Item No.   _6d attach .
Date of Meeting: February 26, 2019

PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA                    Item No.        Sb
ACTION ITEM
Date of Meeting      August 6, 2013
DATE:    July 24, 2013
TO:       Tay Yoshitani, Chief Executive Officer
FROM:    Craig J. Kerr, Treasury Manager CYJI'<
SUBJECT:  Banking Services Contract
Amount of This Request:          $9,700,000    Source ofFunds:  Non operating budget
for basic banking
Est. Total Project Cost:             $9,700,000
services. Credit card
fees are budgeted as
operating expense by
the affected
departments.
ACTION REQUESTED
Request Commission authorization for the Chief Executive Officer to execute a contract for
banking services for five years with the option to extend for two additional one-year periods at
an estimated cost in banking fees of$9,700,000.
SYNOPSIS
The Port of Seattle intends to issue a request for proposal (RFP) for banking services.  The
contract term will be for five years with the option to extend for two additional one-year periods.
It is the intent of the Port to select one banking institution to provide Port banking services. The
Port's selected bank will receive deposits and disburse Port funds and process the Port's debit
and credit card transactions.  Only the approximately 80 financial institutions that have been
determined to be qualified public depositories by the Public Deposit Protection Commission
(PDPC) are eligible to compete for the Port's business. All qualified public depositories will be
notified that the Port is soliciting proposals for banking services.  Due to PDPC requirements
along with the Port's need for a robust electronic banking platform with controls, the number of
banks interested in and able to handle the Port's business will likely be quite small.
BACKGROUND
In 2009, staff bid for banking services for five years with the right to extend for two additional
one-year periods. The current banking contract expires on July 31, 2014. The Port has hired a
consultant, Vizant Technologies, to monitor debit and credit card fees. Over 96% of the Port's
banking fees result from processing debit and credit card payments. Vizant's fee is based on a
percentage of savings experienced by the Port as a result of their card acceptance savings
        COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
July 24,2013
Page 2 of 3

recommendations. Given the opportunity to reduce banking fees based on Vizant’s review and
the ongoing technology changes in banking, including increased utilization of electronic and
mobile commerce, staff felt it was an opportune time to rebid for banking services at this time
and not exercise the extension provisions of the current contract.

Banks and the Port have significant costs to implement a banking contract on an electronic
platform and significant savings result with longer duration contracts. The Request for Proposal
for banking services will provide a competitive selection process for all qualified banks. The
selection will be based on a combination of fees and the quality of service offered by the bank
and will be made by a team of internal and external experts.

STRATEGIES AND OBJECTIVES

The Port intends to select one banking institution to provide Port banking services. The selected
bank must be a technologically strong banking partner with an internet banking solution capable
of meeting the Port’s current and future electronic banking demands. In addition, Washington
State Public Treasurers, by statute, can only deposit money with a State “qualified public
depository” and the PDPC further limits the amount of public deposits at each bank based on a
bank’s net worth. This results in a limited pool of banks the Port can utilize for its banking
services. A bank must apply to the State’s Public Deposit Protection Commission for approval to
become a qualified public depository and provide 100% collateralization of all public funds on
deposit.

The Port intends to have a new contract signed by March 1, 2014, and implementation completed
by August 1, 2014.

Breakdown ofBanking Fees:

The majority of Port banking fees result from accepting debit and credit cards. Airport parking
accounts for 78% of all Port debit and credit card receipts.  Card acceptance provides four (4)
advantages over alternative payment modes. Those advantages are: immediate receipt of funds,
no credit analysis efforts, no collection efforts and a higher degree of security over cash and
checks.  Set out below is a breakdown of Port banking fees for 2012:

Credit Card Fees                           $1,256,735           96%
All Other Banking Fees:                    $133,634             04%

Total Banking Fees                        $1,390,369

Implementation:
The successful bidder will need to implement and test all aspects of the electronic internet
banking solution to ensure every function of receiving and disbursing Port money is fully
operational before implementation takes place. Some examples of banking functions that would
be affected if a new bank is selected are as follows:

        COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
July 24, 2013
Page 3 of 3

Electronic Money -The Federal Government, State of Washington and various large customers
pay the Port with electronic transfers (i.e. wires, and ACH Credits). Various notifications must
be made to all electronic payers.

Direct Deposit of Payroll - All bank account numbers in the payroll and accounting system must
be changed and Payroll files reformatted to ensure the Direct Deposit of Payroll can be accepted
by the bank for all employees selecting direct deposit (approximately 97% of all Port
employees).

Fraud Control (Positive Pay) -For every accounts payable and payroll check written, Port staff
must change the bank account numbers and ABA numbers in the Payroll and Accounts Payable
system as well as program the format to fit the bank’s system to accomplish fraud control
functions.

