Template revised September 22, 2016.
COMMISSION
AGENDA MEMORANDUM
Item No.
10a
ACTION ITEM
Date of Meeting
June 23, 2026
DATE: June 4, 2026
TO: Stephen P. Metruck, Executive Director
FROM: Chris Wimsatt, Chief Financial Officer
Scott Bertram, Manager, Corporate Finance
Angie Rose, Principal Financial Analyst, Corporate Finance
SUBJECT: Introduction of Resolution No. 3851 – Issuance and Sale of Subordinate Lien
Revenue Bonds in the Aggregate Principal Amount of Not-to-Exceed $400,000,000.
ACTION REQUESTED
Introduction of Resolution No. 3851: A Resolution of the Port Commission of the Port of Seattle
authorizing the issuance and sale of Subordinate Lien Revenue Bonds, Series 2026A and 2026B
in the aggregate principal amount of not to exceed $400,000,000 (the “Bonds”), for the purposes
of financing or refinancing capital improvements to aviation facilities; setting forth certain bond
terms and covenants; and delegating authority to approve final terms and conditions and the
sale of the Bonds.
EXECUTIVE SUMMARY
Commission authorization is requested to issue the Bonds in an amount not-to-exceed
$400,000,000 to fund the costs of capital improvements at the Airport and to refinance
commercial paper (“CP”) issued in 2025 to acquire the International Place facility.
JUSTIFICATION
The 2026-2030 Plan of Finance estimated future revenue bond needs of $2.4 billion to help pay
for the Airport’s ~$3.8 billion capital improvement plan over the next five years; the Bonds will
fund approximately $225.0 million of those Airport project costs. Some of the major projects
that may be funded, in part, with this bond issuance include S Concourse Evolution, Baggage
Optimization, Airfield Pavement, SEA Gateway Project, Main Terminal Infrastructure, and
Industrial Waste Treatment Plant (IWTP) Program along with various other Airport
improvements; a list of projects currently identified for potential Bond funding is provided in
Exhibit A. If project spending is delayed or if other funding sources are available, e.g., federal
grants, the proceeds from the Bonds may be redirected to other projects within the limits
established by the federal tax code. No Bond proceeds or other funds can be spent on any project
without the appropriate project authorization.
COMMISSION AGENDA – Action Item No. 10a Page 2 of 6
Meeting Date: June 23, 2026
Template revised September 22, 2016.
In February 2025, the Port issued $120.0 million of Commercial Paper (CP) to finance the
acquisition of the International Place office complex. The $120.0 million is currently outstanding
and staff recommends refinancing that CP with the Bonds, which will free up the CP facility to
fund airport projects as needed.
BACKGROUND
The Port’s current revenue bond debt structure includes three liens of revenue bonds that have
been used to fund a significant portion of the organization’s capital needs over the past 30 years.
These liens include the First Lien, Intermediate Lien, and Subordinate Lien. Recent debt issuances
have occurred on the First and Intermediate Liens, issued pursuant to their respective lien Master
Resolutions; until recently, there was no Master Resolution of the Subordinate Lien and the Port
had not issued on the Subordinate Lien since 2008.
On April 14, 2026, the Commission adopted Resolution No. 3845, the Subordinate Lien Master
Resolution, to modernize its Subordinate Lien debt structure by creating a Master Resolution and
to update certain security provisions to current market standards. The resolution also provided
the Port with some added flexibility in managing current and future Subordinate Lien debt and
included a new aggregate debt service coverage calculation.
The Subordinate Lien, established in 1992, has been used primarily for the issuance of variable
rate debt. Unlike most of the Port’s debt, which has fixed interest rates, variable debt has interest
rates that are set (or reset) at predetermined dates based on prevailing market conditions.
Variable rate debt is typically backed by bank-provided letters of credit, which means investors
are, in effect, buying the banks’ credit rather than the Port’s and have the banks’ guarantee of
payment.
