PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA                      Item No.         6e 
ACTION ITEM 
Date of Meeting     September 10, 2013 
DATE:     September 4, 2013 
TO:        Tay Yoshitani, Chief Executive Officer 
FROM:    Fred Chou, Capital Project Manager, Capital Development Division 
Rebecca Schwan, Real Estate Manager, Portfolio & Asset Management 
SUBJECT: Fishermen's Terminal Building C-15 HVAC Improvements (CIP No. C800137) 

Amount of This Request:   $900,000            Source of Funds: Tax Levy 
Est. State and Local Taxes:   $328,970           Est. Jobs Created (This Request): 11 
Est. Total Project Cost:     $4,887,000 
ACTION REQUESTED 
Request authorization for the Chief Executive Officer to (1) execute a construction contract with 
the lowest responsive and responsible bidder to replace the HVAC equipment at the Fishermen's
Terminal C-15 Building, and (2) increase project authorization in the amount of $900,000 to
bring the total project authorization to $4,887,000. Commission action is required in accordance
with Resolution No. 3605, as amended by Resolution No. 3628, because the lowest responsive
and responsible bid is more than ten percent greater than the engineer's estimate. 
SYNOPSIS 
Fishermen's Terminal, located on Salmon Bay, is a regional center for maritime activity and one
of the few working terminals in the United States with public access. Restaurants, retail shops, a
fresh seafood market and the Seattle Fishermen's Memorial offer a front-row seat to the historic
fishing industry and harbor.  It is a location where the public can authentically experience the
fishing industry.  Building C-15 at Fishermen's Terminal is a magnet for those wishing to eat
fresh seafood or visit a working fishing terminal.  The building is fully occupied by 18 mixeduse
tenants and Port staff offices. The C-15 HVAC Improvement project will maintain the longterm
revenue generating capability of the building and reduce overall energy consumption by
replacing outdated and worn out equipment with energy-efficient equipment and controls.
The Commission authorized the execution of the C-15 HVAC Improvements project on May 14,
2013. On August 6, 2013, the Port advertised a major public works contract for the project. On
August 29, 2013, the Port received five bids ranging from $2,967,000 to $3,444,600 (see table, 
next page). The lowest responsive and responsible bid is $633,400 or 27% over the engineer's
estimate of $2,333,600.  This represents a bid irregularity requiring Commission approval to
execute this contract in accordance with Section 4.2.3.4 of Resolution No. 3605, as amended by
Resolution No. 3628.

Template revised May 30, 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 4, 2013 
Page 2 of 6 
Contractor                       Bid 
Kassel & Associates, Inc.              $2,967,000.00 
Express Construction                 $3,047,288.00 
Hermanson Company              $3,379,800.00 
Western Ventures Construction       $3,394,000.00 
Design Air, Ltd                       $3,444,600.00 

Staff analyzed the engineer's estimate and believes the major contributing factor for the higher
bid price is primarily due to the use of a single HVAC equipment supplier by the contractors. 
Several manufacturers were specified in the contract documents, and a third supplier attended the
pre-bid meeting but did not provide quotes to the contractors. Another contributing factor for the
higher bid is the perceived risks in the execution of the construction through the limited openings
above the roof wells. It is also possible that a more competitive bidding climate in the
construction sector in Seattle and fewer suppliers still in business after the economic downturn 
affected the bid.
For these reasons; the fact that the two lower bidders were within 3% of each other, which
appears to be representative of the marketplace; and because all five were above the engineer's
estimate, staff believes the low bid represents a fair and reasonable price.  Staff recommends
proceeding with the construction contract and requests an additional project authorization in the
amount of $900,000. 
BACKGROUND 
Building C-15 at Fishermen's Terminal was constructed in 1987. Building occupants include
four restaurants  Little Chinooks and Chinooks (Anthony's Home Port), the Bay Caf and the
Highliner Pub and Grill  leased offices, and various retail businesses. 
The HVAC system for the C-15 Building currently consists of 19 "rooftop" units ranging in size
from 2.5 tons to 25 tons cooling capacity.  When the building was first constructed, the units
were installed on two roof wells on the mezzanine levels, (one for the west side of the building
and one for the east side of the building) that were integrated into an open truss roof structure;
basically the floor of the mezzanine and the roof for the building are tied together structurally.
This design created significant challenges for future equipment replacement work. 
The design engineering team analyzed design options and determined the most cost-effective
solution that addresses both installation challenges and energy efficiency and sustainability. The
team found ways to significantly reduce construction disruptions to tenant spaces while installing
large units (up to 7'x7'x4') into spaces with limited (42") access. 
On August 6, 2013, the major construction contract for this project was advertised for bid. A 
pre-bid meeting and site tour was held on August 14, 2013. Bids were opened on August 29, and
a total of five bids were received.  Bid prices ranged from the low bid of $2,967,000 to the
highest bid of $3,444,600.  The bids were clustered in two groups, with the two lower bids

