COMMISSION AGENDA MEMORANDUM ACTION ITEM Item No. Date of Meeting DATE: April 30, 2025 TO: Stephen P. Metruck, Executive Director FROM: Scott Bertram, Manager Corporate Financial Analysis 8c May 27, 2025 SUBJECT: Adoption of Resolution No. 3837 - Issuance and Sale of Intermediate Lien Revenue and Refunding Bonds in the Aggregate Principal Amount of Not-to-Exceed $950,000,000. ACTION REQUESTED Request adoption of Resolution No. 3837: A Resolution of the Commission of the Port of Seattle authorizing the issuance and sale of Intermediate Lien revenue and refunding bonds in one or more series (the "2025 Revenue Bonds"), in the aggregate principal amount of not to exceed $950,000,000 for the purposes of financing capital improvements to aviation facilities and refunding certain outstanding revenue bonds of the Port; setting forth certain bond terms and covenants; and delegating authority to approve final terms and conditions and the sale of the bonds. EXECUTIVE SUMMARY The 2025 Revenue Bonds will be used to fund an estimated $700 million of capital improvements at the Airport, and to refund up to $69,290,000 of outstanding Intermediate Lien Revenue Refunding Bonds, Series 2016 (the "2016 Bonds"), for debt service savings. JUSTIFICATION As part of the Port's debt management program, the Port monitors opportunities to reduce debt service. At this time, current interest rates provide for a potentially favorable refunding opportunity on the Port's outstanding 2016 Bonds, which funded or refunded Airport capital improvements. The 2016 bonds will be callable in February 2026, and the Port will achieve an estimated $1.4 million of present value savings if the target savings level is achieved on the refunding. The 2025-2029 Plan of Finance estimated future revenue bond needs of $3.4 billion to help pay for the Airport's ~$4.9 billion capital improvement plan over the next five years, and these 2025 Revenue Bonds will include funding for approximately $700 million of those Airport project costs. Some of the major projects to be funded, in part, with this bond issuance include SEA Gateway Project, Baggage Optimization, C Concourse Expansion, S Concourse Evolution, and A Concourse Expansion along with various other Airport improvements; a list of projects currently identified Template revised September 22, 2016. COMMISSION AGENDA - Action Item No. 8c Meeting Date: May 27, 2025 Page 2 of 4 for 2025 Bond funding is provided in Exhibit A. If project spending is delayed or if other funding sources are available, e.g., federal grants, the 2025 Revenue Bond proceeds may be redirected to other projects within the limits established by the federal tax code. No 2025 Revenue Bond proceeds or other funds can be spent on any project without the appropriate project authorization. The 2025 Revenue bonds will also include proceeds sufficient to pay cost of issuance, fund the required debt service reserve and pay a portion of the interest (capitalized interest) on the Bonds during project construction (i.e. until the bond funded projects can be placed in service and included in the rate base). DETAILS The Bonds are being issued pursuant to the Intermediate Lien Master Resolution No. 3540 and this Resolution No. 3837. The Bonds may be issued in multiple series based on the tax status of the projects to be funded or the tax status of the 2016 Bonds being refunded. Three series are anticipated.  One series is expected to be issued as governmental bonds exempt from all federal income tax (Non-AMT). This series would be used to refund the outstanding 2016 bonds; it may also provide funding for airport capital projects eligible for governmental bond funding, if applicable.  A second series is expected to be issued as private activity bonds exempt from regular income tax but subject to the Alternative Minimum Tax (AMT). This is the most common type of tax-exempt bond that the Port issues because it allows the Port to lease facilities to airport and seaport tenants. This series would be used to provide funding for on-going airport capital investments.  The third series of bonds may be issued as taxable debt and investors would be subject to federal income tax. This series would be used to fund airport capital investments that are not eligible for tax-exempt bond funding or would otherwise benefit from greater flexibility of not needing to comply with tax-exempt bond restrictions. Resolution No. 3837 is similar in all material respects to other Intermediate Lien Series Resolutions and provides for a contribution to the common debt service reserve fund that provides security for all Intermediate Lien bonds. The Resolution delegates to the Port's Executive Director the authority to approve interest rates, maturity dates, redemption rights, interest payment dates, and principal maturities for the Bonds (these are generally set at the time of pricing and dictated by market conditions at that time). Commission parameters that limit the delegation are a maximum bond size, maximum interest rate, and expiration date for the delegated authority. If the Bonds cannot be sold within these Template revised September 22, 2016. COMMISSION AGENDA - Action Item No. 8c Meeting Date: May 27, 2025 Page 3 of 4 parameters, further Commission action would be required. The recommended delegation parameters are: Maximum size: Maximum interest rate on Tax-Exempt bonds: Maximum interest rate on Taxable bonds (if needed): Expiration of Delegation of Authority: $950,000,000 6.5% 7.0% May 27, 2026 Upon adoption, Resolution No. 3837 will authorize the Designated Port Representative (the Port's Executive Director, the Deputy Executive Director or the Port's (Acting) Chief Financial Officer or their respective delegates) to approve the Bond Purchase Contract and escrow agreement, if any, pay the costs of issuance, execute all documents including the preparation and dissemination of a preliminary official statement and final official statement, provide for continuing disclosure and take other action appropriate for the prompt execution and delivery of the Bonds. The Bonds will be sold through negotiated sale to Morgan Stanley & Co. LLC, Backstrom McCarley Berry & Co. LLC (1), Barclays Capital Inc., Goldman Sachs & Co. LLC, Jefferies LLC, and Siebert Williams Shank & Co., LLC (1). Piper Sandler & Co. is serving as Financial Advisor and Pacifica Law Group LLP is serving as bond and disclosure counsel on the transaction. (1) Woman or Minority owned firm ATTACHMENTS TO THIS REQUEST (1) Draft Resolution No. 3837 (2) Presentation PREVIOUS COMMISSION ACTIONS OR BRIEFINGS October 22, 2024 - The Commission was briefed on the 2025-2029 draft plan of finance. May 13, 2025 - The Commission was briefed on Introduction of Resolution No. 3837 Template revised September 22, 2016. COMMISSION AGENDA - Action Item No. 8c Meeting Date: May 27, 2025 EXHIBIT A C Concourse Expansion North Main Terminal Redevelopment (SEA Gateway Project) Checked Baggage Optimization Post IAF Airline Realignment Concourse A Expansion S Concourse Evolution Port Shared-Lounge Concourse A 2021-2025 Airfield Pavement 2026-2030 Airfield Pavement Concourse Low Voltage Upgrades Concourse A Duty Free Snow Storage Expansion 2022 Fire Station Improvements Industrial Wastewater Treatment Plant Program Main Terminal Low Voltage System Upgrade Baggage Claim 15&16 Replacement Utility Meter Networking Widen Arrivals Roadway Parking Garage Elevators Modernization Upgrade Satellite Train System (STS) Control Surface Area Management System North Employee Parking Lot Improvements Template revised September 22, 2016. Page 4 of 4