IRS Tax and Social Security Deposits — Port staff must coordinate with the IRS through the
appropriate Federal Reserve Bank, change bank account numbers and ABA numbers so these
moneys can be deducted from the Port’s bank account by the IRS on paydays.

Due to these requirements, staff estimates that there will need to be a four to five month
transition period if a new bank is selected. The cost of internal staff time for a conversion is
estimated to be between $75,000 and $90,000 but should be recaptured through the use of new
technology and high quality service.

Source ofFunds

All banking services are budgeted annually with the basic banking services budgeted in the non-
operating budget and credit card fees budgeted as operating expense by the affected departments.

ATTACHMENTS TO THIS REQUEST

e    None.

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS

e    None.

                   Port a=
Commissioners                                                                Tay Yoshitani
of Se attje            Chief Executive Officer
Tom Albro
Commission President
Stephanie Bowman                           P.O. Box 1209
Bill Bryant                               Seattle, Washington 98111
John Creighton                              www.portseattie.org
Courtney Gregoire                              206.787.3000

:              APPROVED MINUTES
COMMISSION REGULAR MEETING AUGUST 8, 2013

The Port of Seattle Commission met in a regular meeting Tuesday, August 6, 2013, at Port of
Seatfle  Headquarters,  Commission  Chambers,  2711  Alaskan Way,  Seattle, Washington.
Commissioners Albro, Bowman, Bryant, Creighton, and Gregoire were present.  Commissioner
Creighton was absent after 3 p.m.

1.   GALL TO ORDER

The regular meeting wascalled to order at 1:06 p.m. by Tom Albro, Commission President.

2.    EXECUTIVE SESSION pursuant to RCW 42.30.1110
None.
PLEDGE OF ALLEGIANCE
|
3.   APPROVAL OF MINUTES

Minutes available for approval are included in the Unanimous Consent Calendar.

4,    SPECIAL ORDERS OF BUSINESS

None.

5.    UNANIMOUS CONSENT CALENDAR
[Clerk's Note:  Items on the Unanimous Consent Calendar are considered routine and are not  .
individually discussed.  Port Commissioners receive the request documents prior fo the meeting
and may remove items from the Consent Calendar for separate discussion and votein accordance
with Commission bylaws.]

At the request of Commissioner Gregoire, agenda item 5c was removed from the Unanimous
Consent Calendar for separate discussion and vote.

5a.  Minutes of the regular meeting of July 8, 2013.

5b. Authorization for the Chief Executive Officer to execute a contract for bankingservices
for five years with the option to extend for two additional one-year periods at an
estimated cost in banking fees of $9,700,000.                  :


Digital recordings of the meeting proceedings and meeting materiols are available online —www.portseattie.orq.

               PORT COMMISSION MEETING MINUTES                           Page 2 of 13
TUESDAY, AUGUST 6, 2013

Request document(s) provided by Craig Kerr, Treasury Manager:
e    Commission agenda memorandum dated July 24, 2013,

As noted above, the following agenda item —

Sc.  Authorization  for  the  Chief  Executive  Officer  to  advertise  and  execute  a  major
construction contract, and to self-perform using Port crews, to implement the cleanup
action at Terminal 91, as required under Agreed Order No. DE 8938 entered into with
the Department of Ecology and dated April 10, 2012.
— was temporarily postponed.

5d.  Authorization (1) for the Chief Executive Officer to execute a contract with the Federal
Aviation Administration for relocation of the Airport Surface Detection Equipment
Model X Remote Unit Number 7 antenna as part of the Cargo 2 West Hardstand
Expansion project at Seattle-Tacoma International Airport, at a cost not to exceed
$600,000 and (2) for an additional $300,000in expense funds.
Request document(s) provided by Mike Ehl, Director, Airport Operations, and WayneGrotheer,
Director, Aviation Project Management Group:
o    Commission agenda memorandum dated July 29, 2013.

Se.  Authorization for the Chief Executive Officer fo execute a Fiber Optic Line Easement
with WDH Black Rock LLC for an area along a section of the Eastside Rail Corridor
in
_ right-of-way     Snohomish County, substantiallyas  drafted as Attachment B, to
accommodate the installation and maintenance of an aerialfiberoptic ‘communications
line parallel to the railroad tracks between approximately milepost 37.22 and milepost
37.35 in Snohomish County as shown on the drawing attached hereto as Attachment A.
Request document(s) provided by Melinda Miller, Director Portfolio and Asset Management, and
Sean Sullivan, Real Estate Manager.

e    Commission agenda memorandum dated July 25, 2013.

e    Attachment A: Map of Proposed Easement Location.

e    Attachment B: Fiber Optic Line Easement, including Exhibits A and B.