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 4, 2013 
Page 3 of 6 
$80,288 apart. However, the apparent low bid is approximately 27% higher than the engineer's
estimate of $2,333,600.
With the lump sum price that the contractors submitted, it is difficult to determine the exact 
reasons for the higher bids.   With the help of the design engineering consultant firm that
prepared the engineer's estimate and internal reviews, the higher costs are most likely due to a
single equipment manufacturer that ended up supplying contractors with the major HVAC
equipment quotes, and the perceived risks/challenges in the execution of the construction
through the small space and limited openings above the roof wells.
Other potential contributing factors are a more current competitive bid climate and fewer
suppliers.  In addition, the two lower bids were within 3% of each other, which appears to be 
representative of the marketplace. B ecause all five bids were above the engineer's estimate, staff
believes the low bid represents a fair and reasonable price.  Given these factors, staff does not
believe rebidding the project would result in decreased construction costs.  Staff recommends
additional funding of $900,000 (including construction contingency and sales tax) be authorized 
to allow the Port to proceed with the execution of the major construction contract with the lowest
responsive and responsible bidder.
PROJECT JUSTIFICATION AND DETAILS 
This project will install a new energy efficient HVAC System at the C-15 Building at
Fishermen's Terminal to replacean aging system that has outlived its useful life.  With the
exception of the units that serve the restaurants, the Port is responsible for the maintenance and
repair of the HVAC system. Replacing the system will serve to protect and maintain the longterm
revenue stream of the building. 
Project Statement 
This project will replace the existing HVAC and controls system with new energy efficient
equipment and a fully integrated digital controls system.
Project Objectives 
Replace the existing HVAC system with an energy efficient system. 
Replace the two existing HVAC control systems. 
Maximize tenant comfort and flexibility in future tenant space adjustments. 
Minimize construction impacts to existing tenants. 
Replace the existing HVAC system with the most cost-effective solution taking into account
full lifecycle costs (initial cost of equipment, maintenance, energy efficiency, longevity, etc.). 
Create a design for this replacement that allows for easy access for system maintenance and
replacement in the future.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 4, 2013 
Page 4 of 6 
Scope of Work 
The Fishermen's Terminal C-15 Building HVAC Improvements Project includes: 
Design and construction of a new energy efficient HVAC system to replace the existing
system and make it easily accessible for future replacements. 
Design and installation of a new integrated HVAC digital control system to replace the two
systems currently in use. 
Full commissioning of the system to ensure functionality and to maximize energy efficiency. 
FINANCIAL IMPLICATIONS
Budget/Authorization Summary 
Total Project 
Original Budget                                                                   $0 
Previous Authorizations                                                    $3,987,000 
Current request for authorization                                                $900,000 
Total Authorizations, including this request                                   $4,887,000 
Remaining budget to be authorized                                                $0 
Total Estimated Project Cost                                               $4,887,000 
Project Cost Breakdown 
This Request          Total Project 
Construction                                              $822,030         $3,480,030 
Construction Management                                    $0          $287,000 
Design                                                         $0          $553,000 
Project Management                                         $0         $139,000
Permitting                                                       $0            $99,000 
State & Local Taxes (estimated)                            $77,970          $328,970 
Total                                                        $900,000         $4,887,000 
Budget Status and Source of Funds 
The Fishermen's Terminal C-15 Building HVAC Improvement Project was included in the 2013
Plan of Finance as a committed project in the amount of $4,000,000, inclusive of amounts spent
prior to 2013, under CIP C800137. 
The project will be funded from the tax levy.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 4, 2013 
Page 5 of 6 
Financial Analysis and Summary 
CIP Category                 Renewal/Enhancement 
Project Type                   Renewal and Replacement 
Risk adjusted discount rate     N/A 
Key risk factors                  Project schedule could be delayed due to weather or
the need to minimize the impacts of construction to
existing tenants. 
Future revenues could be less than currently expected. 
Project cost for analysis          $4,887,000 
Business Unit (BU)             Real Estate  Commercial Properties 
Effect on business              This is a renewal and replacement project and
performance                  accordingly, this project preserves Net Operating Income
(NOI) rather than creates new NOI. 
NOI generated by the C-15 building is approximately
$560,000 per year excluding major maintenance
expenses and tenant improvements. 
As a result of this project, depreciation expense will
increase when the assets are put in service. The
incremental impact to NOI and NOI After Depreciation
is noted below. 
NOI (in $000's)         2013     2014     2015     2016     2017
NOI                 $0      $0      $0      $0      $0
Depreciation             $0      ($188)    ($250)    ($250)    ($250)
NOI After Depreciation    $0      ($188)    ($250)    ($250)    ($250)
IRR/NPV                  N/A 

ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS 
Alternative #1. Do nothing.  As the existing system is well beyond its useful life, additional
maintenance costs will be incurred and the risk of system failure increases. The existing HVAC
units are old and parts are becoming progressively more, if not impossible, to obtain. Given the
structural issues associated with replacement, rapidly replacing the system in the event of failure
becomes very challenging. If the system fail s, replacement costs increase, the Port risks not
being able to meet our lease obligations, and the tenants would have neither heating nor cooling,
depending on the season. This alternative is not recommended.
Alternative #2.  Repackage the construction contract and rebid.  This would require additional
soft costs and delay the construction.  The design team explored this option and feels, given the

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 4, 2013 
Page 6 of 6 
site conditions and constraints, options to repackage the contract are limited and may not result
in decreased construction costs. This alternative is not recommended.
Alternative #3. Increase project authorization, award/execute the contract with the apparent low
bidder and proceed with the construction. This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
None. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
May 14, 2013  The Commission authorized advertisement for construction, execution of a
construction contract, and funding of the construction phase in the amount of $3,130,000 to
complete the project, bringing total project authorization to $3,987,000. 
May 11, 2010  The Commission authorized the design funding of $807,000, bringing total
project authorization to $857,000. 
November 30, 2009  The Commission was briefed on the project status.