Template revised January 10, 2019.

COMMISSION

AGENDA MEMORANDUM

Item No.

10b

ACTION ITEM

Date of Meeting

July 25, 2023

DATE : July 19, 2023

TO: Stephen P. Metruck, Executive Director

FROM: Sarah Cox, Director Aviation Environment and Sustainability

Eileen Francisco, Director Aviation Project Management Group

SUBJECT: Sound Insulation Program Briefing and Apartment Sound insulation Program - Phase

2 Construction Authorization (CIP #C200096)

Amount of this request:

Total estimated project cost:

$133,515,000

ACTION REQUESTED

Provide a briefing to the Commission and request Commission authorization for the Executive

Director to advertise, award and execute a major public works contract, include a Project Labor

Agreement, and authorize construction of phase 2 of the apartment program with previously

authorized funds for a $0 request with a total program cost of $133,515,000.

EXECUTIVE SUMMARY FOR BRIEFING

As part of the Port of Seattle’s (Port) long-term commitment to communities surrounding the

airport, the Port offers sound insulation for eligible properties within the current Federal Aviation

Administration (FAA) approved noise remedy boundary. On February 25, 2020, the Commission

adopted Motion 2020-04 to implement the acceleration of the airport’s noise mitigation (sound

insulation and acquisition) programs with direction to complete prior to 2026.

To-date, the Port has provided sound insulation to over 9,400 single family homes and five

condominium complexes. Our current focus is apartments, places of worship, completion of the

Villa Enzian condominium complex and participating single family homes. Staff will share with

you the success stemming from multiple outreach campaigns and the subordination documents

initiative that has led to 9 buildings with 320 residential units being in construction and design

phases.

Commission Construction Authorization for Phase 2 of the apartment program is being requested

today as a separate action item. The objectives of this briefing are to: (1) inform the Commission

about progress made since the Q3 2022 briefing, and (2) inform the Commission about ongoing

work.

COMMISSION AGENDA – Action Item No. 10b Page 2 of 9

Meeting Date: July 25, 2023

Template revised June 27, 2019 (Diversity in Contracting).

Program Status Update

• Program is on target for completion of participating properties no later than the end of

2026.

• Progressing with community outreach, project estimates, design, and acoustic testing of

eligible properties within the current noise remedy boundary.

• Active construction in the Single-Family Homes program.

• Major works bid opening completed for phase 1 of the apartment program, pending

recommendation for award and FAA concurrence.

• Aligning with the Office of Equity, Diversity and Inclusion (OEDI) to enhance equitable

project implementation strategies.

The briefing will cover these topics, as well as progress on project completion for single-family

homes, condominiums, places of worship and apartments.

Project Funding

The FAA Airport Improvement Program (AIP) grants for noise mitigation projects at SEA compete

nationwide with sound mitigation projects at other airports. The FAA determines annually the

availability of funds depending upon the number of applications from all airports nationwide.

Although not guaranteed, noise grants typically fund approximately 80% of eligible costs with the

remaining amount being funded through revenue bonds. The airport would be required to fund

the remaining 20% plus any ineligible costs. To manage the uncertainty of grant availability and

ultimately fund the balance of costs not grant-funded, the Port would use commercial paper as

an interim funding source and follow federal procurement guidelines, so the projects remain

eligible for reimbursement at later dates if AIP funding becomes available.

The FAA is anticipated to award approximately $10 million in Airport Improvement Program (AIP)

grant funding per year. The Port would continue to apply for grants to fund retroactive spending.

However, there is no guarantee of FAA future grant funding and Port sound insulation

expenditures would be made at risk.

The Port has received the following grants for work in progress:

• Single-Family Home Sound Insulation- $5.2M.

• Highline Schools Sound Insulation- Des Moines Elementary School $3.1 million.

• Highline Schools Sound Insulation- Highline High School $11.7 million.

• Condominium Sound Insulation- $4.1 million.

• Apartment Sound Insulation- $21.3 million.

• Places of Worship – $5M.

Diversity and Contracting

The Sound Insulation Program is partially funded with FAA Airport Improvement Program (AIP)

grants, the Port’s Diversity and Contracting Department has established a federally certified

COMMISSION AGENDA – Action Item No. 10b Page 3 of 9

Meeting Date: July 25, 2023

Template revised June 27, 2019 (Diversity in Contracting).

