Commission Meeting Portal

Regular Meeting on Aug 11, 2009 1:00PM

Minutes for the Port Of Seattle Commission meeting, held on Aug 11, 2009 1:00PM

        Commissioners                                                                      Tay Yoshitani 
                                                                                                                 Chief Executive Officer 
                        Bill Bryant 
                            Chair and President 
                        John Creighton                                   P.O. Box 1209 
                        Patricia Davis                               Seattle, Washington 98111 
                        Lloyd Hara                                    www. portseattle.org 
                        Gael Tarleton                                     206.787.3000 

                   An audio of the meeting proceedings and meeting materials are available on the Port of
                                                            Seattle web site - 
                        http://www.portseattle.org/about/organization/commission/commission.shtml 

                   (The approximate point in the audio recording for the specific item is identified by
                  minutes and seconds; example: 01:30  Please note: For the August 11, 2009 meeting,
                   there are two separate audios.) 
                                APPROVED MINUTES 
                      COMMISSION REGULAR MEETING AUGUST 11, 2009 
                  The Port of Seattle Commission met in a regular meeting at 1:00 p.m., Tuesday, August
                 11, 2009 in the Commission Chambers at Pier 69, 2711 Alaskan Way, Seattle, WA.
                  Commissioners Bryant, Creighton, Davis, Hara and Tarleton were present. 
                      1.       CALL TO ORDER 
                   The regular meeting was called to order at 1:12 p.m. by Bill Bryant, Chair and President. 
                      2.       EXECUTIVE SESSION pursuant to RCW 42.30.110 
                  The regular meeting was immediately recessed to an executive session for approximately
                   one hour to discuss legal risk and real estate issues and reconvened to open public session 
                 PLEDGE OF ALLEGIANCE 
                      3.       APPROVAL OF MINUTES 
                  (Audio part one - 00:00:48) Motion for approv al of the minutes of the regular
                  meeting of July 14, 2009 - Davis 
                 Second  Creighton 
                  Motion carried by the following vote: 
                 In Favor: Bryant, Creighton, Davis, Hara, (4) 

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                  Commissioner Tarleton was absent from the subject meeting. 
                  Motion for approval of the minutes of the special meeting of July 21, 2009  Davis 
                 Second  Creighton 
                  Motion carried by the following vote: 
                 In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5) 
                       4.      SPECIAL ORDER OF BUSINESS 
                 None. 
                       5.      (00:01:33) UNANIMOUS CONSENT CALENDAR 
                       a.  Authorization for approval of Outstanding Claims and Obligations for the
                      period of July 1 through July 31, 2009 in the amount of $49,984,200.33 
                     b.  Authorization for the Chief Executive Officer to amend four professional
                     services contracts that support Investigations for the Lower Duwamish
                    Waterway (LDW) and Harbor Island superfund sites and provide notification
                    to Commission in accordance with RCW 53.19.060 that the amendments exceed
                      50% of the cumulative value of the initial contract. 
                 Request document: Commission agenda memorandum dated July 10, 2009 from
                 Stephanie Jones Stebbins, Senior Manager, Seaport Environmental Programs and Kathy
                 Bahnick, Environmental Program Supervisor, Seaport Environmental Programs 
                       c.   Authorization for the Chief Executive Officer to execute a Category 3
                      professional services contract for consultant support for environmental
                     investigation and associated regulatory coordination at Terminal 115N ranging
                     from approximately $750,000 to $1,000,000. 
                 Request document: Commission agenda memorandum dated July 14, 2009 from
                 Stephanie Jones Stebbins, Senior Manager, Seaport Environmental Programs and Kathy
                 Bahnick, Senior Environmental Program Manager 
                     d.  Authorization for the Chief Executive Officer to issue Change Order Number
                     010 for the North and South Satellites Food Courts Flooring Replacement
                      Project to add the additional time required, 61 days, to complete the project. 
                 Request document: Commission agenda memorandum dated August 3, 2009 from Ralph
                  Graves, Managing Director, Capital Development Division 

