PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA             Item No.      6d 
ACTION ITEM             Date of Meeting    July 9, 2013 

DATE:    July 2, 2013 
TO:     Tay Yoshitani, Chief Executive Officer 
FROM:    James R. Schone, Director, Aviation Business Development 
Jeff Wolf, Manager, Aviation Business Development and Analysis 
SUBJECT:  ATZ Lease Approval for Doug Fox Parking Lot 

ACTION REQUESTED: 
Request Commission authorization for the Chief Executive Officer to execute a lease
substantially as drafted in Exhibit 1 with ATZ Inc. (ATZ) for a term of five years, with two fiveyear
extension options upon mutual agreement, for operation of the parking facility commonly
known as the Doug Fox Parking Lot (Doug Fox) located north of South 170th Street and east of
the Northern Airport Expressway in the City of SeaTac. 
SYNOPSIS:
The Port owns an "off-airport" surface parking lot on South 170th Street that is approximately 
mile from Seattle-Tacoma International Airport. This facility, commonly known as the Doug
Fox Parking Lot, is leased to and operated by ATZ. The firm provides shuttle bus service for its
customers to the courtesy vehicle plaza in the main garage, from where travelers have a short
walk into the terminal building (see Exhibit 2). In 2004, the Port signed a five-year lease with
ATZ for operation of this facility. In September 2009, the Port signed a new two-year lease with
ATZ that included a one-year option to extend. The current lease for operation of the facility has
been in month-to-month holdover since October 2012 and will expire on September 30, 2013. 
In early 2012, in anticipation of lease expiration, Airport staff identified the need for
improvements to critical infrastructure at the facility, including improving the storm drainage
system and pavement renewal and replacement.  In an effort to enhance revenues to the Port,
staff also identified upgrade opportunities that included new lighting, new signage, and a new
building.  Design and construction for storm drainage improvements was approved by the
Commission on February 14, 2012, and an increase of design funds for pavement repair, lighting,
signage, and a new building were approved by Commission on May 22, 2012.
Staff then conducted a public, competitive request for proposal (RFP) process for a new operator
during the summer of 2012. Although a number of local and national firms expressed interest,
only two proposals were submitted and only one of those  submitted by ATZ  met the

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 2, 2013 
Page 2 of 9 
minimum proposed financial return required by the Port. As a result, staff carefully reviewed
ATZ's proposal and, after determining it was favorable to the Port, selected ATZ as the winning
bidder and entered into lease contract negotiations. The terms of the proposed lease include a
minimum annual guarantee, which was not a term of the previous lease, and a higher base
concession fee, both of which are beneficial to the Port. 
In conjunction with this request for lease execution authorization, a separate request for
construction funding for the previously recommended improvements in the amount of $5.1
million (CIP #C800451) will also be considered at this meeting.  The financial implications of
the new lease with ATZ and the associated construction project are positive. The overall net
present value (NPV) of the project, including new lease terms and construction costs, is $4.8
million with an associated internal rate of return of 13% and a payback of 7 years. 
BACKGROUND: 
The Doug Fox lot has been used primarily for Airport parking since its development well over 20
years ago. Although it is an off-site facility, the lot has the advantage of being relatively close to
the Airport with a convenient approach from the Northern Airport Expressway. The lot provides
the Airport with a facility that competes in the off-airport market where prices are lower, while
the Airport garage commands higher rates based on the value of proximity to the terminal. Staff
analysis indicates that based on market conditions, operation of the facility by a private entity,
rather than by the Port, provides for a higher rate of return.
Prior to expiration of the Port's lease and concession agreement with ATZ Inc. on September 30,
2009, a new two-year lease was negotiated with the possibility for a one-year option. The
purpose for this new lease was two-fold: 1) to resolve all claims related to the impact of the
Northern Airport Expressway construction on the lessee; and 2) to provide sufficient time to
determine the appropriate investments to make in the facility to improve its marketability and
competitiveness.  In 2011, the one-year option was executed, extending the agreement
termination date to September 30, 2012. The agreement included a month-to-month holdover
clause for a maximum of six months, thus allowing for the termination of the agreement to be
extended to March 31, 2013.  The agreement was amended on March 29, 2013, to extend the
holdover period until September 30, 2013. 
On May 22, 2012, the Commission authorized proceeding with design for pavement renewal and
replacement, a new and improved lighting system, new signage to improve visibility of the
facility, demolition of the existing building,  and construction of a new building. These
improvements were in addition to February 14, 2012, authorization to construct a new storm
drainage system. 