Motion for approval of consent items 5a, 5b, 5d, and 5e ~ Creighton

Second ~ Gregoire

Motion carried by the following vote:

In Favor: Albro, Bowman, Bryant, Creighton, Gregoire (5)

PUBLIC TESTIMONY
|
As noted on the agenda, public comment was received from the following individual(s):

e   Sally Clark, Seattle City Council President.  Ms. Clark spoke in support of agenda item
6a, relating to Port funding for the Alaskan Way Viaduct Replacement Project.  She
commented on the importance of Alaskan Way as a freight corridor and for access to the

Minutes of August 6, 2013, proposed for approval on September 10, 2013,

                PORT COMMISSION MEETING MINUTES                           Page 4 of 13
TUESDAY, AUGUST 6, 2013
tunnel to minimize disruption to Port activities.  He cautioned the Commission on the
spectrum of investment needs required to preserve the Port's competitiveness and
comply with regulatory challenges and emphasized theimportance of the Port's tunnel
contributionin protecting a working waterfront and family-wage jobs.
o -   Commissioner Albro noted receipt of a letter from the Seattle Aquarium signed by its
president, Robert Davidson, and dated August 2, 2013. The letter supported the funding
agreement between the Port and WSDOT for work on the Alaskan Way Viaduct
Replacement Program. A copy of the document is, by reference, made a part of these
minutes, is marked Exhibit A, and is available for inspection in Port offices.
o    Commissioner Albro also noted receipt of an email from Visit Seattle sent by its
president, Tom Norwalk, and dated August 5, 2013.  The message supported the
funding agreement between the Port and WSDOT for work on the Alaskan Way Viaduct
Replacement Program. A copy of the documentis, by reference, made a part of these
minutes, is marked Exhibit B, andis available for inspectionin Port offices.
e    Commissioner Albro further noted receipt of a letter from BNSF Railway signed  by
Government Affairs Executive Director Terry Finn and dated August 6, 2013.  The letter
supported the funding agreement between the Port and WSDOT for work on the Alaskan
Way Viaduct Replacement Program. A copy of the document is, by reference, made a
part of these minutes, is marked Exhibit C, and is available for inspection in Port offices..

6.    DIVISION, CORPORATE, AND COMMISSION ACTION ITEMS

6a.  Adoption of a motion to direct and authorize the Port's Chief Executive Officer to
~ -.~-£Xecute.afundingagreementwiththe StateofWashington.in-substantially.theform...
attached  as  Exhibit A,  providing  Port participation  in  the Alaskan Way Viaduct
Replacement Program consisting of the SR-99 Tunnel Alternative, the SR-99 South
Access Connection Project, and the SR-99 North Access Construction Project, and to
authorize expenditure of $275,000,000 in accordance with the terms of the funding
agreement.
Request document(s} provided by Kurt Beckett, Deputy Chief Executive Officer: Mike Merritt,
Manager,  Puget Sound/Washington  Goverment  Relations;  and  Geraldine  Poor,  Regional
Transportation Manager:
Commission agenda memorandum dated July 30, 2013.
Text of motion.
Exhibit A, Final draft funding agreement.
Presentation slides.
State and Port memorandum of agreement, 2010, GCA 6444.

Presenter(s).  Mr. Beckett; Ms. Poor; WSDOT Secretary of Transportation Lynn Peterson; and
Alaskan Way Viaduct Replacement Program Administrator Linea Laird.

The Commission received a presentation that included the following relevant information:

e    Options for replacement of the Alaskan Way Viaduct have been the object of study since
the viaduct was damaged during the 2001 Nisquallyearthquake.


