Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
10c
ACTION ITEM
Date of Meeting
March 26, 2024
DATE : March 18, 2024
TO: Stephen P. Metruck, Executive Director
FROM: Jeff Wolf, Director, Aviation Commercial Management
Eileen Francisco, Director, Aviation Project Management Group
SUBJECT: Airport Food and Beverage Introductory Kiosks (CIP #C801111)
Amount of this request:
$5,850,000
Total estimated project cost:
$7,050,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to 1) authorize the preparation of
construction bid documents, 2) advertise, award, and execute a major public works construction
contract for the Food and Beverage Introductory Kiosk project. The amount of this request is
$5,850,000.
EXECUTIVE SUMMARY
This project will incorporate food and beverage into the framework of Airport Dining and Retail’s
(ADR’s) Introductory Kiosk Program by creating two rotating in-line food incubator concepts.
These concepts will add diversity and flexibility of offerings for SEA passengers in two separate
locations: one on Concourse B (CB-04) and the second in the Central Terminal (CT-02), directly
underneath the recently completed Brewtop Social.
Prior to the solicitation of construction services, the project team is requesting additional budget
to close out the design phase. The Port’s designer has notified the project team of additional
project increases associated with the development of the 100% design package. These cost
increases are a direct result of resolving critical design issues to conform designs to existing
conditions and time associated with the evaluation/approval to reuse the existing kitchen
equipment, where applicable.
JUSTIFICATION
The goal of this project is to create new opportunities for small businesses by reducing the
barriers to entry for food and beverage operators within the ADR Program. Small businesses will
be offered a three-year flexible lease term for the fully-built-out units to provide food and
COMMISSION AGENDA – Action Item No. __10c__ Page 2 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
beverage services. This will allow the operators to determine whether their concept might thrive
in the airport environment without having to make a significant capital investment and commit
to longer lease terms. Both locations will be designed, constructed, and maintained by the Port.
These units will provide the Port with additional non-aeronautical revenue but are primarily
intended to provide opportunities for small businesses to enter the airport food and beverage
market who otherwise would not be able to due to high build-out and start-up costs.
This program is an extension of the widely successful retail kiosk program, which has advanced
multiple small businesses from introductory kiosk opportunities into both intermediate kiosks
and successful RFP respondents for long-term inline spaces.
Between August 2019 and November 2020, $1,200,000 was authorized for planning and design
services. Originally the total project value was estimated at $5,500,000.
Design solicitation and preliminary concept development occurred between April 2021 and
August 2022. After a slight delay, due to COVID, the project kicked off full design in January 2023.
Upon receiving the 100% design submittal in October 2023, critical design issues arose
concerning the approval to reuse the existing kitchen equipment within the CB-04 location.
Design revisions and extensive coordination was required to secure said approval. Delivering the
space with a diminished cookline or fully replacing the gently used equipment would have been
detrimental to both the project vision and budget. These efforts significantly depleted some the
design funds needed to complete design and develop both the permit and bid packages.
Diversity in Contracting
The project team has worked with the Diversity in Contracting and set a women- and minority-
owned business enterprise (WMBE) aspirational goal of 15% for this project.
DETAILS
As a result of the necessary and lengthy design coordination, the Port has reassessed the overall
project budget and determined a budget increase is warranted, in addition to requesting Port
Commission’s authorization of remaining budget.
The value of this request incorporates all known cost increases to close out design, prepare bid
documents, allow the Designer of Record to provide minimal design support during construction,
and allow for project management by a Consultant Project Manager.
Project estimates are consolidated in the table below with the additional $1.55 million increase
reflected within the current estimate.
COMMISSION AGENDA – Action Item No. __10c__ Page 3 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Item
Original Estimate
Current Estimate
Planning & Design
$1,200,000
$2,700,000
Construction
$4,300,000
$4,350,000
TOTAL
$5,500,000
$7,050,000
The additional design coordination required to resolve critical project issues provided insight for
lessons learned, which are as follows:
(1) Recognition that designers new to the Port will require more investment, both
financially and from a project delivery resource standpoint to ensure new designers
are successful in navigating the Port’s processes and design standards. Efficiencies
are gained when new designers are paired with experienced project managers.
(2) In depth oversight by staff familiar with Port standards and practices during design
development is necessary to verify designs conform to the vision of the project and
existing site conditions.
Scope of Work
This project includes all typical components of a food service tenant improvement, with Port
furnished, owned, and maintained equipment.
Specific scope includes new lighting, signage, ceilings, storefront finishes, flooring, casework,
kitchen equipment, furniture, and Mechanical, Electrical and Plumbing infrastructure to support
the future operations.
The Concourse B location (CB-04) repurposes the previous concept’s kitchen. The space is
equipped with all necessary utilities to support a full restaurant cookline, including a hood and
grease duct. All existing utilities are approved for reuse as part of the Food Incubator Program.
The completion of the tenant improvement requires the existing closed-off storefront to be
modified for passenger walk up service, including the addition of a service counter behind a new
decorative storefront façade. A small seating area will also be created within the space.
The Central Terminal location (CT-02), formerly the Anthony’s Grab and Go Fish Bar, requires new
cooking equipment, finishes, and utilities. The façade at this location will need to integrate
seamlessly into the adjacent new Salty’s restaurant storefront, which will be the primary
backdrop for the north side of the Central Terminal. Due to the small size of this location, it will
utilize existing seating in the Central Terminal.