Following Commission approval of design funds, staff initiated a public RFP process for a new
operator in anticipation of the expiration of the current lease agreement with ATZ in September
2012. The RFP was advertised broadly in various local, national, and industry-specific
publications. During the RFP process, six parking firms either submitted questions or attended
the pre-proposal conference. With the exception of ATZ, Port staff does not believe any of the

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 2, 2013 
Page 3 of 9 
six firms are involved in the parking market at Seattle-Tacoma International Airport. Based on
the evaluation criteria and scoring methodology contained within the RFP, ATZ was the only
responder that met the minimum qualifications. By comparison, in 2012, 14 non-revenue
solicitations out of 162 received only one bid, mostly among small works construction contracts.
For revenue-generating contracts, most RFPs are conducted through Aviation Concessions, and
several during 2011 and 2012 received two or fewer bids, including the bookstore replacement,
hamburger restaurant, North Satellite coffee kiosk, and the technology store replacement. Within
the Seaport and Real Estate Divisions, RFPs are not frequently employed as web advertising, and
the use of brokers has been deemed a better way to get access to the market. 
ATZ is a locally-owned and operated business that has over 30 years of experience managing
parking operations in the local airport market.  In evaluating ATZ's response, staff determined
that it was a strong proposal and entered into contract negotiations during the fall of 2012. Since
that time, the design process for the construction project and lease negotiations with ATZ have
been moving forward concurrently. 
Enhanced Terms: 
The resulting proposed lease includes enhanced terms to the Port with a quality operator of the
facility. For example, the current agreement does not have a minimum annual guarantee (MAG).
The new agreement includes a MAG that escalates over the five-year term, beginning at $1.5
million in year one and ending at $2.8 million in year five. The first-year MAG and percentage
fees paid to the Port were intentionally negotiated lower compared to the final four years of the
contract due to the anticipated impacts from the construction project on parking operations at the
facility.
The base concession fees paid by ATZ are higher in the new, proposed agreement with a
beginning percentage of 55% of gross receipts escalating to 63% of gross receipts in year five.
The current agreement requires 54.5% to be paid to the Port (with the possibility of higher
percentages paid to the Port if higher gross receipts are achieved).
The new lease requires that ATZ not own, operate, or have a financial interest in any other
parking operation within a three-mile radius of the Airport. The current lease does not include
this requirement. To fulfill this requirement, ATZ will divest itself from ownership/operation of
a competing parking facility, ShuttlePark 2. The new sole owner of ATZ, Darin Lang, will not
have any formal or informal relationship to the ownership group of ShuttlePark 2, or Sterling
Realty, who owns the property upon which ShuttlePark 2 resides. 
The commencement date of the new lease will be October 1, 2013. This date was selected to
align the impacts of construction on the operation and potential profitability of the site with the
accommodation provided in the first year of the lease terms.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 2, 2013 
Page 4 of 9 
Length of the Lease Term: 
The proposed base term of the lease with ATZ is five years. Included in the lease are two fiveyear
options to extend. The options to extend the lease require mutual consent. The initial lease
term along with the options were established for several reasons. Staff anticipates that there will
be a higher and better use for this property at some point within the next 10 to 15 years, and the
Port desires to maintain as much flexibility as possible regarding that potential future use. The
three successive five-year increments (with the latter two exercisable only on mutual consent)
provide the Port periodic windows within which to examine alternative uses while continuing to
derive important non-aeronautical revenue from this site as a surface parking facility.  The
requirement for the Port's consent to exercise eitherof the options provides the Port with the
flexibility to negotiate with a different parking operator or conduct another RFP for a parking
operator if needed. 
To understand alternative uses of the site within the next five or ten years, staff contracted in
2009 with Heartland to provide an evaluation of uses of the facility. The report was updated by
Mohr Partners in 2011 and indicated that viable alternative uses over that time horizon included
a campus with a business class hotel, an air crew lodging facility, and an office building with a
parking garage.
"Bundling" of Ground Transportation Service Charge: 
The Port generally imposes fees on off-airport parking and hotel operators to recover costs
associated with the use of Airport assets, such as roadways, equipment, shelters, etc.  For 2013,
the fee for operators of courtesy shuttles from off-Airport parking locations is $1.83 per vehicle
trip. However, the amount varies from year to year and has ranged from a low of $1.25 per trip
to a high of $3.13 per trip over the past five years.