Minutes ofAugust 6, 2013, proposed for approval on September 10, 2013,

               PORT COMMISSION MEETING MINUTES                           Page 30f 13
TUESDAY, AUGUST 6, 2013

cruise business.  She noted the importance to Seattle of a quality transportation system
andvibrant waterfront.
o    John Odland, Vice President, MacMillan-Piper Inc., and Chair of the Manufacturing
Industrial Council Executive Board.  Mr. Odland spoke in favor of agenda item 6a and
commented on the importance of a deep-bored tunnel for safety, connection of industrial
areas, and continued movement of cargo.
e    Warren Aakervik Jr., President of Ballard Oil Company and Secretary/Treasurer of the
Manufacturing Industrial Council Executive Board.   Mr. Aakervik spoke in favor of
agenda item 6a and commented on changes to the waterfront over time and the need to
maintain a freight corridor on the waterfront.
e    Don  Newby,  former Burien  City Councilmember and member of the Alaskan Way
Viaduct Replacement Program South Portal Working Group.  Mr. Newby spoke in favor
of agenda item 6a and commented on the need for transportation network connections
to  the  Kent/Auburn  Valley  and  through  Seattle  and  urged  continued  support  for
completion of SR-509,
e    Vince O'Halloran,  Branch Agent for the Sailors  Union ofthe  Pacific;  Puget Sound
Maritime Trades Port Council, AFL-CIO.  Mr. O'Halloran spoke in favor of agenda item
6a and commented on the importance of north-south freight mobility in Seattle.
e    Cameron Williams, President, International Longshore Workers Union {ILWU) Local 18.
Mr. Williams commented on agenda item 6a.  He spoke of the ILWU's engagement in
discussions focused on maintaining freight mobility during construction of the deep-
bored tunnel.  Mr, Williams noted the ILWU's traditional scope of work on Port terminals
and the dispute between terminal operator TT! (Total Terminals International) and tunnel
-
rn--—subcoiraclor Seattle.Tunnel Partners(STP). Heasked.that.labor-unrestberemedied-- .
“prior to release of funding from the Port to the Washington Department of Transportation
. (WSDOT) for work on the Alaskan Way Viaduct Replacement Program.
o   Kate Joncas, President of the Downtown Seattle Association.  Ms. Joncas spoke in favor
*  of agenda item 6a.

e    Catherine Stanford, representing the Building Owners and Managers Association.  Ms.
Stanford spoke in support of agenda item 6a and noted the interests of the association's
member businesses in freight mobility to and through downtown Seattle.
e    Kevin Clark, CEO and President of Argosy Cruises, Royal Argosy, and Tillicum Village;
and founding board member of the Seattle Historic Waterfront Association,  Mr. Clark
commented on agenda item 6a and described the need for continued mobility on
Alaskan Way for people, freight, and goods.
e    George Allen, Senior Vice President, Seattle Metropolitan Chamber of Commerce.  Mr.
Allen spoke in favor of agenda item 8a, which he said was critical to completion of the
SR-99 tunnel and maintenance of regional freight capacity.  He noted continued efforts
for completion of SR-509 and SR-167.
+    Diane Carlson, Regional Initiatives Director for the office of King County Executive Dow
Constantine.  Ms. Carlson commented in support of agenda item 6a and noted the
County's commitment to fulfilling  its role in  the  project and to seeking funding to
complete transportation and fransit projects.
e    Jordan Royer, Pacific Merchant Shipping Association.  Mr. Royer spoke in support of a
north-south freight corridor in the city of Seattle and the opportunity for the deep-bored


Minutes of August 6, 2013, proposed for approval on September 10, 2013.

               PORT COMMISSION MEETING MINUTES                           Page 5 of 13
TUESDAY, AUGUST 6, 2013

»    The Port Commission adopted a motion in 2008 supporting the proposal of a deep-bored
tunnel with associated system improvements as an alternative to the viaduct.
The tunnel option was preferred to other scenarios due fo its preservation” of
transportation capacity, minimizing ofroad closures and construction-related disruption
fo Port operations, investment in environmental benefits and transit, promotion of the
long-term health of the maritime-industrial sector and goods distribution systems, and
transformation of the waterfront for residents andvisitors.
The funding agreement under consideration fulfils aFebruary  2010 memorandum of
understanding between the Port and WSDOT, confirming Port participation not to
exceed $300 millionin the Alaskan Way Viaduct Replacement Program.
Major provisions of the agreement include definition of the program and projects;
description  of  Port  benefits,  specifying  of  components  to which  Port  funding  is
applicable, and description of the responsibilities of the parties.
The state  is  acknowledged  as  the owner of the  facility  responsible  for delivering
programs and benefits, notably maintaining efficient traffic flows during all project
components, completion ofenvironmental reviews and permits,  and communication with
the Port throughout the program process.
Acknowledged by the agreement are funding of prior Port investments in the SR-99
system of $19 million and a credit of $7.3 million for Port costs associated with early
financing and Port staff activities not related to regular Port operational activities.
On May 1, 2015, a Port contribution of $120 million is due; on May 1, 20186, a second
contribution of $147.7 million is due.  These contributions subtotal $267.7 million, and
total committed Port funds are $294 million.  WSDOT may identify future program-
+= —related-investmentof $6 million-at-the-Pert's diseretion;-for-which-thestatemay request
sl
allocation through 2018.
.,_. The Alaskan Way Viaductis one of only two highway routes through Seatile’s urban
ii core, accommodating over 100,000 vehicles daily and linking the Duwamish and Ballard-                                                                                         "Interbay industrial areas.~                                                                                        '

