PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6b 
ACTION ITEM 
Date of Meeting     October 8, 2013 
DATE:    October 1, 2013 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:   James R. Schone, Director, Aviation Business Development 
George England, Program Leader, Aviation Project Management Group 
SUBJECT:  Doug Fox Lot Service Upgrades Construction Contract (CIP #C800548) 
Amount of This Request:        $1,385,000   Source of Funds:   Airport Development
Fund 
Est. Total Project Cost:          $6,503,000 
Est. State and Local Taxes:        $423,000   Est. Jobs Created:          32 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer (1) to request An
authorization increase of $1,385,000 in addition to the $5,118,000 previously authorized to
construct the Doug Fox Lot Service Upgrades project at the Seattle-Tacoma International Airport
for a total project authorization of $6,503,000 due to bids exceeding the engineer's estimate by
more than 10 percent and (2) to execute a major public works construction contract with the low
responsive and responsible bidder to construct project. 
SYNOPSIS 
The Commission authorized the advertisement for bids on July 9, 2013, for the Doug Fox Lot
Service Upgrades, but when contractor bids were opened on September 5, 2013, the lowest
responsive bid was received from Pellco Construction and exceeded the engineer's estimate by
39.5%. This represents a bid irregularity requiring further Commission action in accordance
with Section 4.2.3.4 of Resolution No. 3605, as amended by Resolution No. 3628. After review
of Pellco Construction's bid, Port staff believes the bid price to be fair and reasonable. The
additional authorization of $1,385,000 is for the higher bid plus associated higher tax and
construction contingency amounts.  In July 2013, the capital budget was decreased by
$1,005,000, which was transferred to the Non-aeronautical Allowance and which would now be
transferred to the project, resulting in a net increase in project cost of $380,000. 
After careful review by staff, even with the increased construction bid cost, the lease that this
project supports generates a positive net present value of $3.46 million. Moving forward with
this project supports a current annual revenue stream of $2 million that is expected, with this
project, to grow to $3 million in five years.

Template revised May 30, 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
October 1, 2013 
Page 2 of 6 
BACKGROUND 
On May 22, 2012, the Port of Seattle Commission authorized design of the Doug Fox Lot
Service Upgrades and a total project budget of $6,123,000. On July 9, 2013, the Commission
authorized construction and a revised total project budget of $5,118,000. The budget change
between these two Commission actions was based on design progression and cost estimates
prepared during that period. On July 29, 2013, the project was advertised for construction bids.
On August 7, 2013, a pre-bid meeting and site tour was held with several contractors in
attendance. Construction bids were originally scheduled to be opened on August 28, but the
opening was postponed via an addendum to September 5 to provide additional time for bidders
to prepare their bids. Bids were received and opened , and Pellco Construction was identified as
the lowest responsive bidder with a bid of $3,992,357.50. The remaining six bids ranged from
$4,227,163 to $5,300,000. The engineer's estimate was $2,860,943.18. The difference between
the engineer's estimate and the low bid is $1,131,414.32, whichexceeds the estimate by more
than 10% and necessitates this Commission authorization request. Additional sales tax and
construction contingency bring the total requested budget increase to $1,385,000. 
Staff has reviewed the engineer's estimate and bid results and identified several factors that may
have contributed to the bid difference, including but not limited to: 1) Risks and inefficiencies
specific to construction phasing and the requirement to keep the lot operational at all times
during construction. Four separate and distinct phases were required to construct the new storm
drainage and lot lighting systems, both systems having to be operational at the end of each phase.
2) Risks with performing work during the wet winter season, including weather sensitive
activities such as paving and excavating.  3) Risks and associated costs for a vendor of the
manufactured structures (modular building, drive lane canopy, and cashier booths) to prepare
detailed design shop drawings based on architect drawings, obtain required reviews and permits,
and to fabricate and deliver the structures to meet the construction phasing needs. 4) A reflection
of the current overall subcontractor pricing levels and bidding climate. After review of Pellco
Construction's bid, Port staff believes the bid price to be fair and reasonable. Staff also evaluated
whether any scope could be deleted from the project or whether rejecting all bids and rebidding
is a viable option. Due to specific project requirements within the lease including the time
commitment for completing the improvements, staff recommends award to Pellco Construction. 
