Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
10b
ACTION ITEM
Date of Meeting
December 12, 2023
DATE : November 14, 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 Request for Proposal for Eight Various Food and Beverage
Locations and Five Various Retail Locations Within the New Concourse C Expansion
and Surrounding Areas at Seattle-Tacoma International Airport (SEA)
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) conduct a Request for
Proposal (RFP) with recommended adjustments per the November 14, 2023, Commission
Briefing and noted in the Executive Summary below and (2) execute a Lease and Concession
Agreement with selected proposers for the 13 locations known as CCE-RFP. The following
locations that are within the CCE-RFP in the eight (8) food and beverage and five (5) retail
opportunities associated with the new Concourse C Expansion (CCE) project:
Food and Beverage locations: CC-26, CC-28, CC-30, CC-37, CC-38, CC-40, CC-41, and NE03.
Retail locations: CT-08, CT-07, CT-27, CC-25, and CC-27 .
EXECUTIVE SUMMARY
The continued redevelopment of the Airport Dining and Retail (ADR) Program offers an excellent
opportunity to advance the Port’s Century Agenda goals by enhancing the Airport’s profile as the
preferred gateway to the Pacific Northwest, by promoting job growth, by creating new
opportunities for small, local, and disadvantage businesses, and by meeting the expectations of
the traveling public for quality food service, retail products, and personal services.
The ADR program is an important element of the Port’s ongoing efforts to provide outstanding
customer service and improve the traveling experience. In addition, the businesses generate
significant revenue that is reinvested to support airport operations and capital improvements.
This request is for new ADR locations that are being constructed as part of the CCE Project to be
released for concessions bidding opportunities at SEA. This is the last new space opportunity
within the ADR program until the potential new retail opportunities associated with the South
Concourse renovation project. All other ADR RFPs will be associated with the natural expiration
of current locations lease terms.
COMMISSION AGENDA – Action Item No. 10b Page 2 of 4
Meeting Date: December 12, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Staff will utilize the same RFP process that reflect Commission’s guidance used in past ADR
Program redevelopment Lease Groups 2 – 5 with a change to small business exemption for Labor
Harmony Agreement. Previously, small business firms with 35 or more employees were required
to obtain an LHA. As part of this RFP, the requirement will change to small business firms
having three or more units being required to obtain an LHA. Firms with less than three units
will be exempt from this requirement.
In the event that the timing of the Labor Harmony Agreement is adjusted in the future, the
Executive Director will administer an amendment to the RFP.
JUSTIFICATION
The CCE project is the latest and one of the last projects to add new ADR locations into the overall
ADR inventory. The approval of these proposed RFP opportunities continues to support the
Port’s Century Agenda to create 100,000 new jobs and provide opportunities for small, local, and
disadvantaged businesses.
The RFP bidding opportunities will be comprised of both single unit and multi-unit packages.
There will be one food and beverage package and one retail package, and both will consist of two
locations. There will be at least one (1) location specifically identified for small business proposals
only. Currently, all locations are designated as open concept categories to allow for greater
variety of proposals and staff is still evaluating concept specific needs on a space-by-space basis.
Diversity in Contracting
The ADR program is governed by the Federal Aviation Administration (FAA) and will include
Airport Concession Disadvantage Business Enterprise (ACDBE) aspirational goals in line with the
Aviation Business Goals and Objectives. Current 2023 goals for ACDBE participation stands at
23.5%.
DETAILS
Schedule
Preliminary RFP Schedule for the RFP:
Commission authorization to release RFP
December 2023
Release RFP Documents
Q1 2024
Written Proposals Due
Q2 2024
Award and Lease Agreement Execution
Q3 2024
Business Terms
Food and Beverage Lease and Concession Agreements will be for a period of twelve (12) years.
Retail Lease and Concession Agreements will be for a period of ten (10) years. The previous
standard for contract lease terms has been eight (8) years for retail and ten (10) years for food
COMMISSION AGENDA – Action Item No. 10b Page 3 of 4
Meeting Date: December 12, 2023
Template revised June 27, 2019 (Diversity in Contracting).
and beverage. Increased costs to build and the impact those increased costs have had on the
time in which a return on investment is realized, has been a point of focus for Staff. Staff
recommends extending the standard term for retail from eight (8) years to ten (10) years and
food and beverage from ten (10) years to twelve (12) years. This move aligns with rightsizing of
contract terms and providing the spaces in a demoed condition as staff recommended to
Commission on March 8, 2022.
There are multiple locations within the Concourse C Expansion project that are not a part of this
RFP release as there are extenuating circumstances regarding the leasing of those locations: six
(6) introductory kiosk locations, which have a limited contract term and space CC-29, which is
allocated as a contractually required replacement space for a displacement.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 - Directly negotiate all thirteen (13) opportunities individually.
Pros:
(1) Doesn’t require the Port to undergo the RFP process.
Cons:
(1) Inhibits the process of fair competition.
(2) Port will not get the benefits of a competitive process and innovations available with
each of these RFPs.
This is not the recommended alternative.
Alternative 2 – Issue competitive RFPs for the thirteen (13) opportunities.
Pros:
(1) Allows for fair competition.
(2) Creates additional opportunities for new small, WMBE and ACDBE businesses and the
introduction of new innovations in technology as identified in the RFP proposals.
Cons:
(1) Due to the current economic environment, the Port may receive limited responses to
the RFP.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
The additional thirteen (13) units will provide an increase in new non-aeronautical revenue at
SEA estimated to range from $15 -$20 million per year depending on final mix of uses (food and
beverage vs. retail), lease terms, and passenger demand.
COMMISSION AGENDA – Action Item No. 10b Page 4 of 4
Meeting Date: December 12, 2023
Template revised June 27, 2019 (Diversity in Contracting).
On October 24, 2023, the Commission approved termination agreements of the current
Concourse C operations and net book value buyout (NBV) for three (3) locations impacted by the
Concourse C construction. The value of the NBV buyouts is approximately $2.5 million.
Project cost for analysis
$0
Business Unit (BU)
Aviation Commercial Management
Effect on business performance
(NOI after depreciation)
NOI will increase with new non-aeronautical revenue
from 13 additional ADR units but be offset by the NBV
buyout of the three locations impacted by the
construction of the new Concourse C facility.
IRR/NPV (if relevant)
N/A
CPE Impact
N/A
ATTACHMENTS TO THIS REQUEST
(1) Presentation
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
March 8, 2022: ADR Tenant Build-Out Analysis
October 24, 2023: Commission approved 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 in the amount of $2,479,145.