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                       e.   Authorization for the Chief Executive Officer to authorize all work, execute
                     Category III procurement process, and execute all contracts and amendments
                     for photographic services to provide both scheduled and on-call photography
                      and related services for a one-year contract, with the option to renew for an
                      additional two years. Estimated annual contract value of $80,000, with the
                      option to renew for up to three years, for a total procurement amount not to
                     exceed $240,000. 
                 Request document: Commission agenda memorandum dated July 28, 2009 from Jane
                  Kilburn, Director, Public Affairs and Nancy Blanton, Manager, Corporate
                Communications 
                       f.   Authorization for the Chief Executive Officer to handle requests for privileged
                     documents by the State Auditor as part of the current performance and
                       accountability audits. 
                 Request document: Commission agenda memorandum dated July 31, 2009 from Craig
                 Watson, General Counsel and Tom Tanaka, Senior Port Counsel 
                 Motion for approval of Consent Calendar Items 5a-5f  Tarleton 
                 Second  Davis 
                  Motion carried by the following vote: 
                 In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5) 
                 Commissioner Davis commented on the two consent items regarding the Duwamish
                   superfund site cleanup (Items 6b and 6c), noting for the record that the money for these
                   projects comes from the tax levy. 
                       6.   DIVISION, CORPORATE AND COMMISSION ACTION ITEMS 
                      a.  (00:03:04) Authorization for the Chief Executive Officer to authorize
                    permitting, design and project management to be performed for the completion
                    of the South Wall reconstruction at Fishermen's Terminal (FT) in the amount of
                     $980,000. 
                 Request document: Commission agenda memorandum dated July 27, 2009 from Melinda
                  Miller, Director, Portfolio Management and Tim Leonard, Capital Project Manager; and
                   computer slide presentation. 
                   Presenter: Ms. Miller 
                  Ms. Miller referenced a recent briefing to the Commission on the background of this
                   project and the need for completion of the final phase of the seawall replacement at

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                   Fishermen's Terminal, noting that this request is for design, permitting, and project
                   management, the majority of which would be done by Port staff. She stated that staff
                   would return to Commission at a future date for authorization to proceed. 
                   Ms. Miller clarified that if the project remains on schedule, the work will be done during
                  the fish window opening which begins in October, 2010 and is anticipated to be about an
                   eight month period of construction. 
                 Motion for approval of Item 6a  Davis 
                 Second  Creighton 
                  Motion carried by the following vote: 
                 In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5) 
                     b.  (00:10:45) Authorization for the Chief Executive Officer to: 
                            1. Enter into agreements to complete design and permitting for the
                               replacement of four (4) mooring dolphins at the north end of Harbor
                                 Island, and; 
                            2. Procure long lead materials required to complete the project within the
                               current schedule. Total amount of the request is $480,000. 
                 Request document: Commission agenda memorandum dated July 24, 2009 from Mike
                   McLaughlin, Director, Cruise and Industrial Properties; Scott Pattison, Manager,
                  Industrial Properties and Business Development; and Mark Longridge, Project Manager,
                  Capital Development Division; and computer slide presentation 
                  Presenters Mr. McLaughlin and Mr. Longridge 
                  Mr. McLaughlin noted that today's request was to move forward with design and
                   permitting of the project required to replace mooring dolphins at Terminal 18. It was
                    noted that staff would return at a later date with an estimate of the final construction costs
                   and a request for authorization to proceed.
                  Mr. Longridge provided background information of the project as well as the planned
                   project schedule, which is expected to be completed by the spring of 2010. 
                  Commissioner Davis commented that this project will result in the removal of some old
                   creosote pilings and noted the benefit of that with respect to the environment. 
                    Staff confirmed that they believe this project will create benefits for the barge industry
                   throughout the harbor. 
                 Motion for approval of Item 6b  Hara 