Disadvantaged Business Enterprise (DBE) goal for consultants and contractors who are

supporting the overall program(s). DBE goals follow the United States Department of

Transportation’s DBE program requirements. DBE goals have been established for this program

and the DBE Plan is administered in accordance with 49 CFR Part 26 by the Diversity in Contracting

Department. Current sound insulation program DBE goals:

• Consultant design contract – 14% DBE goal.

• Single-family homes construction – 5% DBE goal.

• Condominium construction – 5% DBE goal.

• Apartment phase 1 construction – 7% DBE goal.

• Apartment phase 2 construction – 7% DBE goal.

• Places of Worship – 7% DBE goal.

Potentially eligible projects

The following provides a summary of progress on the Capital Improvement Programs (CIPs)

associated with the Sound Insulation Program (SIP). Project eligibility criteria has to be met

including being within the current noise remedy boundary, passing a noise audit of an interior

noise level of 45 dB Day-Night Average Sound Level (DNL) or greater, and built after applicable

building codes were enacted that met noise reduction standards for the area (1986 in Des Moines

and 1987 in all other jurisdictions):

• Single-Family Home SIP

Approximately 140 homes within the noise remedy boundary were potentially eligible to

participate when program acceleration began. There have been 77 property owners that

have applied to participate. Here is a summary of the applicants:

• 23 homes were completed in 2021-22.

• 10 homes to be completed in 2023.

• 1 home to be completed in 2024.

• 2 homes have acoustic testing results pending.

• 15 homes failed acoustic testing and do not meet sound insulation qualification

requirements.

• 26 homes have been placed on hold by the owner.

• All subordinations needed have been received to date.

• Condominium SIP

3 condominium complexes within the noise remedy boundary were potentially eligible to

participate.

• Villa Enzian Condominium (28 units) substantially completed in 2023.

• The remaining complexes have declined and remain potentially eligible to

participate.

• Apartment SIP

18 complexes (903 units) are within the noise remedy boundary and are potentially

eligible to participate.

COMMISSION AGENDA – Action Item No. 10b Page 4 of 9

Meeting Date: July 25, 2023

Template revised June 27, 2019 (Diversity in Contracting).

•

Through extensive outreach, 14 of 18 complexes expressed interest in the

program and were briefed on the details; 2 of the 14 complexes declined acoustic

testing.

• 11 complexes (622 units) acoustically tested eligible for the program (based on

FAA criteria) and 1 complex tested ineligible.

• 1 complex declined to participate after acoustic testing was completed.

• 10 complexes are actively participating in the program.

• Construction for phase 1 of the apartment program is anticipated to commence

Q4 – 2023 (5 complexes).

• Commission Construction Authorization for phase 2 is being requested today as

an action item (4 complexes).

• Phase 3 construction authorization (1 complex) targeting Q1 – 2025.

• Places of Worship SIP

7 properties within the noise remedy boundary are potentially eligible to participate.

• Through extensive outreach, 5 of 7 properties have currently expressed interest

in the program.

• Acoustic testing was completed in June 2022 with 4 confirmed as eligible and 3

are actively participating in the program.

• Design is underway for 3 of the eligible participating properties.

• Returning to Commission Q4 – 2023 for construction authorization.

• Approach Transition Zone (ATZ)

• Voluntary acquisition of residential units in the 3

Runway South ATZ

– estimated 1 home and 1 apartment complex with 6 units.

Highline School District

• Memorandum of Agreement

• $100 million shared equally with the FAA to contribute to the noise mitigation

work at 15 schools.

• 10 of 15 are complete; the 11

passed its bond vote in November with a scheduled

completion of July 2027.

Program Risks

As discussed in prior Commissioner briefings, there are several uncertainties and challenges

related to program implementation:

• Eligible properties that have declined to participate are still able to at a later date,

however, completion by the end of 2026 may not be feasible. Staff is committed to

ongoing outreach.

COMMISSION AGENDA – Action Item No. 10b Page 5 of 9

Meeting Date: July 25, 2023

Template revised June 27, 2019 (Diversity in Contracting).

•

Obtaining subordination or consent agreements is often challenging and can delay the

program. The use of a specialty consulting firm has achieved progress and Staff will

continue to monitor the consultant’s work and adjust the schedule accordingly.

• Supply chain material issues continue to impact procurement of long lead sound

insulation products (doors & windows).

Staff will work to incorporate lead times into project schedules.

EXECUTIVE SUMMARY FOR AUTHORIZATION REQUEST

The Sound Insulation Program exists to help reduce community noise impacts caused by aircraft

utilizing the Airport. As part of its long-term commitment to communities surrounding the

Airport, the Port offers sound insulation for eligible properties within the current Federal Aviation

Administration (FAA) Airport Noise Compatibility (Part 150) noise remedy boundary.