In order to reduce the likelihood that proposers would hedge their financial proposals to the Port
due to the risk of variability in these ground transportation fees, the Port elected to "bundle" the
ground transportation fee into the percentage fees paid by an operator to maximize the amount
proposers would be willing to pay for the combined right to operate the parking lot and access
the Airport.  While the Port will continue to calculate the "burden" placed on its ground
transportation facilities by ATZ and appropriately account for that when establishing the fees for
other ground transportation operators (i.e., the cost will not be shifted to other operators), the
RFP was clear that the concession fee was to compensate for both the right to operate the lot and
to access the Airport. 
While some operators impose a surcharge on their customers in an attempt to recoup the expense
associated with accessing the Airport, this is not required by the Port. Indeed, the Port assesses
its ground transportation fees on vehicle operators per vehicle trip  not per passenger or per
customer. While ATZ will, under the terms of the new lease, no longer separately pay ground
transportation fees, no other parking operator pays a concession fee (ranging from 55% to 63%
over the initial five-year term) to the Port.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 2, 2013 
Page 5 of 9 
This "bundling" of ground transportation fees currently exists within other classes of ground
transportation services. For example, the Seattle-Tacoma International Limousine Association,
which provides on-demand limousine service and Puget Sound Dispatch dba Yellow Cab, which
provides on-demand taxi service, both pay large minimum annual guarantees and additional
percentage or trip fees without separately paying cost-recovery ground transportation fee
amounts. In addition, this methodology, as noted above, has no impact on the calculation of the
access fees charged to any other ground transportation provider.  The trips from all of these
operators will be included in the Port's cost-recovery model and allocated based on their
proportionate use of assets and resources. 
Three-Mile Radius for Exclusion of Firms with Other Parking Operations: 
Given the highly competitive nature of the parking market around the Airport, staff believes that
it is best to have an operator solely focused on making this facility as successful as possible. To
the extent that the operator of the Doug Fox Lot also had management or ownership
responsibilities for a facility that could be considered a competitor to the Doug Fox Lot, there
would be questions about which facility was receiving priority in marketing and operations. The
exclusion eliminates any question about the priorities of the operator of the Doug Fox Lot. Port
staff determined that a three-mile radius appropriately defined the Airport parking market and
contained all of the related operators.  It is the same radius the rental car companies use when
determining if an operation is an Airport facility or a non-Airport facility. Outside of three
miles, parking operations may support non-Airport parking related uses. Port staff determined
that inclusion of the three-mile radius clause was the most appropriate way to handle any
potential conflict of interest, and did not consider other options.
Revenue to the Port Diminished Due to the RFP Structure? 
A statement was made during the March 5, 2013, Commission meeting that the structure of the
RFP led to lower bids than would have been expected otherwise. This comment specifically 
targeted the language that excluded other firms from bidding if they would operate a competing
facility within three miles of the Airport.  This assertion is unsubstantiated; however, as stated
above, staff believes that having an operator whose sole focus within the Airport parking market
is the Doug Fox Lot is still in the best interest of the Port.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 2, 2013 
Page 6 of 9 
Lease Summary and Financial Analysis: 
Current Lease     New, proposed 5-year lease
Two (2)-years from 10/1/2009
Term                          Five (5)-years
through 9/30/2011
Yes. Two, five (5)-year
Yes. One, one (1)-year option
extensions based on mutual
Extension           at Port's sole discretion
agreement between Port and
(executed)
ATZ
Yes. Month-to-month, for no  Yes. Month-to-month, for no
Holdover
more than six (6) months     more than six (6) months
Year 1:  $1.5 million
Year 2:  $2.5 million
MAG (Minimum
None         Year 3: $2.6 million
Annual Guarantee)
Year 4:  $2.7 million
Year 5:  $2.8 million
Concession
fee to Port    Gross Receipts
Year 1:    55%
from $0 to $4.8
54.5%
million, plus          Year 2:      60%
Concession Fee(s)           from $4.8 million to     Year 3:    61%
70%
$5.25 million, plus        Year 4:      62%
from $5.25 million to
72%                 Year 5:    63%
$6.6 million, plus
75%    over $6.6 million.