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                 Second  Davis 
                  Motion carried by the following vote: 
                 In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5) 
                       c.   (00:21:39) Authorization for the Chief Executive Officer to perform full design
                    documents; prepare, execute, award and amend service agreements; and execute
                     service directives for C1 to C88 Baggage Handling Connection Project at
                     Seattle-Tacoma International Airport for an estimated cost of $280,000. The
                      ultimate cost for the constructed project is estimated to be $2,800.000. 
                 Request document: Commission agenda memorandum dated July 24, 2009 from Michael
                   Ehl, Director, Airport Operations and Robert F. Riley, Director, Aviation Capital
                Improvement Program 
                   Presenters: Dave Soike, Deputy Director, Aviation Division and Ed Weitz, Capital
                 Project Manager 
                   Mr. Soike provided background of the project, noting that this project will connect two of
                   the seven baggage handling systems at the Airport, and stated that it will allow Alaska
                   Airlines baggage to move to the north satellite via an existing underground tunnel rather
                   than being towed across the airfield by tugs. He clarified that the project has been
                   approved by the airlines and they have agreed to pay for it. 
                  Responding to Commissioner Creighton's question as to whether or not this project is
                   eligible for federal grant money, Mr. Soike responded that since the project does not
                   enhance security, it would not be eligible for that funding. 
                 Motion for approval of Item 6c  Davis 
                Second  Hara 
                  Prior to the vote, Commissioner Creighton asked whether there was a hard deadline for
                   the completion of this project, Mr. Soike noted that a full design of the project will be
                   done before going out to an open public bid, and that there is no hard deadline. 
                  Motion carried by the following vote: 
                 In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5) 
                     d.  (00:32:32) Ratification of critical fender pile work at Terminal 91 in accordance
                     with Resolution No. 3605. 
                 Request document: Memorandum dated August 10, 2009 from Ralph Graves, Managing
                  Director, Capital Development Division 

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                   Presenters: Mr. Graves and Mark Longridge, Project Manager, Capital Development
                  Division 
                   CEO Yoshitani noted that this was an action item, and clarified that this request for
                    ratification of a critical work situation was the first time this provision has been used
                  since the Commission adopted Resolution No. 3605. 
                   Mr. Graves noted that this work did not rise to the level of being emergency, and
                   therefore there is no need to bypass any contractual steps; however, this would be
                  shortcutting our own procedures' approval of work. 
                  Mr. Longridge provided an overview of the area at Terminal 91 which is referred to in
                   this request, and noted that the work needs to be done in order to allow safe cruise
                   berthing. He clarified that there have been no disruptions to cruise service as a result of
                    the deteriorating fender piles. 
                  Motion for ratification of Declaration of Critical Work Situation, Item 6d  
                 Tarleton 
                 Second  Davis 
                  Motion carried by the following vote: 
                 In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5) 
                       7.   STAFF BRIEFINGS 
                      a.  (00:38:39) South Satellite Common Use Gate Strategy 
                  Presentation document: Commission agenda memorandum dated July 27, 2009 from 
                  Michael Ehl, Director, Airport Operations 
                   Presenter: Nick Harrison, Senior Manager, Airport Operations 
                  As background to a request for authorization for common use equipment which would be
                 coming soon to the Commission, Mr. Harrison provided an overview of why common
                    use gates are beneficial both to the Port and to the airlines. He noted that the biggest
                   driver of this project was the recent consolidation of Delta and Northwest airlines
                    operations in the south satellite terminal. 
                     b.  (00:43:07) Terminal 30 Apron Upgrade Status Briefing 
                  Presentation document: Commission agenda memorandum dated August 3, 2009 and
                  computer slide presentation from Ralph Graves, Managing Director, Capital