These storefront façades are highly visible, prominent design features which will impact the
overall aesthetic of the airport, especially within the Central Terminal.
COMMISSION AGENDA – Action Item No. __10c__ Page 4 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Both locations include digital signage to easily promote tenants who will be rotated through
these spaces on short-term leases as well as new cook lines and equipment with Type I grease
exhaust, and new finishes.
Schedule
Activity
2024 Quarter 4
2025 Quarter 2
Cost Breakdown
This Request
Total Project
Preliminary Planning
$0
$50,000
Design
$1,500,000
$2,650,000
Construction
$4,350,000
$4,350,000
Total
$5,850,000
$7,050,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Leave Concourse B and the Central Terminal locations vacant and competitively
bid the spaces for two (2) potential new ADR operators to lease.
Cost Implications: $1,200,000 (committed cost used to- date)
Pros:
(1) Remaining capital budget of $4,350,000 could be saved.
(2) Potential to receive greater proposed rent structures as part of the RFP process.
Cons:
(1) Current design and permit development and submissions to date along with costs would
be wasted. As noted above, $1,200,000 has been committed to date.
(2) The RFP process and project schedule for new leased space will take time and further
delay the opening of these locations until approximately 2026.
(3) Limits the number of opportunities for small businesses to operate individual locations
within the airport.
This is not the recommended alternative.
Alternative 2 – Competitively bid the locations just for small business(es).
Cost Implications: $1,200,000 (committed cost used to- date)
Pros:
(1) A specific lease group just for small businesses would guarantee small business
opportunity within the program.
(2) Remaining capital budget of $4,350,000 could be saved.
COMMISSION AGENDA – Action Item No. __10c__ Page 5 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Cons:
(1) Design and construction costs for spaces have been identified as a barrier of entry for
many small businesses especially those entering the airport for the first time.
(2) Given the long lease term, this alternative would establish the same cadence of small
business prospects as all locations within the ADR program limiting opportunities to
every 10-12 years.
(3) Current design and permit development and submissions to date along with costs would
have to be expensed. As noted above, $1,200,000 has been committed to date.
This is not the recommended alternative.
Alternative 3 – Build out the two ADR food incubator kiosk concepts. The Port will incur the cost
for construction and maintenance for the food incubator kiosk concessionaire spaces.
Cost Implications: $7,050,000 capital costs. Estimated annual maintenance costs of $50k- $150k.
Pros:
(1) Provides increased accessibility into the ADR program for multiple small businesses to
test their concepts in an airport environment due to the limited lease term and by
removing the upfront costs associated with a full-scale design and construction process.
(2) Enhances the passenger experience by expanding the widely successful kiosk program
into the food and beverage category and diversifying the offering mix on a more
consistent basis.
(3) The project creates unique architectural interests in Concourse B and Central Terminal.
Cons:
(1) The Port has limited experience in maintaining an operational tenant occupied space.
As a result, the Port anticipates navigating various unknowns regarding the
maintenance needs of the space having only limited lessons learned from the retail
kiosk program to draw from.
(2) Removes units from being bid as part of a larger RFP process and potentially securing a
higher proposed rent structure.
This is the recommended alternative.
COMMISSION AGENDA – Action Item No. __10c__ Page 6 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$5,500,000
$0
$5,500,000
Current change
$1,550,000
$0
$1,550,000
Revised estimate
$7,050,000
$0
$7,050,000
AUTHORIZATION
Previous authorizations
$1,200,000
$0
$1,200,000
Current request for authorization
$5,850,000
$0
$5,850,000
Total authorizations, including this request
$7,050,000
$0
$7,050,000
Remaining amount to be authorized
$0
$0
$0
Annual Budget Status and Source of Funds
This project was included in the 2024 – 2028 capital budget and plan of finance with a budget of
$5,500,000. The capital budget increase of $1,500,000 will be transferred from the Non-
Aeronautical Reserve CIP (C800754) resulting in zero net change to the Aviation capital budget.
The funding source would be the Airport Development Fund (ADF) and revenue bonds.
Financial Analysis and Summary
Alternative 3 (Preferred)
Project cost for analysis
$7 million capital and $50k-$150k of annual expenses
Business Unit (BU)
Commercial Management
Effect on business
performance
New additional non-aeronautical revenue will ramp up from
approximately $500k/year to $1 million/year (based on estimated
comparable sales from similar established tenants) in year 15.
With the Port taking on additional costs to reduce barriers to entry
for these tenants, breakeven is extended to approximately 15-20
years.
NPV
NPV is estimated to be positive based on 15-20 years of revenue
generation.
CPE Impact
N/A.
Future Revenues and Expenses (Total cost of ownership)
COMMISSION AGENDA – Action Item No. __10c__ Page 7 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
New non-aeronautical revenues are estimated to be approximately $500k (year 1) - $1 million
(year 15) based on annual escalation of 3%.
A service agreement for yearly maintenance of these spaces of approximately $50,000 per year
will be required after completion of the project. The financial analysis includes this amount with
an annual increase of 6%.
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
November 17, 2020 – Design Authorization.