COMMISSION AGENDA MEMORANDUM Item No. ACTION ITEM Date of Meeting DATE: October 17, 2025 TO: Stephen P. Metruck, Executive Director FROM: Sabin Mudaliar, Acting Director, Airport Operations Eileen Francisco, Director, AV Project Management Group 8d October 28, 2025 SUBJECT: Building 161E Renovation Construction Authorization (CIP #C801179) Amount of this request: Total requested project cost: $10,891,000 $13,989,000 ACTION REQUESTED Request Commission authorization for the Executive Director to advertise and execute a major public works construction contract for the Building 161E Renovation project at Seattle-Tacoma International Airport. The amount requested under this authorization is $10,891,000 for a total project authorization of $13,989,000. EXECUTIVE SUMMARY In September 2022, Commission authorized design of this project. Today's request authorizes construction. The Building 161E Renovation project updates building mechanical, lighting, and fire protection systems, improves the building's restrooms and adds an entry management system. This project is necessary to improve operational efficiency and facility maintainability for continued lease revenue. Pending this authorization, construction will begin next year. JUSTIFICATION As previously described in the September 2022 request, the building remains difficult (and costly) to maintain and repair as most systems have long exceeded their life cycles. Completing the project will reduce repair calls and expenditures and reduce the risk of system failures. New systems will reduce energy use and improve air quality, supporting the Port's Century Agenda goals. Diversity in Contracting The Design contract has achieved 40% WMBE participation. Port staff have established a 10% WMBE aspirational goal for the construction portion of the contract. Template revised January 10, 2019. COMMISSION AGENDA - Action Item No. 8d Meeting Date: October 28, 2025 Page 2 of 4 DETAILS Building 161E is an Air Cargo/Multiple-use Port-owned facility built in 1981. This 25,600 squarefoot facility serves multiple tenants, including airlines and service providers. This facility consists of approximately 10,000 square feet of warehouse space, 5,000 square feet of Ground Service Equipment (GSE) mechanical repair space, and 10,600 square feet of office space. In 2015, Building 161E reverted to Port ownership upon expiration of a thirty (30) year ground lease. This building is currently occupied by multiple tenants and is serving multiple needs including air cargo and ground equipment maintenance in an airport environment with limited land use options. Moving tenants to other facilities is infeasible as such facilities either do not exist or are at full capacity. Therefore, this building will need to remain open and operational during construction. Construction will need to be phased. Scope of Work Building upgrades include: (1) Replacing building's heating and cooling systems with higher efficiency systems (2) Replacing underperforming and failing windows, skylights, and doors. (3) Upgrading existing lighting to LED fixtures. (4) Improving restroom fixtures and finishes. (5) Installing a means to control access to the building, and (6) Providing a new fire alarm panel and alarm devices. Schedule Activity Construction starts In-use date 2026 Quarter 2 2027 Quarter 3 Cost Breakdown This Request Total Project Design Construction Total $0 $10,891,000 $10,891,000 $3,098,000 $10,891,000 $13,989,000 ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 - Construct the project as originally scoped, including additional building amenities as a part of the project. Cost Implications: $14,700,000 Template revised June 27, 2019 (Diversity in Contracting). COMMISSION AGENDA - Action Item No. 8d Meeting Date: October 28, 2025 Page 3 of 4 Pros: (1) (2) Office flooring would be replaced with new carpet. Locker room new showers would be provided. Cons: (1) Additional budget would be required. This is not the recommended alternative. Alternative 2 - Construct the project as originally budgeted, by removing certain amenities. Cost Implications: $13,989,000 Pros: (1) (2) Cons: (1) Budget stays within approved amount. Building receives needed improvements. Certain building amenities, such as additional carpeting, are not provided. Building functionality is not impacted. This is the recommended alternative. FINANCIAL IMPLICATIONS Cost Estimate/Authorization Summary Capital Expense Total COST ESTIMATE Original estimate $13,989,000 $0 $13,989,000 AUTHORIZATION Previous authorizations Current request for authorization Total authorizations, including this request Remaining amount to be authorized $3,098,000 10,891,000 $13,989,000 $0 $0 $0 $0 $0 $3,098,000 10,891,000 $13,989,000 $0 Annual Budget Status and Source of Funds This project, CIP C801179, was included in the 2025-2029 capital budget and plan of finance with a budget of $13,989,000. The funding sources will be Airport Development Fund (ADF) and Revenue Bonds. Template revised June 27, 2019 (Diversity in Contracting). COMMISSION AGENDA - Action Item No. 8d Meeting Date: October 28, 2025 Page 4 of 4 Financial Analysis and Summary Project cost for analysis Business Unit (BU) Effect on business performance (NOI after depreciation) IRR/NPV (if relevant) CPE Impact $13,989,000 Airfield Commercial Cargo NOI after depreciation will increase NPV $(1.0M) NOI after debt service will be negative between ($293K and $10K) during 2028-2037. NOI after debt service becomes positive in year 13 (2038). N/A Future Revenues and Expenses (Total cost of ownership) As a result of this project, Aviation Maintenance will see a reduction in service calls and repairs and an increase in preventive maintenance support. Future lease revenues may increase due to improvements to the building's condition that will make the facility more attractive to tenants. ATTACHMENTS TO THIS REQUEST (1) Presentation slides PREVIOUS COMMISSION ACTIONS OR BRIEFINGS September 13, 2022 - The Commission authorized $2,900,000 for the design of this project. Template revised June 27, 2019 (Diversity in Contracting).