Commission Meeting Portal

Special Meeting on Nov 10, 2009 1:00PM

Minutes for the Port Of Seattle Commission meeting, held on Nov 10, 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) 
                     APPROVED MINUTES 
              COMMISSION SPECIAL MEETING NOVEMBER 10, 2009 
            The Port of Seattle Commission met in a special meeting at 2:00 p.m., Tuesday, 
            November 10, 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 special meeting was called to order at 2:10 p.m. by Bill Bryant, Chair and President. 
               2.     EXECUTIVE SESSION pursuant to RCW 42.30.110 
           None. 
           PLEDGE OF ALLEGIANCE 
               3.     APPROVAL OF MINUTES 
            Motion for approval of the minutes of the October 8, 2009 special meeting  
           Creighton 
           Second  Hara 
            Motion carried by the following vote: 
           In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5) 

               November 10 SM Min

        PORT COMMISSION MINUTES OF THE SPECIAL MEETING 
         TUESDAY, NOVEMBER 10, 2009                        P. 2 
               4.    SPECIAL ORDER OF BUSINESS 
            Commissioner Bryant noted that present at the meeting was Commissioner-elect Rob
            Holland. 
               5.    (00:01:55) UNANIMOUS CONSENT CALENDAR 
               a.  Approval of outstanding Claims and Obligations for the period of October 1
              through October 31, 2009 in the amount of $56,023,187.46 
              b.  Authorization for Port Commission to modify the scope of previous
              authorizations to complete construction of necessary improvements to the
              fendering and terminal systems at Terminal 25, Pier 28 and Terminal 46 for no
               net change in the current $300,000 authorization. 
           Request document: Commission agenda memorandum dated November 4, 2009 from
            Mike McLaughlin, Director, Cruise & Industrial Properties and Mark Longridge, Capital
            Project Manager 
           Motion for approval of Consent Items 5a and 5b  Creighton 
           Second  Tarleton 
            Motion carried by the following vote: 
           In Favor: Bryant, Creighton, Davis, Hara, Tarleton (5) 
            Item 7a was advanced on the agenda as follows: 
               7.   STAFF BRIEFINGS 
               a.  (00:03:36) Briefing on the Draft Plan of Finance 
            Presentation documents: Commission agenda memorandum dated November 2, 2009
            and computer slide presentation from Dan Thomas, Chief Financial Officer and Elizabeth
            Morrison, Senior Manager, Corporate Finance 
             Presenters: Mr. Thomas and Ms. Morrison 
            Mr. Thomas commented on the Plan of Finance which is prepared annually as part of the
            budget process, noting that the assumptions imbedded in the Plan at this time are based
            on the preliminary budget which was presented last month. 
             Ms. Morrison stated that the Plan of Finance rolls up all of the work that has been done
             by the operating divisions in developing their operating budgets and forecasts, their
            capital improvement plans, and the assumptions on the tax levy as presented in the
            preliminary budget document. 

               Nov 10 SM Min

        PORT COMMISSION MINUTES OF THE SPECIAL MEETING 
         TUESDAY, NOVEMBER 10, 2009                        P. 3 

            Regarding the funding sources in the Plan include the net operating income from all of
             the operating divisions and existing fund balances, passenger facility charges, customer
             facility charges, existing and new revenue bond proceeds, expected grant receipts, as well
            as assumptions about new bonds and tax levy funding. 
            Specific areas reviewed included: 
              Aviation Capital Funding, 2010-2014 
              Seaport Capital Funding, 2010-2014 
               Real Estate Capital Funding, 2010-2014 
              Corporate Capital Funding, 2010-2014 
              Debt service coverage 
              Port-wide Revenue Bond Debt Service Coverage, 2010-2014  Forecast 
              2010 Planned Finance Activity 
            Item 6e was advanced on the agenda as follows: 
               6.   DIVISION, CORPORATE AND COMMISSION ACTION ITEMS 
                e.   (00:17:01) Resolution No. 3631 and Resolution No. 3632, First Readings and
           Public Hearing. 2010 Budget and Tax Levy 
            Presentation documents: Commission agenda memorandum dated November 2, 2009
            and computer slide presentation from Michael Tong, Corporate Budget Manager 
             Presenters: Mr. Tong; Dan Thomas, Chief Financial Officer; Elizabeth Morrison, Senior
            Manager, Corporate Finance; and Borgan Anderson, Senior Manager, Aviation Finance
           and Budget 
            Mr. Thomas provided a summary of information which had been presented to the
            Commission thus far related to the budget process, and noted that there had been some
            changes since staff presented to the Commission in October. He stated that some of those
            changes would be proposed amendments to the budget. He also noted that the meeting
            shown on the slide presentation for November 24 had been rescheduled to November 23,
            which would be the intended day for Second Reading and Final Passage of the Budget. 
            Mr. Thomas highlighted some of the budget reduction efforts taken over the past year in
            preparation for the 2010 budget. After a review of all key functions, those efforts
             included: 
              Reduction of programs and functions 
               Implementation of voluntary separation program 
               Modification of medical benefits 
               Elimination of 110 FTE's 

