of the
Duty-Free Request for Proposal process throughout 2024):
• Terminal Getaway Spa Seattle, LLC location CA-03 (Terminal Getaway Spa)
• InMotion SEA, LLC location CA-07 (InMotion Entertainment)
• Stellar Bambuza SEA, LLC location CA-09 (Swarovski)
COMMISSION AGENDA – Action Item No. 8e Page 2 of 5
Meeting Date: October 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
NBV Amounts
NBV buyout Amounts for the applicable Lease and Concession Agreements broken out by project
impact are as follows:
CCE Project
Seattle Air Ventures JV: $1,000,318
Terminal Getaway Spa Seattle, LLC: $ 482,756
Total Concourse C Expansion Buyout $1,483,074
Concourse A Duty Free
InMotion SEA, LLC: $ 211,155
Stellar Bambuza SEA, LLC: $ 402,008
Terminal Getaway Spa Seattle, LLC: $ 382,908
Total Concourse A Duty-Free Buyout $ 996,071
Total Buyout $2,479,145
New Lease and Concession Agreements
New Lease and Concession Agreements associated with the CCE project:
• Planewear: Replaces the current location, CT-27, impacted by CCE construction.
New Lease and Concession Agreement associated with the Concourse A Duty-Free Expansion
Project:
• SeaTac Bar Group, LLC replaces the impacted location, CA-04
• Sun’s Inc. replaces the impacted location, CA-06
EXECUTIVE SUMMARY
CCE Project:
On March 10, 2020, April 12, 2022, and September 26, 2023, Commission was provided a public
briefing on the status of the Concourse C Expansion project. In addition, on September 26, 2023,
Commission was briefed in 2:2:1 on the release of an RFP for the new ADR locations being created
as part of the CCE project as well as additional locations in areas surrounding Concourse C.
As construction is anticipated to begin in January of 2024 for CCE, early termination of the
affected spaces is required. Affected locations that will be required to permanently close due to
this construction project include (lease term in parentheses):
On February 14, 2023, Commission authorized a Tenant Reimbursement Agreement with
Planewear, LLC to relocate their space from CT-27 to CT-09. This request is specifically for the
COMMISSION AGENDA – Action Item No. 8e Page 3 of 5
Meeting Date: October 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Space
Number
Tenant
Name
Locaton
Name
Contract Term
Expiration
Status
CA-03 Terminal Getaway Spa Seattle Terminal Getaway Spa Seattle September 30, 2034 NBV Buyout
CA-04 Sun's Inc. Manchu Wok December 31, 2026 Replacement Space
CA-06 Seatac Bar Group, LLC Africa Lounge December 31, 2026 Replacement Space
CA-07 InMotion SEA, LLC InMotion Entertainment June 30, 2031 NBV Buyout
CA-09 Stellar-Bambuza SEA JV Swarovski January 31, 2031 NBV Buyout
Tenant
Name
Locaton
Name
Contract Term
Expiration
Status
CC-03
Seattle Air Ventures, JV Hudson December 31 ,2027 NBV Buyout
CC-04 Seattle Air Ventures, JV Elliot Bay Books December 31 ,2034 NBV Buyout
CC-05 Terminal Getaway Spa Seattle Terminal Getaway Spa September 30, 2031 NBV Buyout
CC-06A Beecher's Handmade Cheese Beeher's Handmade Cheese December 31 ,2023 Natural Expiration-No Buyout
CC-06B Latrelles Express, Inc. Subway December 31 ,2023 Natural Expiration-No Buyout
CC-07 Beecher's Handmade Cheese Beecher's Beer and Wine December 31 ,2023 Natural Expiration-No Buyout
CT-06 Host BF Foods Stonehouse Cafe December 31 ,2023 Natural Expiration-No Buyout
CT-27 Planewear Planewear December 31 ,2034 Replacement Space
Executive Director to execute a new Lease and Concession Agreement for Planewear in the new
location.