Separate per-trip fee
for shuttle access to    Yes, based on cost recovery           No
terminal
Non-compete (ability
to have interest in
Not included in contract       Included in contract
another local parking
operation)
The financial analysis and justification associated with this request 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. In addition, since the May 22, 2012, communication
to Commission, staff has been 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 parking consulting firm currently under contract with the Port of Seattle.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 2, 2013 
Page 7 of 9 

CIP Category            Revenue/Capacity Growth 
Project Type             Business Expansion/New Business Development 
Risk adjusted Discount rate   8% 
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 fiveyear
extensions. There is risk associated with a potential
future conversion of the property to non-parking use, and
lease terms associated with future extensions. 
Project cost for analysis      $5.1 million 
Business Unit (BU)         Landside 
Effect on business         The financial analysis assumes that with construction of the project
performance            improvements at the facility, annual revenues to the Port will
increase. Current revenues to the Port are approximately $2
million to $2.5 million per year. Within five years of
implementation of the improvements, annual revenues are
anticipated to increase by close to $1 million, totaling $3.5 million.
Within ten years, revenues are anticipated to increase by
approximately $2 million, bringing the annual total to around $4.5
million. 
IRR/NPV            NPV: $4.8 million 
IRR: 13% 
Payback: 7 years 
CPE Impact            None 
As shown above, the payback is seven years. 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 $5.1 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. However,
staff included a revenue growth rate in the base case to present a conservative financial analysis.
If instead of a 2.2% growth rate, revenues declined by 3% per year, a five-year payback would
be achieved. If revenues declined by 11% per year, payback would drop to four years.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 2, 2013 
Page 8 of 9 
STRATEGIC OBJECTIVES: 
This lease and associated improvements align with the Port's Century Agenda strategy of
advancing the region as a leading tourism destination and business gateway.
ENVIRONMENTAL SUSTAINABILITY: 
Environmental sustainability elements related to this project are described in the associated
construction project memo. 
BUSINESS PLAN OBJECTIVES: 
Approval of this lease authorization request in conjunction with associated upgrade project will
contribute to achievement of the Airport's business plan objective of "maximizing non-
aeronautical net operating income" by generating increased non-aeronautical revenues. 
TRIPLE BOTTOM LINE SUMMARY: 
The project supports economic development by investing in an upgraded parking lot to serve the
public's parking needs at the Airport. Environmental sustainability principles will be employed
consistent with Port policy. Also, procedures set forth in the Port's new Small Contractors and
Suppliers Program and other small business participation opportunities in support of the Century
Agenda goals will be used when applicable in the project contracting process in coordination
with the Office of Social Responsibility. 
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS: 
Alternative 1  Do not authorize execution of the new lease with ATZ and do not approve
this construction funding request.  The current lease, with holdovers, will expire
September 30, 2013. Port staff would negotiate an amendment to the current lease with
ATZ in order to have sufficient time to prepare a revised RFP for a new lease for
operation of the facility. Without proposed repairs to the facility, continued wear and tear
would eventually lead to the shutdown of the facility. The new negotiated lease would
likely include significantly lower revenue to the Port due to the poor condition of the
facility. This is not the recommended alternative. 
Alternative 2  Authorize execution of the new lease but only invest in critical
infrastructure needs with a lower project cost, such as pavement and lighting, and do not
invest in signage and a new building. This alternative would allow for improvement to
critical facility systems, thus marginally enhancing the level of customer service.
However, this alternative is not recommended as the facility will continue to be less
competitive due to its poor visibility to customers, and lower level of customer service
compared to other facilities in the Airport parking market. In addition, this alternative
would only defer the required investment in the building as the current building has an
estimated life of two-to-five years. Also, the new lease with ATZ would need to be
renegotiated to reflect the reduced investment in facility upgrades.  This is not the
recommended alternative.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 2, 2013 
Page 9 of 9 
Alternative 3  Authorize execution of a new lease with ATZ and invest in proposed
improvements to the facility.  This alternative will lead to a better customer experience
and enhanced revenues due to an upgraded parking facility that is more competitive in the
Airport parking market. This is the recommended alternative. 
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST: 
Exhibit 1  Proposed draft Lease and Concession Agreement. 
Exhibit 2  Doug Fox Project Site Location. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS: 
February 14, 2012  Commission approved funding for design and construction in the
amount of $1,028,000 to install a new stormwater drainage system by September 30,
2012. 
May 22, 2012  Commission approved 1) increasing the project scope by adding lot
resurfacing, lighting, building, and road signage work elements; and 2) proceeding with
project design. 
March 5, 2013  Commission postponed consideration of the Doug Fox Parking Lot
Lease. 
June 4, 2013  Proposed Doug Fox Lease and Service Upgrades Project was presented to
Commission but no final action was taken.