Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No. 10c
ACTION ITEM Date of Meeting October 22, 2024
DATE: October 15, 2024
TO: Stephen P. Metruck, Executive Director
FROM: Kyra Lise, Director of Real Estate Development
Richard Duncan, Director of Aviation Business & Properties
SUBJECT: Airport Parking Lot Leases
ACTION REQUESTED
Request Commission authorization for the Executive Director to (i) execute two (2) 30-year
ground leases with options to purchase after 20-years, and one (1) 27-year Ground Lease with
International Boulevard LLC, SEA-TAC Investments LLC, and MPARK LLC (Landlords) for three
parking facilities located adjacent to SEA; and (ii) authorize funds totaling $1.8 million to
reimburse Landlords for pre-possession improvements. Annual rent for the three leases total
$6.8M plus 3% annual escalation, costs to be distributed among several operating budgets.
EXECUTIVE SUMMARY
The proposed acquisition via long term ground lease of 16.5 acres of property adjacent the
airport, currently developed as surface parking, provides the Port with opportunities to address
multiple space needs for access to staging for construction, operations and most pressing, the
need for additional employee parking. Port of Seattle currently manages a parking program for
the employees of its airport tenants. The SEA Real Estate Study identified airport employee
parking constraints as one of the top challenges. The existing North Employee Parking Lot (NEPL)
has 4,100 parking spaces and provides parking for 12,000 employees. Since 2022, the NEPL
program has been at full capacity and has incorporated a waiting list which currently exceeds
1,800 employees with wait times ranging from six to 12 months. Additionally, the three flight
kitchens that serve SEA are not part of the current Employee Parking program but have requested
parking for their staff. Incorporating those flight kitchen employees would increase demand by
an estimated additional 1,000 parkers per month. By 2027, updated forecasts with the flight
kitchen staff estimate the shortage to grow an additional 2,000 – 2,300 stalls, and then grow to
an increased demand for 2,600 - 3,000 additional stalls by 2030.
Amount of this request: $1,800,000 + annual lease costs of $6.8 million
Total estimated project cost:
$1,800,000
COMMISSION AGENDA – Action Item No. 10c Page 2 of 7
Meeting Date: October 22, 2024
Template revised June 27, 2019 (Diversity in Contracting).
To address these pervasive issues a Port working group, consisting of Airport Operations, airport,
dining and retail representatives, airline representatives, Aviation Business and Properties, and
the Port’s Economic Development Real Estate team met to create an Employee Parking Task
Force. It was clear the demand and supply side of the problem needed to be addressed to resolve
the parking shortage situation.
For the demand side, all parties agreed to start a Transportation Management Association (TMA)
currently known as “SEA Moves”. This is a multi-faceted approach to reducing the number of
single occupancy commute trips and lower the demand for parking stalls. (Updates on the TMA
will be provided on a parallel Commission briefing).
Unfortunately, even the most successful TMA (15-20% reduction) would not reduce demand
enough given the Port’s current parking supply, therefore additional parking stalls are needed.
After researching available properties nearby, three privately owned lots were identified (Lot A,
M and C) as available totaling about 16 acres and 2,059 parking stalls.
By incorporating these three lots (2,059 stalls) into the NEPL Employee Parking program (4,100
stalls) and instituting a TMA reducing demand by an estimated 20%, the Port should meet the
parking needs of its tenants well into the 2030s.
JUSTIFICATION
Quickly relieve pressure on the employee parking program and eliminate the current
parking waiting list.
Support the needs of airline partners who are constrained from hiring due to lack of
parking.
Help support flight catering operations to accommodate the catering needs of domestic
and international airline partners’ recent growth.
Take advantage of previously developed but underutilized land.
Provides overnight shift workers opportunities to get to work when mass transit is not
available.
This helps meet the Century Agenda Goal #2, Advance this Region as a Leading Tourism
Destination and Business Gateway but also has impact on the success of Goal #5,
Objective 14: Ensure that all internal and external programs, structures and practices
provide equitable opportunities for all.
Diversity in Contracting
Through long term ground leasing of these properties, there will be opportunities for WMBE and
small businesses to participate within either the design or tenant improvement scopes of work.
COMMISSION AGENDA – Action Item No. 10c Page 3 of 7
Meeting Date: October 22, 2024
Template revised June 27, 2019 (Diversity in Contracting).
These additional parking measures also allow for safer, and close in parking alternatives for
airport staff.