Key project components were summarized.
The deep-bored tunnel will accommodate about two-thirds of the traffic of the viaduct,
but will not provide access to Downtown and Bell Town.  The Alaskan Way surface
street will have to meet the need for connections to those areas and serve the remaining
one-third of traffic volume not accommodated by the tunnel.
»    The  funding  agreement  includes  language specifying  the state's responsi   that
design and construction of the viaduct
.                                                replacement  program  will  facilitate  efficient
movement of freight and other traffic between the Duwamish  and  Baliard-interbay
neighborhoods,  including access to fishing, cruise, and other Port facilites.   The
language specifies surface street components related to number of lanes and access at
key intersections, including the Colman Dock ferry terminal.
e    Enhanced fransit during construction is in need of a stable funding source.  Transit
service is not a project explicitly outlined in the funding agreement.
e   WSDOT has an interest in fostering the economic vitality of the state represented by the
economic development engines of its ports and is grateful for its partnership with the
. Port of Seattlein infrastructure investment.                    |



Minutes of August 6, 2013, proposed for approval on September 10, 2013.

               PORT COMMISSION MEETING MINUTES                           Page6 of 13
TUESDAY, AUGUST 6, 2013

e    The Viaduct Replacement Project budget is approximately $3.15 billion.  The Port's
contribution, as outlined in the funding agreement proposed, will go toward the SR-99
Tunnel Project, which includes work on the north and south tunnel entrances, or portals.
The budget for the SR-99 Tunnel Project portion of the overall program is about
$2.05 billion.
e   Other projects at the south end of the SR-99 corridor that will improve access fo Port
terminals were summarized,
Tunneling began on July 30, 2013.
A diagram of the project work site adjacent to Terminal 46 was presented.
Of the work underway on the South-Holgate-to-King-Street replacement project, the
South Atlantic Street overpass is the last project and is due to be completed in late 2013.
This project provides direct connection between East Marginal Way and Terminal 46.
o    Tunnel boring is on schedule and is expected to be finished toward the end of 2014.
The tunnel is expected to open to traffic at the end of 2015.
e    After opening of the tunnel, work would proceed on surface street connections and
demolition of the Alaskan Way Viaduct.
e    Concept designs for the north and south tunnel portals and the eventual connection
between Elliott and Western Avenues with Alaskan Way were presented.

Commissioner Creighton commented in support of the funding agreement and cautioned, despite
good relationships with WSDOT and the freight community, that it is not the Port's core mission to
fund transportation improvements and that funding of this kind should not become a precedent.
* Commissioner Bryant commentedon the historyof thePort's decisiontobecome involved in” ~
funding the SR-99 tunnel project and the Port's compelling need to remain competitive, which is
served by the project.   He noted that the financial burden for the Port's participation is much
greater than in 2009 due to additional burdens now facing the Port for environmental mandates,
unanticipated stormwater costs, and the speed at which global fleets are acquiring larger container
vessels that will have to be accommodated by Port infrastructure investments for the Port to remain
competitive.  Commissioner Bryant noted the loss of $120 million in revenue represented by the
“movement of the Grand Alliance to the Port of Tacoma.  He stated this revenue could have been
used fo  support essential transportation projects.   He commented in  support of the funding
agreement and urged adoption of city and state policies that would assist the Port in partnering to
keep cargo flowing through Puget Sound and the Kent/Aubum Valley.

Commissioner Gregoire commented in support of the funding agreement and noted parallels with
the pressures affecting establishment of public ports in Washington in 1911 and the pressures
facing preservation of an open and working Seattle waterfront today.  She noted core needs of
transportation investment for freight mobility, including connectivity between eastern and western
- Washington, regulatory certainty to anchor public and private investment, and awareness of the
competitive landscape of the container business going forward.

Commissioner Bowman commented on the critical nature of freight mobility to the economic vitality
of the region.  She spoke in favor of the funding agreement and pointed out that the funding the
Port would contribute to the SR-99 tunnel project will not be available for other projects at the Port,
which has responsibilities for environmental mitigation and other critical projects.  She encouraged

Minutes of August 6, 2013, proposed for approval on September 10, 2013.

               PORT COMMISSION MEETING MINUTES                        :    Page 7 of 13
TUESDAY, AUGUST 6, 2013

other regulators not to create obstacles to movement of freight through the Port of Seatile or to
create competitive disadvantages for the Port compared to Canadian ports.