Construction work typically includes installation of new Sound Transmission Class (STC) rated

windows, doors, and storm doors, as well as supplemental ventilation to meet the FAA standard

of 45 decibel (dB) Day-Night Average Sound Level (DNL) interior noise that can be achievable with

at least a 5 dB reduction. The program currently has single-family home construction underway.

The apartment program phase 1 construction bid opening was completed, pending award and

contract execution. This request will allow the Port to commence the second phase of

construction for the apartment program. The sound insulation improvements for the current

participating condominium were completed Q2 – 2023. The Sound Insulation Program is on-track

to complete in accordance with Commission Motion 2020-04 requiring completion no later than

2026.

Phase 2 construction authorization is a $0 funding request. Initially, phase 1 construction

authorization included an extensive mechanical ventilation scope in the estimate which was later

removed from the design per the property owner’s request. The Commission funding

authorization for phase 1 construction provides sufficient funds for both phase 1 and phase 2

apartment program construction. Phase 2 construction estimate is $10 million.

This request does not include work associated with condominium buildings, single-family homes,

places of worship and south Approach Transition Zone (ATZ) voluntary residential acquisition.

Staff will return to Commission to request authorization(s) associated with these items and

subsequent construction authorization(s) at a later date.

JUSTIFICATION

Resolution No. 3683 was adopted by the Commission on October 22, 2013, and included all

recommendations from the Part 150 Study, including sound insulation for eligible structures

within the Noise Remedy Boundary. This authorization will help to meet the requirements of

Resolution No. 3683 to conduct an ongoing Sound Insulation Program (SIP).

COMMISSION AGENDA – Action Item No. 10b Page 6 of 9

Meeting Date: July 25, 2023

Template revised June 27, 2019 (Diversity in Contracting).

In February 2020, the Commission passed Motion 2020-04 to accelerate this work with the goal

of completing work on these programs by the end of 2026. Moving forward with the apartment

sound insulation is critical to compliance with the Motion.

Diversity in Contracting

The apartment program and the places of worship program will be partially funded with FAA

Airport Improvement Program (AIP) grants, the Port will follow the United States Department of

Transportation’s Disadvantage Business Enterprise (DBE) program requirements. A DBE goal of

7% has been established for apartment phase 2 construction, the DBE Plan will be administered

in accordance with 49 CFR Part 26 by the Diversity in Contracting Department. The DBE goal was

calculated from the number of federally certified DBE firms which perform the scope(s) of work

as identified for the project.

DETAILS

This request is for construction authorization includes 4 apartment complexes (phase 2) that are

eligible to participate in the program. Staff are planning to return to Commission requesting

construction authorization on subsequent construction phases as necessary.

Under state law, (R.C.W. 53.54.030), any owner who participates in the Program is required to

provide the Port with an Avigation Easement in return for the Port paying the cost of the

improvements. A Subordination Agreement or Consent is required to convey the Avigation

Easement if there is a mortgage, deed of trust, or other lien on the property.

Scope of Work

Typical construction to include:

(1) STC rated solid core doors.

(2) STC rated windows.

(3) Storm doors.

(4) Positive exterior air ventilation.

(5) Other associated work as determined to be necessary by the architect to reduce noise

or to meet code.

(6) Regulated materials abatement as necessary to facilitate these installations.

Schedule

The apartment program is a multi-phased design and construction program. Design and

construction will proceed concurrently throughout the duration of the program (2021-2026). The

first apartment construction package bid opening is complete with a construction notice to

proceed anticipated Q3 – 2023. Phase 2 (this request) bid opening is anticipated to occur Q1 –

2024 and will be followed by subsequent design and construction packages until completion.

Staff are planning to return to Commission requesting construction authorization for design

COMMISSION AGENDA – Action Item No. 10b Page 7 of 9

Meeting Date: July 25, 2023

Template revised June 27, 2019 (Diversity in Contracting).

packages throughout the duration of the program. The schedule below shows design and

construction of phase 1.

Activity CIP #C200096 Apartment Program

Commission design authorization

2021 Quarter 3

Design start

2023 Quarter 1

Construction start

2024 Quarter 1

Cost Breakdown CIP #C200096

This Request

Total Project

Design

$34,461,000

Construction

$99,054,000

Total

$133,515,000

ALTERNATIVES AND IMPLICATIONS CONSIDERED

Alternative 1 – Authorize Apartment Sound Insulation Program to commence phase 2

construction.