PROJECT JUSTIFICATION AND DETAILS 
With the new lease with ATZ and construction of the upgrades proposed in this request, the
Airport has the opportunity to increase parking revenues generated from an improved facility.
The facility represents an important element of the Port's Airport parking business with annual
Port revenues regularly surpassing $2 million. 
Project Objectives 
The Port's objective is to increaserevenues generated from the facility. An enhanced customer
experience will result from a new storm drainage system, pavement, lighting, signage, and a new
building, enabling the facility to offer a more competitive parking product in the Airport parking
market.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
October 1, 2013 
Page 3 of 6 
Scope of Work 
New storm drainage system 
Lot resurfacing 
Lighting system upgrade 
New and improved signage 
Construction of a new sanitary sewer pipeline 
Demolition of the existing building 
New building (including supporting infrastructure), cashier booths, and canopy over the
entrance/exit lanes 
Schedule 
Construction phase: November 2013  December 2014 
FINANCIAL IMPLICATIONS 
Budget/Authorization Summary               Capital       Expense    Total Project 
Current Budget                         $5,068,000       $50,000     $5,118,000 
Budget Increase                         $1,385,000           $0     $1,385,000 
Revised Budget                        $6,453,000       $50,000     $6,503,000 
Previous Authorizations                    $5,068,000        $50,000      $5,118,000 
Current request for authorization               $1,385,000            $0      $1,385,000 
Total Authorizations, including this request        $6,453,000        $50,000      $6,503,000 
Remaining budget to be authorized                 $0           $0           $0 
Total Estimated Project Cost                $6,453,000       $50,000     $6,503,000 
Project Cost Breakdown                   This Request       Total Project 
Construction                              $1,265,000         $4,452,000 
Sales Tax On Construction                     $120,000         $423,000 
Design and Other Soft Costs                         $0        $1,135,000 
Construction Mgt. and Related Costs                   $0         $493,000 
Total                                    $1,385,000         $6,503,000 
Budget Status and Source of Funds 
This project, CIP #C800451, was included in the 2013  2017 capital budget and plan of finance
with a budget of $6,073,000. The capital budget was decreased by $1,005,000 in July of 2013.
The savings was transferred to the Non-aeronautical Allowance CIP (C800405). The current
budget increase will be transferred from this same allowance CIP for a net increase in the project
cost of $380,000. There will be no change in the overall Airport capital budget. The funding
source for this project is the Airport Development Fund.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
October 1, 2013 
Page 4 of 6 
Financial Analysis and Summary 
As part of the February 14, 2012, request for design and construction funding for the stormwater
drainage repair work, the associated financial analysis assumed that by upgrading the drainage
system, the current revenues generated at the facility would be maintained. However, no new,
incremental revenues were anticipated as part of that analysis. 
The financial analysis associated with the additional design funds requested on May 22, 2012,
assumed new, incremental revenues associated with the construction of the additional project
elements based on staff's expectation that with new, enhanced pavement, lighting, signage and a
new building, revenues would be enhanced. 
The financial analysis and justification associated with this request again includes only the new,
incremental revenue generated from the facility with implementation of all the project elements,
including the cost of the previously approved drainage work. This was done to create a
conservative financial analysis showing all costs associated with the project, both previously
approved by Commission and those related to this request, as well as new revenues anticipated
from an enhanced surface parking facility. Following the May 22, 2012, communication to
Commission, staff was able to better refine the parking activity assumptions throughout the lease
term and extensions associated with the facility improvements. The updated assumptions
included significant input and review from ATZ as well as review by Leigh Fisher Associates, a
consulting firm currently under contract with the Port of Seattle. The financial analysis presented
to Commission on July 9, 2013, has now been updated using the higher project costs described
above. The results of that updated analysis are below. 