The Port’s debt management policy limits the total amount of variable rate debt to no more than
25% of total Port debt. Currently, less than 5% of the Port’s total debt portfolio has variable
interest rates and as such, Port staff recommends adding variable rate debt exposure at this time.
Variable rate obligations provide certain benefits compared to fixed rate bonds:
Benefits
• Lower rates. Variable interest rates tend to be lower on average than long-term fixed
interest rates. During the Great Recession and Pandemic, long-term interest rates were
historically low and the Port used the opportunity to lock-in low fixed rates. Now that
long-term interest rates have risen, the Port can achieve lower cost of debt by increasing
its utilization of variable rate bonds and notes.
• Flexible repayment terms. An additional benefit of the variable rate bonds are the flexible
repayment terms. The Port has typically chosen to amortize its variable rate debt to avoid
a large principal payment(s) in the final years, but the Port has also paused principal
COMMISSION AGENDA – Action Item No. 10a Page 3 of 6
Meeting Date: June 23, 2026
Template revised September 22, 2016.
payments during times of stress. For example, during the pandemic, the Port paused
principal payments temporarily, which reduced the debt service charged to the airlines.
Variable rate obligations do carry certain risks. The Port has safeguards to manage these risks
and expects to continue to issue primarily fixed rate bonds while increasing its exposure to
variable rate debt.
Risks
• Interest rate risk. Increases in rates can add to the Port’s variable rate debt service
(interest) costs. However, those increases in rates would also apply to the Port’s
investment portfolio, which would result in higher interest earnings.
• Remarketing risk. There are different types of variable rate debt but the Port has typically
issued variable rate demand bonds (VRDBs) backed by a letter of credit from a bank. The
interest rate on VRDBs resets regularly (for example, daily or weekly) through a
remarketing process where the remarketing agent sets the interest rate at the lowest
level needed to successfully remarket the bonds (i.e. the level where there is sufficient
investor demand). There is a risk of remarketing failure when there is not sufficient
investor demand for all the bonds. Such a failure last occurred during the Great Recession.
In the event of a failed remarketing, the letter of credit bank purchases the bonds and the
Port pays the bank a predetermined rate of interest until the bonds can be successfully
remarketed. The Port has carefully negotiated agreements with its letter of credit banks
to provide time to cure the problem before the Port needs to repay the bonds.
Note: Direct bank loans, as opposed to VRDBs, are executed through a private placement and
not the public markets. This means potentially faster execution, as well as less regulatory and
compliance requirements. Bank loans typically result in a moderately higher variable interest
cost than can be achieved in the public market but have lower issuance and ongoing costs. Bank
loans also do not create remarketing risks to the Port that otherwise exist with public market
variable rate products.
COMMISSION AGENDA – Action Item No. 10a Page 4 of 6
Meeting Date: June 23, 2026
Template revised September 22, 2016.
DETAILS
The Bonds are being issued pursuant to the Subordinate Lien Master Resolution No. 3845 and
this Resolution No. 3851. Port staff expects to issue the Bonds with variable interest rates, in the
following manner:
• Variable rate demand bonds (VRDBs) - $225.0 million
Proceeds will be used to fund approximately $225.0 million of on-going Airport capital project
costs. As noted above, some of the major projects to be funded, in part, with this bond issuance
include S Concourse Evolution, Baggage Optimization, Airfield Pavement, SEA Gateway Project,
Main Terminal Infrastructure, and Industrial Waste Treatment Plant (IWTP) Program along with
various other Airport improvements; a list of projects currently identified for potential Bond
funding is provided in Exhibit A.
The Port has secured a $225.0 standby letter of credit from Bank of America, who was selected
as part of a competitive RFP process. Interest rates on the VRDBs will be reset daily or weekly
based on a market clearing rate.
The VRDBs are expected to be issued as private activity bonds, interest earnings upon which are
exempt from regular income tax but subject to the Alternative Minimum Tax (AMT) to investors.
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.