Cost Implications: Estimated at $10,000,000

Pros:

(1) Meets commitment to noise remediation in the community per Commission Resolution

3683.

(2) Maintains the critical path program schedule to meet the intent of Commission Motion

2020-04 to accelerate the airport’s noise mitigation programs prior to 2026.

(3) Allows staff to begin construction of phase 2 of the apartment program.

(4) Provides a direct community benefit to reduce aircraft noise impacts.

Cons:

(1) The Port assumes the financial risk for this work if FAA AIP grant funding cannot be

secured.

This is the recommended alternative.

FINANCIAL IMPLICATIONS

Cost Estimate/Authorization Summary

(CIP #C

200096)

Capital

Expense

Total

COST ESTIMATE

Original estimate

$133,515,000

Current change – net

$133,515,000

Total Estimated

$133,515,000

AUTHORIZATION

Previous authorizations

$74,461,000

COMMISSION AGENDA – Action Item No. 10b Page 8 of 9

Meeting Date: July 25, 2023

Template revised June 27, 2019 (Diversity in Contracting).

Current request for authorization

Total authorizations, including this request

$74,461,000

Remaining amount to be authorized

$59,054,000

Annual Budget Status and Source of Funds

This project, CIP C200096, was included in the 2023-2027 capital budget and plan of finance with

a budget of $133,515,000. The funding sources would be AIP grants, commercial paper and

revenue bonds. This project received Majority in Interest (MII) support from the airlines on

August 3, 2021.

The capital cost of the entire apartment program is estimated at $133,515,000. The funding plan

projects $69 million of AIP grants from 2022-2029. Therefore, the Rate Base Cost is estimated at

$64,515,000. The Rate Base Impact reflects a 25-year debt service term. Debt service would be

charged as landing fee when each apartment complex construction is substantially completed,

and grants are received.

There are project risks and uncertainties in the Port’s funding plan; however, the focus is

designed to allow the Port to minimize the airline rate base impacts. Lower costs or reduced

scope (due to ineligibility or owner reluctance to participate), combined with anticipated grants

would further reduce the rate base impacts.

Financial Analysis and Summary

Project cost for analysis

$133,515,000

Business Unit (BU)

Airfield Movement Area

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

$.21 in 2027

Future Revenues and Expenses (Total cost of ownership)

Once the project is complete and the avigation easement is permanently recorded on the

parcel(s), there will be no further expenses incurred.

ATTACHMENTS TO THIS REQUEST

(1) Presentation Slides.

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS

August 9, 2022 – Commission briefing on sound insulation programs and construction

authorization for Phase 1 Apartment Program.

COMMISSION AGENDA – Action Item No. 10b Page 9 of 9

Meeting Date: July 25, 2023

Template revised June 27, 2019 (Diversity in Contracting).

December 14, 2021 – Commission authorized design services for Places of Worship Sound

Insulation Program.

August 10, 2021 – Commission briefing on sound insulation programs and design

authorization for the Apartment Program.

August 10, 2021 – Commission authorized design for the Apartment Sound Insulation

Program.

December 15, 2020 – Commission briefing on sound insulation programs, acceleration and

staff recommendations.

December 15, 2020 – The Commission authorized consultant services IDIQ contract to

provide sound insulation program development support for single-family homes,

apartments, and places of worship.

February 25, 2020 – Commission briefing on sound insulation programs, acceleration, and

staff recommendations. Motion 2020-04 of the Port of Seattle Commission directing the

acceleration of the sound insulation program at the Airport.

July 10, 2018 – The Commission authorized contracting for Sound Insulation Architect and

Project Oversight Consulting for Condominiums.

October 11, 2016 – The Commission authorized contracting for Sound Insulation Architect

and Project Oversight Consulting Services and Job Order Contracting (JOC) for Single-

Family Homes.

October 22, 2013 – Second Reading and Final Passage of Resolution No. 3683 concluding the

Federal Aviation Regulation (FAR) Part 150 Noise and Land Use Compatibility Study

Update for Seattle-Tacoma International Airport.

October 8, 2013 – First Reading of Resolution No. 3683 concluding the Federal Aviation

Regulation (FAR) Part 150 Noise and Land Use Compatibility Study Update for Seattle-

Tacoma International Airport.

April 23, 2013 – The Commission authorized contracting for Sound Insulation Consulting

Services and Job Order Contracting (JOC) for Single-Family Homes.