               Nov 10 SM Min

        PORT COMMISSION MINUTES OF THE SPECIAL MEETING 
         TUESDAY, NOVEMBER 10, 2009                        P. 4 
             Reduction of O&M costs by $15M 
            As a highlight of major budget changes since the October 8, 2009 presentation, Mr.
           Thomas commented on the following: 
              Reduced operating revenues by $2.3M 
              Reduced OPEB (Other Post Employment Benefits) medical costs by $3,018K 
              Reduced worker compensation expense in Aviation Division by $101K 
               Total operating costs reduced by $3,119K 
            Mr. Thomas also provided clarification to a question which had been asked at an earlier
            meeting regarding an expense of approximately $780,000 within the Capital
            Development Division's Budget related to the Rental Car Facility. The question that had
            been asked was whether that expense was part of the overall Rental Car Facility program
             budget, and for the record, Mr. Thomas stated that those costs are part of the overall
             program budget; are not part of the actual project authorization, but instead are included
            in the operating budget and are paid for by CFC's (Customer Facility Charges). 
            Mr. Tong reviewed the Operating Budget, both including and not including
           Environmental Reserve expenses. Also reviewed was the Net Operating Income since
             the year 2000. 
            Mr. Anderson reviewed proposed changes to the Aviation Division's budget which
             included: 
            Revenues 
                   o Reduce $200K for Ground Transportation due to reduced costs 
             Expenses 
                   o Add $1.2M for rental and demobilization costs of emergency backup
                      generators 
                   o Increase $110K for International Service Incentive program 
            Also reviewed was a summary of the budget changes and resulting impacts of the three
            changes discussed previously. 
            Mr. Tong then reviewed a summary of the Portwide budget with proposed changes. He
            also spoke about the non-operating income summary and explained major variances. He
             also clarified that in the slide (#'s 13 and 14) information being presented, the units of
             dollar amounts are actually thousands rather than millions as shown on the slides.. 
            Items with significant variances noted by Mr. Tong included: 
              Revenue bond interest expense 
              Interest income 
              Grants and donations 
               GO (general obligation) bond interest expense 

               Nov 10 SM Min

        PORT COMMISSION MINUTES OF THE SPECIAL MEETING 
         TUESDAY, NOVEMBER 10, 2009                        P. 5 

            Mr. Tong then reviewed the summary of the Capital Budget by Division, commenting on
             the process of the review of capital projects to decide which projects could be either cut
             or deferred. He provided a breakdown of the 5-year capital plan, noting that the
            preliminary business plan prospective numbers may change pending the outcome of tax
             levy discussions. The Capital Improvement Plan beginning in the year 2000 was also
            reviewed. 
             Mr. Thomas noted that this presentation does require a public hearing, and also that there
            were two separate resolutions for consideration; Resolution No. 3631 which does approve
            the Port's budget and establishes the tax levy as proposed, and Resolution No. 3632,
            which a resolution designed to preserve the maximum statutory limit on the tax levy,
             which is separate from the actual levy that the Commission sets. 
            Commission Creighton stated that he believed Budget Resolution as presented, with a
           recommended tax levy amount of $75M, would not receive Commission support and that
            he would like to see brought forward a Resolution with a recommendation that would
            have support. 
            Prior to further discussion, Commissioner Bryant declared the meeting an open Public
            Hearing. 
            Public Comment regarding Item 6e was received from the following individual: 
              David Freiboth, King County Labor Council. Mr. Freiboth stated his support, in
                  behalf of Labor, of maintaining the current level of financing on the levy, which is
                  $75 million as he understands it. 
            There were no further public comments, and the Public Hearing was declared closed. 
            Motion for Resolution No. 3631, First Reading, as presented  Davis 
            Commissioner Davis read into the record, as follows, a portion of the mission statement
            which is included in the Bylaws: 
            "Commissioners shall safeguard the Port of Seattle as a Public Agency whose primary
            mission shall be to invest public resources to advance trade and commerce, promote
            industrial growth, stimulate economic development, and create jobs. This mission
            depends upon the transportation of people and goods by air, water, and land, and ensures
             economic vitality and a sustainable quality of life for the people of King County. The
            Commission shall act to preserve scarce maritime and aviation related resources of
             unique value for Port uses." 
            Commissioner Creighton noted his reasons for not wanting to support a levy at an amount
            of $75 million and stated that he would support an amount of $70 million, which had
           been suggested by Commission Bryant. 