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                 Development Division and Mike Burke, Senior Manager, Container Leasing and
                  Operations 
                   Presenters: Mr. Graves and Mr. Burke 
                  Mr. Graves provided a brief operational update on Terminal 30, including a video a video
                   showing loading and unloading of containers at the terminal. Also discussed was the
                   recently replace crane cable. It was noted that the settlement of the final cost of the cable
                     is still being negotiated. 
                   Mr. Graves also provided information on the status of the cost of uplands disposal of
                   dredge spoil, noting that the cost came to $3.6 million; that King County has paid $1.4
                   million of that cost; and that discussions are ongoing with King County regarding a
                  $400,000 balance. 
                  Commissioner Tarleton posed the following questions to staff: How many containers can
                  we now handle with the new terminal operating? How many people are going back to
                  work now that Terminal 30 is serving the container industry again? How many new
                   customers has the Port been able to attract by bringing Terminal 30 online? 
                   Mr. Burke noted that it is difficult to have an exact answer as to how many containers are
                   being handled, as that number can vary due to a variety of reasons. He also stated that
                   the terminal still has significant growth potential and could get into the 400,000-500,000
                TEU range. As to the number of jobs, Mr. Burke stated he would need to return with that
                  information. He provided information on current customers at the terminal and stated
                  that staff would continue to provide further and ongoing information about customers
                     there. 
                  A brief recess of the regular meeting was called at 1:55 and the meeting was reconvened
                  at 2:08 p.m. for a Budget Workshop. 
                       8.   NEW BUSINESS 
                 None. 
                       9.   POLICY ROUNDTABLE 
                      a.  (Audio part two - 00:00:01) Second Quarter 2009 Financial Performance
                    Briefing and Year-end Outlook 
                  Presentation documents: Commission agenda memorandum dated July 28, 2009; 
                  computer slide presentation; and quarterly performance report from Michael Tong,
                 Corporate Budget Manager. 


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                   Presenters: Mr. Tong; Borgan Anderson, Manager, Aviation Finance and Budget; Boni
                 Buringrud, Manager, Seaport Finance and Budget; and Ralph Graves, Managing
                  Director, Capital Development Division.
                   Mr. Tong presented a brief overview of the Port-wide financial results for the second
                  quarter of 2009. Included as a part of the overview were the Port -wide income summary,
                   the Port-wide year-end forecast, and total Port capital spending for 2009 
                   Mr. Tong also pointed out that there would be some costs hitting the budget due to the
                  voluntary separation program (VSP) and upcoming layoffs and noted that the current
                   estimate for the VSP is approximately $2.7 million. 
                  Mr. Anderson reviewed the Q2 Financial Performance of the Aviation Division. Topics
                   discussed included: 
                     Business Highlights 
                                o Airline activity 
                            o Operating budget 
                             o Non-airline revenues 
                             o Capital Budget 
                     Year-to-date operating revenues 
                     Year-to-date operating expenses 
                      Aeronautical business and key indicators 
                      Non-aeronautical business and key indicators 
                    Year-end expense forecast summary 
                     Summary of financial results 
                     Capital budget spending 
                  Ms. Buringrud provided a review of the Q2 Performance of the Seaport Division. Topics
                   discussed included: 
                     Seaport business goals 
                         o TEU volume 
                           o Grain volume 
                              o Smith Cove cruise facility 
                      Seaport organizational goals 
                            o Environmental stewardship 
                              o Regional transportation 
                     2009 expense budget reductions 
                       Seaport full year operating forecast 
                       Seaport second quarter year-to-date operating results 
                      Key variances, revenue and expense detail 
                    Business groups 
                      Seaport capital for 2009 