DETAILS
Rent for the three ground leases is $6.8 million per year plus a 3% annual escalation. Following
the execution of the leases, the current owner will construct Port requested improvements on
the properties of which the Port will reimburse. The total reimbursable is estimated at $1.8
million. These improvements are necessary for the parking lots to operate as remote self-parking
locations. Access from the parking lots to SEA will be through a combination of employee shuttle
bus service and walking access. During the term of the ground leases, the Port will be responsible
for all maintenance at the sites. Lots A and C will have Purchase Option Agreements, which will
give the Port the choice to purchase one or both of the properties at the 20-year mark. The
purchase price will be at fair market value as determined through an appraisal process at the
time the option is exercised.
Lot A Lot C Lot M
18220 International Blvd
SeaTac, WA (adjacent to Bow
Lake)
Used as Valet passenger
parking
16025 International SeaTac,
WA (adjacent to Lot M)
Used as Valet passenger
parking
16025 International Blvd
(160
th
Street) SeaTac, WA
(adjacent to Port’s existing
ground transportation lot)
Used as Amazon delivery
staging
300-520 stalls 1,100-1,500 stalls 659 stalls
1.91 acres (83,630 sq ft) 8.48 acres (369,270 sq ft) 6.2 acres (269,927 sq ft)
The Port has conducted abbreviated due diligence on the parking lots to ensure the intended
use is viable. This included Phase 1 Environmental Site Assessments, title reviews, City of
SeaTac code reviews and general property condition assessments.
COMMISSION AGENDA – Action Item No. 10c Page 4 of 7
Meeting Date: October 22, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Schedule
October 23, 2024 – Port signs agreements
December 2024 – April 2025 Port takes possession
Upon completion of improvements, the following estimated dates of operations for the lots would
begin:
Lot A – January 1, 2025
Lot C – June 1, 2025
Lot M – July 1, 2025
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Enter into long term Ground Leases for Lots A, C and M with options to purchase
Lots A and C.
Cost Implications: $6.8 million annual rent (3% annual escalation) plus one-time costs for
improvements ($1.8 million)
Pros:
(1) Provides parking capacity immediately with relatively little improvements needed and
avoids paving greenfield lots.
(2) For the two lots where the Port has an option to buy, the Port would have flexibility
with land use/development in the future.
(3) Provides adjacent aviation and operational support as these SEA proximal sites are all
within 1 mile of the airport.
(4) Lots have utility beyond parking, including construction staging, operations, storage,
cargo staging, or GSE seasonal storage.
(5) A flexible range of uses can spread the costs to multiple cost centers.
Cons:
(1) Large annual lease costs, with an additional $1.8M initial investment.
(2) The Port is locked into a long-term commitment.
(3) These three lots will have a non-compete clause (for commercial parking) until either a
new terminal is constructed or Doug Fox is shut down.
This is the recommended alternative.
Alternative 2 – Do nothing
Cost Implications: 0$
Pros:
(1) Lowest cost option.
(2) May force employees on the waiting list to use more public transportation.
COMMISSION AGENDA – Action Item No. 10c Page 5 of 7
Meeting Date: October 22, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Cons:
(1) Does not address short-, medium- or long-term employee parking concerns at SEA.
(2) Equity concerns for low-wage employees who would be forced to pay commercial rates
at 3
rd
party lots while on the SEA waitlist.
(3) Future opportunities for control of parking lots near the airport may not exist
(4) Limits opportunities for other flexible uses to address other needs of the airport.
This is not the recommended alternative.
Alternative 3 – Continue to search market for other sites
Cost Implications: Unknown
Pros:
(1) New properties may hit the market in the future and may have more favorable business
terms.
Cons:
(1) To date, discussions with other property owners have not yielded favorable business
terms.
(2) A different lot will most likely not have the favorable geographic proximity as these
three.
(3) There is an immediate need for parking relief. Searching the market for alternative
parking lot opportunities will significantly delay solving this current problem.
This is not the recommended alternative.
FINANCIAL IMPLICATIONS
Historically, the Employee Parking rate has been set annually through a cost recovery
methodology. An increase to the employee parking rate has been expected in the 2025 budget
for existing employee parking operations primarily due to recent completion of capital
improvements at the North Employee Parking Lot (NEPL), as well as regular increases in Employee
Parking operating expenses for existing services and continued participation in the
Transportation Management Association (TMA) initiative. The cost of capital improvements is
recovered over the useful life of new assets and impact the monthly Employee Parking rate once
new assets are placed into service. Separate from this proposed real estate deal, the estimated
impact to the Employee Parking rate for existing NEPL operations is a 2025 rate increase of
$29/month (a 33% rate increase), from the current 2024 rate of $87/month to the expected rate
of $116/month in 2025.