               Nov 10 SM Min

        PORT COMMISSION MINUTES OF THE SPECIAL MEETING 
         TUESDAY, NOVEMBER 10, 2009                        P. 6 

            Commissioner Hara stated that he would also support an amount of $70 million, and
            noted that he was more concerned about the levy rate 
            Commissioner Tarleton stated that her concern was related more to the budget than the
             levy, and how the budget allows the Port to accomplish its mission.. 
           Second to motion - Tarleton 
            Motion failed by the following vote: 
           In Favor: Davis, Tarleton (2) 
          Opposed: Bryant, Creighton, Hara (3) 
            Following further Commission discussion, a new Resolution number (Resolution No.
            3634) was assigned to the Budget item, a Resolution which would include an amount of
             $70 million. 
           Motion for Resolution No. 3634, First Reading. 2010 Budget  Creighton 
           Second  Hara 
            Motion carried by the following vote: 
           In Favor: Bryant, Creighton, Hara (3) 
          Opposed: Davis, Tarleton (2) 
             Prior to the vote on Resolution No. 3632, Mr. Thomas clarified that in order to pass, this
             Resolution required a super majority, or 4-1 vote in favor of the item. 
           Motion for Resolution No. 3632, First Reading. Setting maximum tax levy capacity
            Creighton 
           Second  Davis 
            Motion carried by the following vote: 
           In Favor: Bryant, Creighton, Davis, Hara (4) 
          Opposed: Tarleton (1) 
            Commissioner Hara was excused from the meeting from this point forward. 
            Item 6d was advanced on the agenda as follows: 

               Nov 10 SM Min

        PORT COMMISSION MINUTES OF THE SPECIAL MEETING 
         TUESDAY, NOVEMBER 10, 2009                        P. 7 

            d.  (01:47:39) Resolution No. 3633, First Reading, the 2010 Salary and Benefit
           Resolution 
           Request documents: Commission agenda memorandum dated November 3, 2009 from
           Tammy Woodard, Senior Manager, Total Compensation 
             Presenter: Ms. Woodard 
            Ms. Woodard highlighted changes to the 2010 Salary and Benefit Resolution from the
            2009 Resolution noting that changes would be minimal and noted that benefit changes
            will impact employees and retirees more significantly than Resolution changes will, and
             all changes will reflect a conservative approach to both pay and benefits for 2010. 
            Highlights reviewed by Ms. Woodard included: 
               What the Salary and Benefit Resolution is 
               Unique aspects of the Port 
               Port salary ranges vs. Typical public employer ranges 
              Considerations for 2010 
              Proposed changes for 2010 
              Non-represented ranges 
            Commissioner Creighton mentioned it may be prudent to include as a provision of the
            Resolution, granting the Chief Executive Officer the authority to implement a voluntary
            separation program, depending on the economic situation, should it be necessary to assist
            in managing human resource costs, and which would be subject to notifying the
          Commission. Ms. Woodard noted that the 2009 Resolution had been amended to include
             this provision and it was kept in the proposed Resolution for 2010. 
            Commissioner Creighton also referred to furloughs which had been implemented in 2009
            and whether or not language specific to possible implementation of future furloughs
             should be included in the Resolution, and staff noted that this could be done. 
            Commissioner Creighton then stated that he felt the language regarding the setting of
            CEO compensation needs to be further clarified 
           Motion for Resolution No. 3633, First Reading. 2010 Salary and Benefit Resolution
            Creighton 
           Second  Tarleton 
            Motion carried by the following vote: 
           In Favor: Bryant, Creighton, Davis, Tarleton (4) 