Commissioner Albro commented on the importance of a strong and diverse economy in order to
have the wherewithal to make improvements in society.  He noted the critical role of access to
global markets and connections between maritime industrial lands to produce jobs that create
prosperity for families.   Commissioner Albro contrasted  Washington's  approach  fo Canada's
aligned Intergovernmental approach In pursult of a national vision and multiplier opportunities.

Commissioner Albro noted that the Commission acknowledges the labor issue involving the
handling of tunnel spoils on Terminal 46, and stated that although the Portis not directly involved,
the Commission strongly urges a fair and equitable resolution as soon as possiblein a way that
addresses the concerns of all parties involved.

Motion to direct and authorize the Port's Chief Executive Officer to execute a funding
agreement with the state of Washington in substantially the form attached as Exhibit A,
providing  Port  participation  for the  following  elements  of the Alaskan Way Viaduct
Replacement Program:  the SR-99 Tunnel Alternative, the SR-99 South Access Connection
Project, and the SR-99 North Access Construction Project, and to authorize the expenditure
of $275,000,000in accordance with the terms of the funding agreement[agenda item 6a] —-
Bowman
Second- Gregoire

_ Motion carriedbythe followingvote: ~~~ ~~~
In Favor: Albro, Bowman, Bryant,Creighton,Gregoire {5)
ares
6b.  Authorization to execute project  labor agreements  for seven  different projects at
Seattle-Tacoma International Airport currentlyin their design phases. The projects are
Cargo 2 West Hardstand Expansion, Cargo 5 Hardstand, Cargo 6 Enhancements, 2014
Airfield Apron Pavement Replacement Design, North Satellite Transit System Ceiling
Leaks Long-Term Repair, and Vertical Conveyance Modernization Aero Phase 1 and
Phase 2. No fundingis associated with this authorization.
Request document(s)  provided  by Ralph Graves,  Managing  Director,  Capital  Development
Division:                                 :
s    Commission agenda memorandum dated July 29, 2013.
Presenter(s): Wayne Grotheer, Director, Aviation Project Management Group, and Lisa Hornfeck,
Labor Relations Manager.

The Commission received a presentation that included the following relevant information:

e    The projects for which project labor agreements are being requested are all in their
design phases.
o    Negotiation  of  project  labor  agreements  authorized  at  the  time  of  construction
authorization has delayed projectsin some cases.

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               PORT COMMISSION MEETING MINUTES                           Page 8 of 13
TUESDAY, AUGUST 6, 2013

o    In the future, staff will request approval of project labor agreements, asapplicable,  at the
time of design approval.
»   Appropriateness of pursuing a project labor agreement involves reviewof relevant
factors, such as the trades involved, the timing of labor contract negotiations, impacts of
project delays,  importance of uniform working conditions,  impact on small business
opportunities, project cost impacts, and safety concerns.
e    Of active construction projects at the Airport, the 10 of 46 that have project labor
agreements represent 78 percent of Port construction spending and 87 percent of Airport
construction spending.
¢    Delays for the projects included in the request due to possible labor disputes would
create significant operational impacts to the airfield, postponement of seasonal work to
times of the year that would reduce quality and create safety risks, and disruption of
passenger movement on the South Satellite.

In response to Commissioner Creighton, Mr. Grotheer reported that project labor agreements are
negotiated  through  the  office  of  labor  relations.   Ms.  Hornfeck  noted  that  review  of the
appropriateness of each project labor agreement to a particular project was a difference between
the agreements currently requested and the approach during construction of the Third Runway.
She noted that recent introduction of workforce development aspects in project labor agreements is
another difference from the project labor agreement approach used for the Third Runway.

in response to Commissioner Gregoire, Ms. Hornfeck noted that use of union labor under a project
laboragreementsupportshiringof local union members  notwithstanding use of targeted zip codes.
Commissioner Bryant commented on confusion within the labor and contracting communities on
the standards governing use of project labor agreements and stated his preference that there be
Commission-approved  criteria for using  a  project labor agreement that could  be  applied
administratively to particular projects rather than require Commission authorization every time. He
noted existing criteria for a project to involve multiple jurisdictions, be time-sensitive, have an
element of public safety or security, be for a type of project for which there is a history of labor
disruptions, and where delay would result in significant financial loss.

Motion for approval of item 6b — Bryant

Second - Gregoire

Motion carried by the following vote:

In Favor: Albro, Bowman, Bryant, Creighton, Gregoire (5)

“Without objection, the Commission advanced to the following agenda item, which was removed
from the Unanimous Consent Calendar for separate discussion and vote, as noted above —
Sc.  Authorization  for  the  Chief  Executive  Officer  to  advertise  and  execute  a  major
construction contract, and to self-perform using Port crews, to implement the cleanup
action at Terminal 91, as required under Agreed Order No. DE 8938 entered into with
the Department of Ecology and dated April 10, 2012.


