Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
10b
ACTION ITEM
Date of Meeting
June 25, 2024
DATE: June 14, 2024
TO: Stephen P. Metruck, Executive Director
FROM: Rick Duncan, Director, Aviation Business & Properties
Eileen Francisco, Director, Aviation Project Management Group 
SUBJECT: Post IAF Airline Realignment Construction Authorization (CIP#801158)
Amount of this request:
$85,800,000
Total estimated project cost:
$154,500,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to approve a total project budget
of $154,500,000 and to allocate $85,800,000 of that budget for the Post IAF Airline Realignment
Project at Seattle-Tacoma International Airport and to execute the Maximum Allowable
Construction Cost Contract Amendment, any related project change orders, amendments, work
authorizations, purchases, contracts, and to take any actions necessary to support and deliver
the project within the approved budget. (CIP #C801158)
EXECUTIVE SUMMARY
At the September 2023 Commission briefing Port staff presented a budget range for this project
between $102M and $140M. With the completion of design and the receipt of subcontractor
bids, the MACC contract amendment can be completed. This step has solidified a project budget
grown to $154.5M to accommodate scope changes, market conditions, and schedule mitigations.
The project is facilitating the relocation of airline operations from Concourse A to Concourse B.
This allows for airlines with international flights to use the vacated international capable gates
on Concourse A. Associated office and support spaces to support airline relocations are being
performed on Concourse A and Concourse B. Additionally, a ticket counter reconfiguration in the
main terminal.
This request will provide construction authorization for the balance of airline realignment scope;
(1) Concourse B mechanical system upgrades, (2) renovation and expansion of office and airline
operations support space on Concourses A and B and (3) reconfigured and expanded common
COMMISSION AGENDA – Action Item No. 10b Page 2 of 6
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
use ticket counters in the Main Terminal. Completion of this work will provide ramp level
operational space for United Airlines by Quarter 3 of 2025.
The United Airlines’ Lounge will be delivered under a separate reimbursement agreement and
will be the subject of a future authorization request.
JUSTIFICATION
In April 2024 construction activities for enabling work commenced, facilitating the consolidation
of existing airline operations to make way for the balance of the airline realignment scope
included within this authorization.
Should this request be approved, the Maximum Allowable Construction Costs (MACC) negotiated
with the General Contractor Construction Manager (GCCM) would be executed in mid-July and
construction activities for the balance of the airline relocations would begin shortly thereafter.
Seeking this authorization now supports the project team’s efforts to advance the project
expeditiously and support the earliest move of the airlines.
With the completion of the subcontractor construction bidding process, the project has greater
cost certainty for the airline realignment scope included within this authorization. Competitive
market costs were secured with subcontractor bids received throughout the month of May 2024.
Market conditions with bids received reflected higher costs than estimated at 60% design
development and can be attributed to increases in material and shipping costs, shortages in the
labor market and the complexity of the phased work to deliver the airline realignment scope
while maintaining 24/7 airport operations. Additional temporary provisions to maintain existing
operations incorporated into the project have increased costs to mitigate schedule delays.
Diversity in Contracting
The project team has worked with the Diversity in Contracting team to establish the following
women- and minority-owned business enterprise (WMBE) goals for the project’s contracts as
outlined in the table below.
Contract
Goal
Project Management
14%
Construction Management
30%
Design
15%
Testing & Special Inspection
TBD
GCCM (Construction)
13%
DETAILS
Significant phasing and sequencing are required to deliver the airline realignment scope in a 24/7
operational airport. Initiating key infrastructure and existing systems relocations on Concourse B
COMMISSION AGENDA – Action Item No. 10b Page 3 of 6
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
ramp through the enabling work in April allowed the GCCM to streamline construction durations
to support the work outlined below beginning in July.
Scope of Work
(1) Renovations to existing tenant-leased spaces on Concourse A to support final tenant
relocations required for airline realignment.
(2) Renovated and expanded tenant-leased spaces on Concourse B ramp to create new office
support space for the relocated airline tenant.
(3) Code upgrades to extend the new interior corridor initiated with the enabling work.
(4) Cage storage provided with enabling work will be reconfigured to support final airline
relocations.
(5) Modifications and upgrades to existing Concourse B mechanical system to support the
newly expanded and renovated ramp leasable space, including two new enclosed
penthouses at the roof level.
(6) Renovated ticket counter and tenant-leased space in the central main terminal to provide
ten ticketing positions, an airline break room and leasable space for a future tenant.
Schedule
Activity
Enabling Work Construction Start
2024 Quarter 2
Airline Realignment Construction Authorization
2024 Quarter 2
Airline Realignment Construction Start
2024 Quarter 3
In-use date (Concourse B)
2025 Quarter 3
In-use date (Concourse A)
2026 Quarter 1
Note that the “in-use date" for Concourse B establishes the planned move date for United Airlines
in 2025 Quarter 3, presuming no extra-ordinary steps taken to revise this date. United Airlines
had earlier elected to self-complete their lounge. The schedule for completion of this work
remains to be determined.
