5c
PORT OF SEATTLE MEMORANDUM COMMISSION AGENDA Item No. 5c ACTION ITEM Date of Meeting November 19, 2013 DATE: November 11, 2013 TO: Tay Yoshitani, Chief Executive Officer FROM: Wayne Grotheer, Director, Aviation Project Management Group James Schone, Director, Aviation Business Development James Jennings, Manager, Aviation Properties SUBJECT: Mezzanine Tenant Relocation at Seattle-Tacoma International Airport (CIP #C800560) Amount of This Request: $1,997,000 Source of Funds: Airport Development Fund Est. Total Project Cost: $2,332,000 Est. State and Local Taxes: $131,000 ACTION REQUESTED Request Commission authorization for the Chief Executive Officer to advertise for bids and award and execute a major construction contract for the Mezzanine Tenant Relocation project at the Seattle-Tacoma International Airport in an amount not to exceed $1,997,000 out of a total estimated project cost of $2,332,000. SYNOPSIS This project will relocate Airport Jobs, Port Credit Union and Port Sign Shop tenants at the Airport. Relocating these non-airline tenants will provide needed office space for new and existing airlines at the south end of the terminal. This project was included in the 2014-2018 capital budget and plan of finance. BACKGROUND An essential element of an airline's operation at the Airport is office space located pre-security to support the airline's ticketing functions. The proximity of this office space to the ticket counters is highly important for operational efficiency. The Airport has limited pre-security office space to support current and future airline needs. The space created by this project is anticipated to accommodate the office space needs of approximately three airlines. PROJECT JUSTIFICATION AND DETAILS There is limited pre-security office space on the south end of the terminal to support current and future airline needs. As referenced in the Century Agenda, it is anticipated that the Airport will continue to see strong international growth, including the likely addition of new international carriers in the not-too-distant future. Airline realignment, Delta Air Lines flow-through ticket Template revised May 30, 2013. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer November 11, 2013 Page 2 of 4 counter project (Zone 3), and United Airlines ticket counter push-back (Zone 2) have created a net reduction of approximately 8,500 square feet of airline office space on the south end of the terminal. The Airport has received requests from existing tenants that have not been able to acquire the desired level of office space to support their airline operations. In an effort to respond to these current and emerging airline office space needs, the Port would relocate three non-airline tenants (Airport Jobs, Port Credit Union and the Port Sign Shop) that are currently occupying valuable office space on the south end of the mezzanine, to locations that are better suited for non-airline functions. Project Objectives Create available pre-security office space for current and future airline needs on the south end of the terminal. Relocate non-airline tenants' office space and provide like-for-like accommodations for those tenants who will be relocated. Scope of Work Reconfigure and provide needed infrastructure to the north mezzanine for the relocation of the Airport Jobs Office. Reconfigure and provide needed infrastructure to the central mezzanine for the relocation of the Port Credit Union. Modify the mezzanine corridor to provide additional space for circulation. Reconfigure and provide needed infrastructure to the central mezzanine for future revenue as a tenant space. Reconfigure and provide needed infrastructure to the Concourse A ramp area to relocate the Port Sign Shop. Prepare the vacated Airport Jobs office for a new tenant by reconfiguring the office space. See attached Map of Tenant Relocations illustrating the changes. Schedule Commission Design Authorization March 2013 Begin Design April 2013 Commission Authorization for Construction November 2013 Advertise Construction Contract March 2014 Begin Construction July 2014 Complete Construction December 2014 FINANCIAL IMPLICATIONS Capital Expense Total Project Budget/Authorization Summary Original Budget $1,750,000 $0 $1,750,000 Budget increase $275,000 $307,000 $582,000 Revised budget $2,025,000 $307,000 $2,332,000 COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer November 11, 2013 Page 3 of 4 Previous Authorizations $335,000 $0 $335,000 Current request for authorization $1,690,000 $307,000 $1,997,000 Total Authorizations, including this request $2,025,000 $307,000 $2,332,000 Remaining budget to be authorized $0 $0 $0 Total Estimated Project Cost $2,025,000 $307,000 $2,332,000 Project Cost Breakdown This Request Total Project Construction $1,379,000 $1,379,000 Construction Management $228,000 $356,000 Design $114,000 $221,000 Project Management $117,000 $217,000 Permitting $28,000 $28,000 State & Local Taxes (estimated) $131,000 $131,000 Total $1,997,000 $2,332,000 Budget Status and Source of Funds This project was included in the 2014-2018 Capital Budget and Plan of Finance, CIP #C800560, with a budget of $1,750,000. The capital budget increase was caused by the need to move the west wall of the new Credit Union space in order to widen the corridor for improved circulation. The expense budget increase is due to a refined estimate of the cost to abate regulated materials. This new cost is included in the 2014 operating budget. The funding source for both the capital and operating costs will be the Airport Development Fund. Financial Analysis and Summary CIP Category Renewal/Enhancement Project Type Infrastructure Upgrade & Customer Service Risk adjusted discount rate N/A Key risk factors N/A Project cost for analysis $2,332,000 Business Unit (BU) Terminal Building Effect on business performance Will increase NOI after depreciation IRR/NPV N/A CPE Impact CPE will increase by $0.01 in 2014 due to regulated material abatement. The ongoing CPE impact will be $.01, beginning in 2015, but no change to business plan forecast as this project was included. Lifecycle Cost and Savings Annual Operating and Maintenance Costs should be equal to or less than present costs. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer November 11, 2013 Page 4 of 4 STRATEGIES AND OBJECTIVES This project promotes the Port's Century Agenda objective of meeting the region's air transportation needs at Sea-Tac Airport for the next 25 years by adding capacity for office space within the existing main terminal building. As the Port strives to develop new business and serve 45 to 60 million passengers annually, including doubling the number of international flights, it is important to provide office space near airline ticketing operations so the airlines can conduct business efficiently. ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1) Do nothing. Existing airlines will continue to operate in less than desirable conditions and new carriers will not have office space available or in a location that is necessary to an efficient airline operation. This is not the recommended alternative. Alternative 2) Increase the footprint of the main terminal, creating new pre-security office space. This is an expensive alternative and real estate outside the terminal footprint is very limited and potentially not available. This is not recommended. Alternative 3) Relocate non-airline tenants, such as Airport Jobs, the Port Credit Union and the Port Sign Shop, that reside on the south end of the main terminal mezzanine to other lesscongested locations in the Airport to create more office space for airlines. This is the recommended alternative. ATTACHMENTS TO THIS REQUEST Map of tenant relocations. PREVIOUS COMMISSION ACTIONS OR BRIEFINGS March 26, 2013 the Commission authorized the design of the Mezzanine Tenant Relocation project (C800560) at Seattle-Tacoma International Airport. That authorization was for $335,000 of a total estimated project cost of $1,750,000.
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