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                  Ms. Buringrud then presented an overview of the second quarter performance of the Real
                   Estate Division. Topics reviewed included: 
                    Business goals 
                     2009 expense budget reductions 
                       Real Estate Division full-year forecast 
                      Year-to-date operating results 
                      Second quarter key variances, revenue and expense detail 
                    Business groups 
                      Real Estate capital for 2009 
                  Mr. Graves provided an overview of the second quarter performance of the Capital
                 Development Division. Topics reviewed included: 
                      Year-to-date business events, including: 
                               o Restart of Rental Car Facility 
                             o Completion of T91 Cruise Terminal Facility 
                           o Completion of T30 Container Terminal Redevelopment 
                    Key indicators 
                      Operating results and forecast 
                  Mr. Tong then presented an overview of the second quarter performance of Corporate
                   Professional and Technical Services, including 
                     Operating results 
                     Corporate highlights 
                     Corporate indicators 
                  Commissioner Tarleton suggested that under 'Corporate Highlights' there be an
                   additional item noted regarding the establishment of metrics to measure the effective
                  performance of the recently created Capital Development Division. 
                     b.  (00:58:01) 2010 Budget  Key Assumptions and Guidelines Discussion 
                  Presentation documents: Commission agenda memorandum dated July 28, 2009 and
                  computer slide presentation from Michael Tong, Corporate Budget Manager 
                   Presenters: Mr. Tong; Dan Thomas, Chief Financial Officer; Borgan Anderson,
                 Manager, Aviation Finance and Budget; and Boni Buringrud, Manager, Seaport Budget
                  and Finance 
                  Mr. Anderson provided background information on the Airline industry since 2001,
                   noting that since during that time, the industry has lost a significant amount of money and
                    does not have a lot of flexibility to absorb additional losses. He stated his belief that
                  capacity cuts and cost-cutting measures taken by the industry have probably not been

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                    enough and the lack of profits is still likely this year. He commented that the current
                 weak economy has depressed travel demand in 2009. Regarding the outlook for Sea-Tac
                   Airport, Mr. Anderson noted that as financial challenges are likely to persist for the
                   airline industry, staff is currently assuming no passenger growth for 2010. 
                  Mr. Anderson also reviewed key assumptions for both airline and non-airline revenues as
                   well as expected trends and risks for 2010. 
                  Ms. Buringrud then provided a brief preview of the Seaport Division budget for 2010,
                   noting that the operating revenue is projected to be approximately flat compared to the
                 2009 budget. She also commented on primary components of revenue for the division. 
                 Reviewing key revenue assumptions, Ms. Buringrud commented that an 8% decrease
                  from the 2009 budget is expected for TEU volumes. She also noted that there is a 6%
                   increase of cruise passengers expected. Regarding the expense budget, Ms. Buringrud
                    stated that staff is looking at potentially a 10% reduction. 
                  Ms. Buringrud also provided a preview of the 2010 budget for the Real Estate Division,
                   noting that operating revenues are expected to be flat or up slightly relative to the 2009
                   budget. 
                  Responding to a question from Commissioner Davis regarding possible income from the
                   use of Terminal 91 for the 6 month period of time when there are no cruises, Ms.
                    Buringrud stated that there are no plans in the current forecast, but the possibility is being
                   explored. 
                  Commissioner Davis reiterated her hope that at some point, an elevator would be
                   installed at the T91 facility, which would enable a greater use of the space, and noted that
                  doing so may be an expense that would need to be incurred. 
                  Ms. Buringrud reviewed upcoming expense trends and risks, which included deferred
                  maintenance projects, tenant improvements, and unknowns related to both the Eastside
                   Rail Corridor as well as audit implications. 
                   Mr. Tong then briefly reviewed payroll assumptions for 2010, noting that currently the
                  average pay for performance is expected to be 3.75% and a salary range increase of 1.5%.
                  He commented on the expected reduction in benefit costs, with an average benefit rate
                  projected at 38.7%. He also pointed out that staff would be able to provide a better
                   forecast by the end of August. 
                  Mr. Tong commented on other budgeting issues, which included: 
                      Revenue assumptions, which are yet to be finalized 
                     Sustainable O&M cost reductions 
                     Voluntary separation program 
                    FTE reductions 