The proposed expansion of the Employee Parking program to include these (3) new parking lot
locations will increase the total cost of the Employee Parking program. If the 2025 Employee
Parking rate is set at full cost recovery with the expanded locations, the monthly employee
parking card rate is estimated to increase to $171/month. To mitigate the impact of a very large
cost recovery rate increase to users of the Employee Parking program, Port staff are exploring
COMMISSION AGENDA – Action Item No. 10c Page 6 of 7
Meeting Date: October 22, 2024
Template revised June 27, 2019 (Diversity in Contracting).
options to phase in parking rate changes for the initial years of an expanded Employee Parking
program until the expanded program is stabilized.
Additionally, there is flexibility in how the new leased locations might be used by the Port (space
for other Port operations, capital projects, etc.). Annual leasing costs for each new location will
be charged to the Port department/operating unit utilizing that specific location. Aviation Finance
and Budget will work with the internal Port users of the leased spaces to ensure the annual
leasing costs are correctly coded based on the specific future uses of each location.
Due to the long-term nature of these lease agreements, any leased space used in the Employee
Parking operation and not recovered through the cost recovery rate each year or any
underutilized (vacant) space will directly reduce Non-Aeronautical NOI as shown in the Financial
Analysis section below.
Future capital investments at these parking expansion premises may be proposed later to
increase the utilization and effectiveness of these lots for Employee Parking or other operations,
however cost estimates for potential future capital improvements are not yet available and are
therefore not included in the preliminary estimates used in this financial analysis.
/Authorization Summary Capital
Expense
Total
COST ESTIMATE One-time
Annual
Original estimate $1,800,000
$6,800,000
$8,600,000
AUTHORIZATION
Previous authorizations 0
0
0
Current request for authorization $1,800,000
$6,800,000
$8,600,000
Total authorizations, including this request $1,800,000
$6,800,000
$8,600,000
Remaining amount to be authorized TBD
TBD
TBD
Annual Budget Status and Source of Funds
The 2025 Budget includes a proposed budget request for this real estate initiative in the amount
of $6.8M for land lease costs, as well as a separate budget request for $3.6M in incremental
operating expenses, for a combined total expense increase of $10.4M related to the expansion
of the existing Employee Parking program.
The 2025 Budget also includes the incremental revenue expected from the initial rollout of the
expanded Employee Parking operation. Year 1 parking usage is expected to increase by 1,075
additional card sales per month.
Projected Employee Parking Rates
Estimated Monthly Rate Impacts
2024
Rate
Potential
2025
% Change
from 2024
$ Change
from 2024
NEPL monthly rate w/ new assets only $87 $116 33% $29
Expansion @ Full Cost Recovery Rate $171 97% $84
COMMISSION AGENDA – Action Item No. 10c Page 7 of 7
Meeting Date: October 22, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Financial Analysis and Summary
Project cost
for analysis
Incremental operating expenses from the expansion of the Employee Parking
program are included in the Annual Employee Parking Cost line item below ($10.4M
for 2025 – Year 1).
Business
Unit (BU)
Employee Parking (ORG 3440)
Effect on
business
performance
(NOI after
depreciation)
IRR/NPV (if
relevant)
Estimated future impacts to Non-Aeronautical Net Operating Income (NOI) during the
initial phase-in years of an expanded Employee Parking program are shown above.
Annual Employee Parking costs excluded from cost recovery will directly reduce Non-
Aeronautical NOI as reflected above.
CPE Impact NA
ATTACHMENTS TO THIS REQUEST
(1) Master Park Cost Exhibit
(2) Master Park Leases
(3) Presentation Slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
N/A
Employee Parking Cost Impacts
(in $millions)
2025 2026 2027 2028 2029
Total
2025-2029
Annual Employee Parking Costs $22.7 $28.7 $30.0 $31.5 $33.1 $146.0
Net Employee Parking Costs Recovered
w/Rate Phase-in
$14.4 $15.9 $17.6 $19.6 $21.6 $89.1
Residual Increase/(decrease) to
Non-Aeronautical NOI
($8.3) ($12.7) ($12.4) ($11.9) ($11.5) ($56.8)
Estimated Monthly Card Price 110.00$ 113.50$ 118.00$ 122.50$ 127.00$
Estimated Monthly Card Sales 12,575 13,500 14,500 15,500 16,500