Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM Item No. 8d
ACTION ITEM Date of Meeting February 24, 2026
DATE : February 24, 2026
TO: Stephen P. Metruck, Executive Director
FROM: Erik Johnson, Aviation Real Estate and Portfolio Manager III
Jason Johnson, Assistant Director Airline Affairs & Aviation Properties
Rick Duncan, Director of Aviation Business and Properties
SUBJECT: PACCAR Lease Termination
ACTION REQUESTED
Requesting Commission authorization for the Executive Director to execute a Lease Termination
Agreement for the PACCAR Lease Agreement at SEA to facilitate their transition to Boeing Field
and support SEA’s airport capital development program and operations.
EXECUTIVE SUMMARY
PACCAR is a long-standing tenant at SEA and has been a valued customer over the years. There
has been an increased desire from PACCAR to explore opportunities to relocate PACCAR’s
operation out of SEA. In their exploration, PACCAR was able to secure a lease agreement at
Boeing Field for a new hangar and plans to relocate their operations over to BFI mid/late 2026.
As part of this authorization to support an early lease termination, PACCAR will be making
improvements to the building requested by Port staff to ensure it is in an acceptable condition
to support SEA’s vision, in lieu of full demolition of the improvements. In the Lease Termination
Agreement PACCAR will be required to perform the following Tenant Improvements:
• Remove all AFFF impacted fire suppression system components and associated systems
from the building
• Install a new water-based fire suppression system
• Remove the underground aircraft fueling system
In the interim, the facility will be used to support SEA’s growing operation by providing real estate
to support multiple Port functions. The anticipated future and long-term use of this site will
support future development at SEA.
COMMISSION AGENDA – Action Item No. 8d Page 2 of 4
Meeting Date: February 24, 2026
Template revised June 27, 2019 (Diversity in Contracting).
JUSTIFICATION
SEA is extremely space constrained, and our continued growth is putting pressure on our existing
operations and Capital Development Program. The termination of this lease agreement to
accommodate immediate Port needs such as Fire Department, Maintenance, Capital
Development, Operations. In the long term, use of this site will support future development at
SEA. As part of the lease termination, PACCAR will be performing Tenant Improvements to the
building to ensure it is in usable condition and remedies the condition for which a fire code
variance has been required to continue operations. In addition to the building, the Port will be
reclaiming airside ramp space and public side parking space which can support multiple different
functions.
Lease Termination Details
Tenant Name PACCAR
New Termination Date Effective once Tenant Improvements are completed
and signed off by the Port
Rental Rate (monthly) $37,360.36
Original Termination Date 05/31/2031
Environmental Indemnification The existing lease agreement indemnification will
survive lease termination in the event the Port
discovers environmental contamination during the
demolition of the building
Tenant Improvement
Requirements
- Removal of PFAS fire suppression system and
components in continuous contact with PFAS
- Installation of water-based fire suppression
system at a lower rating converting the hangar
into a warehouse
- Removal of underground Aircraft Fueling system
to include, but not limited to, underground fuel
tank, piping, fixtures, and any environmental
contamination discovered during the removal
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Do not terminate the PACCAR Lease Agreement
Cost Implications: $37,360.36 in monthly revenue per month, approximately $2 million
throughout the remainder of the life of the agreement.
COMMISSION AGENDA – Action Item No. 8d Page 3 of 4
Meeting Date: February 24, 2026
Template revised June 27, 2019 (Diversity in Contracting).
Pros:
(1) Port continues to lease the building to PACCAR and collect revenue
(2) PACCAR responsible for demolishing the building at the end of the agreement
Cons:
(1) Port loses the ability to utilize crucial airside real estate to facilitate SEA operations
(2) Lease requirements limit Port’s ability to recapture facility
(3) 2-Year notice requirement for an approved capital project
(4) Unlikely PACCAR will secure another opportunity to relocate prior to lease termination
This is not the recommended alternative.
Alternative 2 – Terminate the PACCAR Lease Agreement
Cost Implications: Port would be responsible for demolition of the PACCAR building when the
Port is ready to construct future facilities. The estimated cost for demolition is approximately
$1.5 million.
Pros:
(1) Port recaptures critical airside real estate with multiple potential uses
(2) Building is returned to Port in a fire code compliant condition with a non-PFAS-
containing fire suppression system in place.
(3) Flexibility to adapt to future direction of Port vision
(4) Reduced airspace congestion
(5) Potential to recapture revenue through other means
Cons:
(1) Port is responsible for demolition of the building, when applicable.
(2) Reduction in annual revenue of $448,324.32 or approximately $2 million over the
remainder of the agreement
This is the recommended alternative.
FINANCIAL IMPLICATIONS
After PACCAR building transitions to Port ownership, Aviation Maintenance will be responsible
for maintaining the building. Average cost for similar buildings is approximately $47,000 per year.
ATTACHMENTS TO THIS REQUEST
(1) PACCAR Lease Termination Agreement
(2) Presentation Slides
COMMISSION AGENDA – Action Item No. 8d Page 4 of 4
Meeting Date: February 24, 2026
Template revised June 27, 2019 (Diversity in Contracting).
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
November 16
th
, 2021 – Authorization for the Executive Director to execute an amendment
(Amendment No. 7) with PACCAR
February 27
th
, 2018 – The Commission authorized a lease amendment to the lease with
PACCAR and design and construction of the Interim Westside Fire Station Project