Cost Breakdown
This Request
Total Project
Design
$10,000,000
$43,750,000
Construction
$75,800,000
$110,750,000
Total
$85,800,000
$154,500,000
COMMISSION AGENDA – Action Item No. 10b Page 4 of 6
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Delay MACC authorization until completion of negotiations to maximize project
cost certainty.
Cost Implications: $85,800,000 (same as Alternative 2)
Pros:
(1) All subcontractor costs would be known prior to executing the MACC.
(2) Project budget certainty would be increased when authorizing the MACC.
Cons:
(1) Waiting for the completion of negotiations would delay the start of construction by
several months while preparing the request.
(2) Delays United Airlines Gate allocation on Concourse B to 2026
(3) Delays the GCCM from beginning work in tenant lease spaces that are available for
construction now.
(4) Creates unforeseen schedule impacts from adjacent Port projects performing work in
2024.
(5) Significantly reduces the advantages of the GCCM contracting method by delaying the
work the mechanical and electrical subcontractors could negotiate and perform now.
This is not the recommended alternative.
Alternative 2 – Authorize MACC execution now as requested.
Cost Implications: $85,800,000
Pros:
(1) Aligns with the current scheduling coordination with adjacent Airport projects.
(2) Supports phased delivery of airline realignment scope to deliver Concourse B gates in
2025.
(3) Continues the renovation and consolidation delivered with the enabling work,
mitigating the risk of schedule delays for Concourse B In-Use dates.
(4) Leverages the advantages of the GCCM contracting method by starting work the
mechanical and electrical subcontractors could negotiate and perform now.
Cons:
(1) An increase to project budget is required to deliver the airline realignment scope.
This is the recommended alternative.
COMMISSION AGENDA – Action Item No. 10b Page 5 of 6
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$35,000,000
$35,000,000
$70,000,000
Previous changes – net
$101,145,000
$855,000
$102,000,000
Current change
$52,430,000
$70,000
$52,500,000
Revised estimate
$153,575,000
$925,000
$154,500,000
AUTHORIZATION
Previous authorizations
$54,202,000
$898,000
$55,100,000
Current request for authorization
$85,773,000
$27,000
$85,800,000
Total authorizations, including this request
$139,975,000
$925,000
$140,900,000
Remaining amount to be authorized
$13,600,000
$0
$13,600,000
Annual Budget Status and Source of Funds
This project, CIP C801158, was included in the 2024-2028 capital budget and plan of finance with
a capital budget of $69 million and an expense budget of $33 million for a total cost of $102
million. The expense components of the project in amount of $32,145,000 were deemed as
capital. The current budget increase of $52,430,000 was transferred from the Aeronautical
Allowance CIP C800753 resulting in no net change to the Airport capital budget. The funding
sources will be Airport Development Fund and revenue bonds.
Financial Analysis and Summary
Project cost for analysis
$154,500,000
Business Unit (BU)
Gates
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
$0.52 in 2027
Future Revenues and Expenses (Total cost of ownership)
The project team is working with Aviation Maintenance and Facilities and Infrastructure groups
to finalize the existing asset data and coordinate the phased delivery of in-use assets beginning
in December 2024. Operating and maintenance costs for new infrastructure and systems will be
determined when the MACC is executed in July 2024.
ADDITIONAL BACKGROUND
The project team is meeting with adjacent projects to coordinate project schedules, scope
overlap and other necessary items to limit construction impacts to normal airport and tenant
operations.
1. Baggage Optimization Program
COMMISSION AGENDA – Action Item No. 10b Page 6 of 6
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
2. Main Terminal Low Voltage Upgrades
3. North Main Terminal Redevelopment
4. Concourse HVAC Infrastructure Renewal and Replacement Program (CHIRRP)
5. 2024 Airfield Improvement Project
6. 2026 Airfield Improvement Project
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
January 9, 2024 – The Commission authorized $7,500,000 to advance the project schedule
for the Post IAF Airline Realignment project at Seattle-Tacoma International Airport.
September 26, 2023 – The Commission authorized $14,400,000 to facilitate the following
actions: (1) authorize enabling construction work for the Post IAF Airline Realignment
project at Seattle-Tacoma International Airport, (2) procure long lead items, (3) increase
the project authorization by $14,400,000, and (4) execute a project labor agreement.
September 12, 2023 – The Commission was briefed on the program status and schedule for
future authorization requests.
February 14, 2023 – The Commission authorized $7,000,000 to facilitate the following
actions: (1) amend a project-specific design contract, and (2) execute a Change Order to
the General Contractor/Construction Manager Pre-Construction Services contract.
March 23, 2021 – The Commission authorized $26,000,000 to facilitate the following actions:
(1) execute project specific Service Agreements for project management, construction
management, design services, and testing and special inspections; (2) to utilize a General
Contractor/Construction Manager (GCCM) and execute a GCCM construction contract for
pre-construction services; (3) to use port crews; and (4) to execute a Memorandum of
Agreement (MOA) between the Port of Seattle (Port) and United Airlines.