Template revised January 10, 2019.

COMMISSION

AGENDA MEMORANDUM

Item No. 10b

ACTION ITEM Date of Meeting April 8, 2025

Amount of this request: $24,360,000

Total estimated project cost: $30,500,000

ACTION REQUESTED

Request Commission authorization for the Executive Director to take all steps necessary to

complete the Concourse A Shared-Use Lounge Project (Club SEA) at the Seattle-Tacoma

International Airport (SEA). This request is to fully authorize the project and execute the

construction contract, for a total project authorization of $30,500,000.

bring in $17M in non-aero revenues per year, representing $9.8M Net Operating Income (NOI).

The growth of international service, as well as demand from domestic passengers looking for an

escape from the crowded holdrooms, has increased exponentially the demand for our lounges.

This increased demand has led to our lounges being overcrowded and even forcing denial of

service to willing customers due to capacity constraints. Additionally, the lounge business has

evolved over the years, and consumers now expect full-service amenities, including showers,

separated space for work, and a kitchen that can satisfy demand for a wider variety of regional

tastes than can be accommodated within the existing facility.

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

Upon Commission’s approval for the full project authorization, the project will execute a

Maximum Allowable Construction Cost contract with the selected Contractor, complete both the

permitting and pre-construction stages, and issue Notice-to-Proceed with construction.

Substantial completion is anticipated Q2 2026.

JUSTIFICATION

With the completion of SEA’s international Arrivals Facility, gates on A Concourse are now

internationally capable. The demand for lounge experiences have increased by approximately

100,000 visits annually, over the last three years; reaching 303,000 guest visits in 2024. The

The project has established a women-and-minority-owned business enterprise goal of 12%.

DETAILS

Prior to this project and capital investment, the Port’s model for establishing “Club SEA” lounges

consisted of inheriting vacated airline lounges, at the terminus of their specified leased term. The

Port would make use of any previously used but functional cooking equipment, furniture, etc.,

only investing in slight aesthetic modifications such as patching/painting, and signage

replacements.

During the initial project planning and Notebook phases of this project, the Port used the four

expand upon both the amenities and overall lounge aesthetics.

During design development, the Port completed numerous value engineering (VE) exercises to

realign design costs within the original project budget and include the desired full-service

amenities such as: upgrading the partial kitchen to a full-service kitchen, upgrading the partial

bar to a full-service bar, and upgrade the lighting in the entire footprint to modern LED lighting.

Throughout design, significant constructability challenges were raised over the project’s ability

to keep the current Club SEA operational while the new expansion was under construction. Any

closure, even those in support of the new lounge, would significantly impact airport operations,

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

elected to deliver the project via a General Contractor Construction Management (GC/CM)

contract. The move to GC/CM also affords the project advanced planning capabilities and

oversight on critical construction phasing and/or potential closures during construction. The

project was placed on hold from December 2023 to June of 2024 to procure a General Contractor

and initiate pre-construction activities. This included evaluating construction phasing options as

project designs progressed, providing greater design-to-construction cost certainty, and

Schedule

Construction is anticipated to start Q2 2025 with a projected substantial completion in Q2 2026.

A two-phased construction plan is proposed in order to keep the current lounge operational for

the longest extent possible.

Design ($478,000)

Construction $24,838,000

Total $24,360,000

ALTERNATIVES AND IMPLICATIONS CONSIDERED

Alternative 1 – Do not proceed with the CLUB at SEA expansion

Cost Implications: ~$2.9M (design costs incurred to date)

Plus Sunk Costs: $25.9M (allocated base building costs)

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

(2) Provides opportunity to negotiate alternate non-aeronautical tenant use; financial

impact of alternate future non-aeronautical revenue generation not yet known

(2) Does not achieve the Port’s goals for expansion of common use lounges.

(3) Fails to meet the Port’s anticipated lounge demand and desired level of service to

support international operations on A Concourse.

(4) Design development incurred costs are committed and cannot be recovered.

Alternative 2 – Proceed with the current request to advance the project to construction and build

out the full expanded Club SEA footprint provided by the Concourse A Building Expansion for

Lounges project.

Cost Implications: incremental $24,360,000

Plus Sunk Costs: $25.9M (allocated base building costs)

Pros:

(1) Provide capacity to serve the future growth in anticipated common use lounge demand.

(2) Improve the Port’s level of service supporting international operations on Concourse A.

(3) Provide a significantly higher shared lounge passenger experience and would likely

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

FINANCIAL IMPLICATIONS

/Authorization Summary Capital

Expense

Total

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

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS

April 27, 2021 – Commission authorized design and a tenant reimbursement agreement for