Concourse A Duty-Free Project:
On October 26, 2021, Commission authorized the completion of a Project Definition Document
(PDD) for the Concourse A Duty-Free Project as well as authorized the release of a Request for
Proposal (RFP) to select a Duty-Free Operator.
The remaining term of the impacted areas is as follows:
The construction of the Concourse A Duty-Free Expansion is anticipated to begin in Q4 2025/Q1
2026, therefore early termination of these impacted locations is required. Per the Lease and
Concessions Agreement for CA-03, Terminal Getaway Spa, CA-07, InMotion Entertainment and
CA-09, Swarovski, the Port is required to pay Net Book Value of the initial investment if the space
is reclaimed prior to the natural expiration of the lease.
As part of the Lease and Concession Agreement Amendments dated June 22, 2016, for spaces
CA-04, Manchu Wok and space CA-06, Africa Lounge, the Port is required to provide a new
location should the Port reclaim the space prior to the natural termination of the agreement.
This request is for the Executive Director to execute new Lease and Concession Agreements for
replacement space for SeaTac Bar Group, LLC and Sun’s Inc.
Net Book Value Payout:
As part of the early termination, the Port is required to reimburse the affected tenants the
remaining Net Book Value for their space based on their initial investment. In some cases, the
COMMISSION AGENDA – Action Item No. 8e Page 4 of 5
Meeting Date: October 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
affected tenants’ investments have been fully amortized for their location (Stonehouse Café)
therefore a Net Book Value reimbursement is not required and in other cases the natural contract
expiration is December 31, 2023 (Beecher’s, Beecher’s Beer and Wine, and Subway)
JUSTIFICATION
As stated in previous briefings and authorizations to Commission, the completion of both the
Concourse A Duty-Free Expansion and the Concourse C Expansion projects will augment the
overall ADR program by providing more offerings to various passenger demographics, provide
new opportunities for businesses at the airport and enhancing the overall customer experience.
Although permanently closing locations within the airport is not always ideal, staff did consider
all options before seeking authorization for these projects.
Staff has committed to providing the affected tenants a least sixty (60) days’ notice before
termination and closure of their location. Staff will delay the closures of the units until there is
certainty from the general contractor that work is to begin: anticipated closure for Concourse C
Expansion is currently January 2024, and Q4 2025 for Concourse A Duty Free. Staff has worked
closely with the affected tenants and most of the concessionaire employees impacted by these
unit closures will be retained within other locations operated by the impacted tenants. Any
concessionaire employees not directly transferred to other ADR concession locations will be
placed in the employee continuity pool with Port Jobs. Planewear, LLC; SeaTac Bar Group, LLC;
and Sun’s Inc. have been offered and have accepted comparable locations.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Staff is recommending the second, preferred alternative described below.
Alternative 1 – Relocate all affect tenants into the CCE Project
Cost Implications: $0
Pros:
(1) Doesn’t require the Port to undergo the RFP process.
Cons:
(1) This option inhibits the process of fair competition for leasing opportunities.
(2) Port will not get the benefits of a competitive process and innovations available with
the RFP process.
(3) No new opportunities will be available to new businesses interested in entering or
growing within the ADR program.
(4) This option does not follow the Lease and Concessions agreement stipulations for taking
back space for operational need.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. 8e Page 5 of 5
Meeting Date: October 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Alternative 2 – Issue the Termination Agreements
Cost Implications: $2,479,145
Pros:
(1) Follows the process identified in the affected tenants Lease and Concession Agreements
(2) Will not delay the start of construction for the CCE project.
Cons:
(1) May result in the loss of some staff currently within the airport.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Financial Analysis and Summary
Project cost for analysis
$2,479,145 (buyout amount)
Business Unit (BU)
Airport Dining and Retail (ADR)/Commercial
Management
Effect on business performance
(NOI after depreciation)
Included as part of the CCE and Duty-Free project costs
IRR/NPV (if relevant)
N/A
CPE Impact
N/A
ATTACHMENTS TO THIS REQUEST
(1) Presentation
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
March 10, 2020
October 26, 2021
April 12, 2022
February 14, 2023
September 26, 2023