CIP Category          Revenue/Capacity Growth 
Project Type           Business Expansion/New Business Development 
Risk adjusted Discount    8% 
rate 
Key risk factors             Construction risks: the project may encounter
unexpected delays due to unforeseen issues, such as
contaminated soils, which may increase the cost of
the project and/or cause schedule delays. 
Financial risks: general economic conditions will
impact the parking market and if general economic
declines occur in the future, incremental revenues
may fall short of forecasts. 
A timeframe of 15 years was included in the financial
analysis, covering the initial five-year lease and two
five-year extensions. There is risk associated with a
potential future conversion of the property to nonparking
use, and lease terms associated with future
extensions. 
Project cost for analysis     $6.5 million 
Business Unit (BU)       Landside

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
October 1, 2013 
Page 5 of 6 
Effect on business        The financial analysis assumes that with construction of the
performance           project improvements at the facility, annual revenues to the
Port will increase. Current revenues to the Port are
approximately $2 million. Within five years of
implementation of the improvements, annual revenues are
anticipated to increase by close to $1 million. Within ten
years, revenues are anticipated to increase by approximately
$2 million. 
IRR/NPV           NPV: $3.46 million 
IRR: 11% 
Payback: 8 years 
CPE Impact          None 

The financial analysis assumed two revenue scenarios including a base case, as if the lease and
construction project were not approved, and a revenue projection associated with approval of the
lease/project. The difference in revenue between the two scenarios was then calculated and
evaluated against the overall construction cost of $6.5 million. The base case revenue included a 
2.2% annual growth rate over the 2012 actual revenue to the Port of $2.2 million. However,
revenue growth at the facility without infrastructure improvements is very unlikely, and revenues
would most likely decline. Staff included a revenue growth rate in the base case to present a
conservative financial analysis. 
Lifecycle Cost and Savings 
Responsibilities for future operations and maintenance cost of the lot facilities are set forth in the
lease agreement between the Port and lot operator. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Do not authorize the execution of a major public works contract in the amount
requested and direct staff to revise the design of the project and/or change the project schedule
and rebid. The outcome of redesign and rebidding the project is uncertain. This will result in a
several month delay in construction and will not meet the provisions set forth in the new lease
agreement with the lot tenant. This may result in litigation with the tenant. At a minimum, terms
of the lease would need to be renegotiated. This is not the recommended alternative. 
Alternative 2)  Do not authorize the execution of a major public works contract in the amount
requested.  This will result in a construction contract not being awarded and no project
improvements will be constructed. The existing sub-standard facilities would remain in place
and no customer benefits would be achieved. Revenues from the lot would likely decline. This
alternative may also result in litigation with the tenant. At a minimum, the agreement would need
to be renegotiated. This is not the recommended alternative.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
October 1, 2013 
Page 6 of 6 
Alternative 3)  Authorize the execution of a major public works contract in the amount
requested. This will result in the project construction moving forward with the completion date
remaining approximately as planned. This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
None. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
On July 9, 2013, the Port of Seattle Commission authorized the Chief Executive Officer
to reduce the project budget of the Doug Fox Lot Service Upgrades project and to
proceed with construction in the amount of $3,322,000, in addition to the $1,796,000
previously authorized, for a total authorization of $5,118,000. 
On June 4, 2013, the Doug Fox Lot Service Upgrades project was presented to the Port
Commission but no final action was taken. 
On March 5, 2013, the Port Commission postponed consideration of the Doug Fox Lot
Service Upgrades project. 
On May 22, 2012, the Port Commission authorized the Chief Executive Officer to
increase the scope and budget of the Doug Fox Lot Service Upgrades project to
$6,123,000 and proceed with design in the amount of $768,000 in addition to the
previous authorization of $1,028,000, for a total authorization of $1,796,000. 
On February 4, 2012, the Port Commission authorized the Chief Executive Officer to
proceed with design and construction of a new stormwater drainage system on the
Doug Fox Lot in the amount of $1,028,000.