• Direct bank loan - $120.0 million
Proceeds of the $120.0 direct bank loan (also known as bank placement or direct purchase) come
from Wells Fargo, who was also selected as part of a competitive RFP process. Proceeds of the
loan will be used to pay down the $120.0 million of outstanding CP that was issued to finance the
acquisition of the International Place office complex. This will, in turn, free up the CP facility to
fund other Port (primarily airport) project spending, as needed, in advance of a potentially larger
bond issuance in 2027. The Port’s CP facility is meant to serve primarily as an interim financing
source only and the Port will use this bank loan as the longer-term funding source.
The loan is expected to have an initial term of 5 years, and interest on the loan will be calculated
based on the Secured Overnight Financing Rate (“SOFR”) plus a spread. The loan is expected to
be treated as taxable debt, subject to federal income tax.
Resolution No. 3851 delegates to the Port’s Executive Director the authority to approve final
interest rates (or in this case the method of establishing interest rates since they are variable in
nature), maturity dates, aggregate principal amounts, principal maturities and redemption rights.
Commission parameters that limit the delegation include a maximum principal amount for the
COMMISSION AGENDA – Action Item No. 10a Page 5 of 6
Meeting Date: June 23, 2026
Template revised September 22, 2016.
Bonds, final maturity, and expiration date for the delegated authority. If the Bonds cannot be
sold within these parameters, further Commission action would be required.
Recommended delegation parameters include:
Maximum size: $400,000,000
Final Maturity: not later than 40 years after issuance
Expiration of Delegation of Authority: July 14, 2027
Upon adoption, Resolution No. 3851 will authorize the Designated Port Representative (the
Executive Director, the Deputy Executive Director, the Chief Financial Officer or their designees)
to execute various agreements required for the sale and issuance of the Bonds, including: (1) the
bond purchase agreement for the VRDBs; (2) the direct purchase agreement for the direct bank
loan; (3) the remarketing agent agreement for the VRDBs; (4) the mode agreements setting forth
the manner of determining the interest rates on the Bonds; and (5) the letter of credit and bank
reimbursement agreement for the VRDBs.
The VRDBs will be sold through negotiated sale to Goldman Sachs & Co. LLC, who will serve as
the remarketing agent. Piper Sandler & Co. is serving as Municipal Advisor and Pacifica Law
Group LLP is serving as bond and disclosure counsel on both the VRDBs and the direct bank loan.
ATTACHMENTS TO THIS REQUEST
(1) Draft Resolution No. 3851
(2) Presentation
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
• October 28, 2025 – The Commission was briefed on the 2026-2030 draft plan of finance.
• April 14, 2026 – The Commission adopted Resolution No. 3845 – Subordinate Lien Master
Resolution
COMMISSION AGENDA – Action Item No. 10a Page 6 of 6
Meeting Date: June 23, 2026
Template revised September 22, 2016.
Exhibit A - Project List
South Concourse Evolution (SCE)
Checked Baggage Optimization
International Place office complex (STOC)
2021-2025 Airfield Pavement
2026-2030 Airfield Pavement
Industrial Wastewater Treatment Plant (IWTP) Program
Post IAF Airline Realignment
Concourse A Expansion
North Main Terminal Redevelopment (SEA Gateway Project)
Utility Meter Networking
Upgrade Satellite Train System (STS) Control
400Hz Replacement at Concourse C & D
1947 Water Main Improvement - DBB
Concourse A Duty Free
Concourse Modernization (previously Concourse HVAC Infrastructure Renewal Replacement)
Ramp Tower Visibility Restoration
Public Access Distributed Antenna System (DAS) Upgrade
Perimeter Intrusion Detect System
Parking Garage Low Voltage System
Main Terminal Infrastructure
Building 161E Retro Commission (previously Building 161E Renovation and Systems Retrofit)
Snow Storage Expansion
Apartment Sound Insulation
Deaerator (DA) and Condensate System Upgrades
STS Replacement
Widen Arrivals Roadway
Fast Fleet EV Charging
North Employee Parking Lot Improvements (NEPL) Improvements
Preconditioned Air-Handling Unit (PC AHU) Replacement
Concourse Low Voltage Upgrades