Minutes of August 6, 2013, proposed for approval on September 10, 2013.

               PORT COMMISSION MEETING MINUTES
:            Page 9 of 13
TUESDAY, AUGUST 6, 2013

Request document(s) provided by Kathy Bahnick, Manager,Seaport Environmental Programs, and
Fred Chou, Capital Project Manager:
e  Commission agenda memorandum dated July 29, 2013.
»    Agreed Order No. DE 8938 with the Washington State Department of Ecology.

Presenter(s): Ms. Bahnick and Mr. Chou.

The Commission received a presentation that included the following relevant information:

o    Staff has been working on the environmental cleanup at Terminal 91 since the 1990s.

o    The former tank farm at the site was operated since the 1900s as a refinery and
petroleum tank farm and most recently as a dangerous waste treatment and storage
facility.
e    The Port entered into an agreed order under the Model Toxics Control Actin 1998 with
operators Phillips Service Company and Pacific Northern Oil, which are no longerin
business.
e    Port expenditures for remedial investigation, feasibilly study, demolition of the above-
“ground tank farm, design for the work currently requested, and ancillary investigations
and cleanups at Terminal 91 amount to $9.8 million.
e    Recovery  of approximately  $4.6  million  has come  from  grants,  settlements,  and
insurance.  In addition, there are about $1.5 million in committed grant funding that has
_. yet to be received by the Port.

eo -   Cost of past work, the cleanup requested under the current agreed order, and long-term
nom                      A AA                        is- expected to-be: a-little-less-than- ~ PN                                                                                                                     me P00
=~ $20 million. The amount not covered under cost sharing will be funded by the tax levy.
.ox.~ The 2013 yearly environmental remediation liability authorization included funding for the
= amount currently requested for cleanup construction.
_  Other funding options are being considered, including possible identification of additional
responsible parties, including Chevron and British Petroleum.
e    The cleanup design has been approved by the Department of Ecology, and construction
is expected to beginin October 2013,
e    Contaminated soil will be removed from Short Fill areas of the site, just south of the
Magnolia Bridge, that total about 3,900 square feet.  Port crews would be used for this
work due to construction risks associated with unforeseen site conditions and the desire
to complete excavation outside of cruise season.  Port crews will also replace an existing
electrical substation on the site.
e    The major works construction portion of the project is expected to be bid in Novemberor
December 2013 with construction lasting between April and October 2014.
e    The tank farm site is north of the Magnolia Bridge, where contaminated soil will be
removed and an impervious barrier and stormwater treatment system will be installed.

Commissioner Gregoire commented on the difficulty for the Port to shoulder the burden for
environmental contamination to which it did not contribute in the absence of other responsible
parties. She noted potential responsibility on the part of the U.S. Navy.


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TUESDAY, AUGUST 6, 2013
In  response  to  Commissioner Bowman,  Mr. Chou  stated  that  self-performing some  of the
preliminary work using Port crews should reduce the project expense overall,

In response to Commissioner Creighton, Ralph Graves, Director, Capital Development Division,
noted that the criteria for use of a project labor agreement include the likelihood of labor disruption
and critical business impact of project delays, which are not considered applicable to this project.

Motion for approval of item 5c — Creighton

Second ~ Bryant

Motion carried by the following vote:

In Favor: Albro, Bowman, Bryant, Creighton, Gregoire (5)

Commissioner Creighton was absent after 3 p.m.

Following consideration ofagenda item 5c, the Commission advanced to consideration of-
7.    STAFF BRIEFINGS

7a.  Checked Baggage Recapitalization/Optimization Project.
Presentation  document(s)  provided  by David  Soike,  Director,  Aviation  Facilities and  Capital
Program, and Wendy Reiter, Director, Aviation Security and Emergency Preparedness:
Commission agenda memorandum dated July 30, 201 3.
" Presentation’slidés dated July 30,2013” "°°   7
Presentation slides from Vic Thompson dated August 6, 2013.
Presentation slides from the January 8, 2013, authorization request.

Presenter(s):  Mr. Soike; Ms. Reiter; Mark Reis, Managing Director, Aviation Division; Ed Weitz,
Aviation Capital Construction Project Manager; Peter McVey, Planning Branch Manager, Electronic
Baggage Screening Program, TSA Office of Security Capabilities; Mike Irwin, Regional Director,
TSA Western Region 5 Federal Security Director; Victor Thompson, Chairman and CEO, Vic
Thompson Company; and Robin E. Baughman, President, Vic Thompson Company.