               Nov 10 SM Min

        PORT COMMISSION MINUTES OF THE SPECIAL MEETING 
         TUESDAY, NOVEMBER 10, 2009                        P. 8 
            Commissioner Hara was absent for the vote. 
               a.  (02:03:09) Authorization for the Chief Executive Officer to execute the 11th 
             Amendment to Lease between the Port and Louis Dreyfus Corporation at the
              Terminal 86 grain terminal to extend decision dates by six months for the Lessee
               to notify the Port of its election to exercise its option to extend the lease term on
              or before May 14, 2010, and the Port would extend its response time to August
              14, 2010. The effective dates of the option period would remain unchanged. 
           Request document: Commission agenda memorandum dated October 22, 2009 from
            Scott Pattison, Manager, Industrial Properties and Mike McLaughlin, Director, Cruise
             and Industrial Properties. 
             Presenter: Mr. McLaughlin 
            Mr. McLaughlin stated that the proposed amendment would revise the date when the
             Lessee may elect to exercise its next five-year option to extend their lease term. It would
             also revise the date when the Port must respond to the Lessee's notice. He stated that this
             would simply allow the parties a greater length of time to negotiate a longer term
             alternative, which would be beneficial to each side. Mr. McLaughlin noted that staff
            would return to Commission at a future date early next year to propose a terminal
            upgrade amendment or an entirely new lease proposal. 
           Motion for approval of Item 6a  Tarleton 
          Second: Davis 
            Motion carried by the following vote: 
           In Favor: Bryant, Creighton, Davis, Tarleton (4) 
            Commissioner Hara was absent for the vote 
              b.  (02:11:17) Authorization for the Chief Executive Officer to enter into a
              solicitation process and execute a contract for Financial Advisory Services for
               five years with the right to extend for two additional years at an estimated cost
               of $3,000,000. 
           Request document: Commission agenda memorandum dated October 29, 2009 from
            Craig J. Kerr, Treasury Manager and Elizabeth Morrison, Senior Manager, Corporate
            Finance 
             Presenter: Ms. Morrison 
             Ms. Morrison noted that the Port's current financial advisory contract with Seattle-
             Northwest Securities will expire April 1, 2010 and stated that staff hopes to have a new

               Nov 10 SM Min

        PORT COMMISSION MINUTES OF THE SPECIAL MEETING 
         TUESDAY, NOVEMBER 10, 2009                        P. 9 
             contract in place prior to that date so that the financial advisor can assist with letters-of
             credit that expire in 2010. To be consistent with the current contract term and consistent
             with the Port's financial management practices, Ms. Morrison stated that staff is
             requesting that the term of the contract be set at five years. 
           Motion for approval of Item 6b  Tarleton 
           Second  Davis 
            Motion carried by the following vote: 
           In Favor: Bryant, Creighton, Davis, Tarleton (4) 
            Commissioner Hara was absent for the vote 
                c.  (02:15:33) Request for the Commission, in accordance with RCW 53.19.020(5)
              to (1) grant an exemption from competition for procuring semi-annual
             environmental liability support using Environmental Risk Communication Inc.
              (ERCI) Defender File or Pro Form software; and (2) authorization for the Chief
              Executive Officer to execute and administer a three-year contract with two oneyear
              options for semi-annual environmental liability support and software
             upgrade and maintenance. The contract will be $150,000 per year with the total
              Not-to-Exceed $750,000. 
           Request document: Commission agenda memorandum dated October 26, 2009 from
            Stephanie Jones Stebbins, Senior Manager, Seaport Environmental Programs and David
            Kleiber, Seaport Environmental Finance Manager. 
             Presenter: Ms. Jones Stebbins 
            Motion for approval of Item 6c, part 1  Davis 
           Second - Creighton 
            Motion carried by the following vote: 
           In Favor: Bryant, Creighton, Davis, Tarleton (4) 
            Commissioner Hara was absent for the vote 
            Motion for approval of Item 6c, part 2  Creighton 
           Second  Davis 
            Motion carried by the following vote: 

               Nov 10 SM Min

        PORT COMMISSION MINUTES OF THE SPECIAL MEETING 
         TUESDAY, NOVEMBER 10, 2009                       P. 10 
           In Favor: Bryant, Creighton, Davis, Tarleton (4) 
            Commissioner Hara was absent for the vote. 
               8.   NEW BUSINESS 
            Ralph Graves, Director, Capital Development Division provided a brief update on a
            declaration of emergency which had been issued on this day due to an incident at Harbor
            Island Marina, where a 65' tugboat sank. He noted that the emergency declaration had
            been issued due to concern of leaking fuel and the need to recover the vessel, which was
              tied to a Port pier. He also stated that the owner did not have the resources necessary to
             recover the vessel and that the State will reimburse the costs up to 90% if the owner is not
             able to do so. 
               9.   POLICY ROUNDTABLE  BUDGET WORKSHOP 

        10. ADJOURNMENT 
            There being no further business, the meeting was adjourned at 4:37 p.m. 
             (A digital recording of the meeting is available on the Port's website) 

            Gael Tarleton 
            Vice-chair and Vice President 









               Nov 10 SM Min