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                       Majority of severance costs recognized in 2009, so will not hit 2010 budget 
                  Mr. Tong then reviewed the proposed 2010 budget calendar for the next several months. 
                  Commissioner Bryant mentioned dates that he anticipated being held for Budget
                 Workshops as follows: Tax levy workshop  September 15 and 29, with the September
                   29 meeting to include a preliminary discussion of the plan of finance; Operating and
                  Capital Budgets  October 8; Draft Plan of Finance and Tax Levy  October 13.
                  Commissioner Bryant also stated his concern that the current schedule may not allow
                   sufficient time between first and second readings of the 2010 budget resolution. 
                  Commissioner Bryant suggested that staff might make themselves available for
                  discussion regarding the preliminary budget working document on October 20, which
                  would be followed by the release of the preliminary budget document on October 27.
                  The first reading of the budget resolution would then occur on November 10, and the
                  second reading on November 24. He also stated that he would prefer to have 3 weeks
                   between first and second readings, if possible. Staff noted that this could necessitate
                  having a special meeting on November 30, as the budget document needs to be filed by
                 December 1. 
                       c.   (01:38:28) Seaport 2010 Business Plan Overview 
                  Presentation documents: Commission agenda memorandum dated July 28, 2009 and
                  computer slide presentation from Phil Lutes, Deputy Director, Seaport Division; and
                  Wayne Grotheer, Director, Seaport Professional and Technical Services 
                   Presenters: Mr. Lutes and Mr. Grotheer 
                  The overview of the Seaport Division 2010 Business Plan included: 
                      Seaport strategies for 2010 
                              o Protecting current business 
                              o Positioning for recovery and change in the container shipping market 
                              o Collaborating with others to advance key initiatives 
                     Critical work for 2010 
                              o Deliver service to customers 
                             o Deliver on commitments  clean truck plan and customer support plan 
                              o Development of T91 into a multi-use facility 
                      2010 Preliminary Capital Plan  Committed and Business Plan Prospective 
                    Market outlook 
                     Financial outlook  revenue and expense 
                    Growth risks 
                     Business unit major goals 
                             o Containers 
                             o Cruise 
                              o Industrial docks and properties 

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                      Service units major goals 
                            o Finance 
                            o Planning 
                              o Security 
                           o Environmental 
                   Commissioner Tarleton asked, regarding asset evaluation and utilization, whether or not
                  the Commission would be receiving a presentation on the new system that staff is
                  developing. Mr. Grotheer responded that it had not been planned, but staff could do so as
                   part of the budget process. 
                     d.  (02:04:55) Real Estate 2010 Business Plan Overview 
                  Presentation documents: Commission agenda memorandum dated July 28, 2009 and
                  computer slide presentation from Joe McWilliams, Managing Director, Real Estate and
                Property Management 
                   Presenter: Mr. McWilliams 
                  Mr. McWilliams presented a brief overview of the Real Estate Division structure, noting
                   that this division had been created about 18 months prior. He noted that the division
                  includes Port Real Estate Development and Planning; Portfolio Management and
                  Leasing; Harbor Services; Pier 69 Facilities Management; and Marine Maintenance. 
                 Mr. McWilliams commented on the importance of addressing deferred maintenance
                   items, stating that currently there is about $20 million in deferred maintenance.
                  Commissioner Bryant asked whether a list of prioritized deferred maintenance projects
                   was available. Mr. McWilliams responded that there is such a list and that it would be
                  provided to the Commissioners immediately. 
                  Mr. McWilliams reviewed what each of the groups within the Real Estate Division have
                   been working on, as well as some of the challenges they are facing. 
            10. ADJOURNMENT 
                   There being no further business, the meeting was adjourned at 5:05 p.m. 
                   (A digital recording of the meeting is available on the Port's website.) 

                 Lloyd Hara 
                   Secretary 


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