The Commission received a presentation that included the following relevant information:

The Transportation Security Administration (TSA) has an interest in replacing aging
explosive detection system (EDS) machines around the United States and improving
their-costs at the Airport.
There are 27 EDS machines at the Airport and 9% miles of conveyor in six discrete
screening systems with separate search areas that require TSA staffing throughout the
Airport.   Some of the  locations  for these systems  pose  logistical  and  mechanical
‘challenges for personnel access and ventilation.
The Airport has an interest in optimizing its baggage handling system, which curently
accommodates 33 million annual passengers and cannot accommodate more than
45 million annual passengers, despite Airport objectives to increase passenger volume


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to 60 million annual passengers by 2037.  There is currently insufficient room for the
additional necessary EDS equipment in the present configuration.
¢    Construction of an optimized baggage handling solution will take at least five years to
complete.                                          2
e    The Port and the TSA have been collaborating on ajoint long-term  baggage system
solution for the Airport over the past 14 months.
»    Itis desirable to enter into an agreement with the TSA before the end of the 2013 fiscal
year in September in order to ensure an ongoing stream of federal funding during the
multiple years of an optimization project.  Without an “other transaction agreement” with
the TSA now, future federal funding for the ongoing project would have to be pursued
anew in each fiscal year.  It is unclear whether federal funding priorities from year to year
will favor funding for the local project in the future.
s+    Baggage sysiem upgrades following September 11, 2001, benefitted from 30-percent

-   project funding by the TSA, and the expectation is that a similar funding opportunity is
available now.
e    An optimized baggage system would replace six spade systems with a single system.

e    Attempts to upgrade baggage systems after September 11, 2001, prior to completion of
design and in an environment of considerable industry uncertainty, resulted in poor
performance and cost overruns.
under budget.                    Subsequent baggageprojects have been delivered
e    Recapitalization involves 100-percent TSA funding for replacement of EDS machines
only,  whereas  optimization  also  includes. upgrades  fo  conveyors  and  related
infrastructure but would not be funded in full by the TSA.
-         mmo ‘recapitalization  atone would  fail-to meet-growth demands  and address: - —
common-use flexibility,whereas optimization could provide future capacity to reach 60
* . million annual passengers, lower TSA staffing costs, and reduce maintenance costs. An
=optimized
baggage system would require 11 EDS machinesin one locationin contrast to
the current 27 in six locations.  Eventually an optimized system would add four additional
EDS machines to accommodate throughput of 60 million annual passengers.
e    Other airports considering optimization include Boston, San Francisco, Chicago, Denver,
.
Las Vegas, Tampa, Sacramento, and Anchorage.
e    Projected long-term Airport capital cost to accommodate 45 million annual passengers
via recapitalization would be about $175 million.  Optimization would cost approximately
$190 million.  Pursuing recapitalization until passenger volumes rise to 45 million annual
passengers and then converting to an optimization plan in order to continue passenger
growth is estimated to cost $385 million.  In contrast, the work to grow passenger volume
from 45 million to 60 million annual passengers using optimization is estimated to cost
an additional $20 million, or about $210 million overall.
»    In addition to the cost estimates cited, TSA participation is estimated by staff at between
$50 million and $100 million.
e    Savings in operations and maintenance costs are available by pursuing optimization.

e    Design for optimization is not yet 30-percent complete and TSA participation numbers
are not yet known, but are expected to be known by August 15, 2013.  Authorization to
begin construction will not be requesteduntil design is complete.

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A centralized, optimized baggage system would provide opportunity for baggage to be
routed through different EDS machines in the event of failure or servicing of particular
machines.
Authorization on September 10, 2013, of an agreementwit the TSA will enable the TSA
to ensure funding over multiple years.
The Commission previously authorized $5 million for optimization design.  TSA funding
provided the initial program planning study and the Port has spent about $1 million on
this design effort through September.  It is expected that the Port will spend the TSA's
multi-year contribution in the first 5-6 years.   In the second portion of the project,
between  5-10 years,  the  Port's  contribution  is  anticipated  to  be  approximately
$100 million.
The Port contribution toward optimization will be taken from the Airport Development Fund.
Comparable  approaches  by  other U.S.  airports were presented  by independent
design/build firm Vic Thompson Company.
The TSAis considering 38 recapitalization/optimization projects, including at the Seattle-
Tacoma International Airport.
Although newer EDS machines are capable of processing more bags than older
systems, capacity is ultimately limited by the overall baggage handling system.  Newer
machines inserted into inefficient systems will not be able to take advantage of the ability
to process more baggage and accommodate higher passenger volumes.
TSA carryover funding currently available for optimization would cease to be available
after the end of the fiscal year at which point it would be subject to redistribution
throughout the Department of Homeland Security.  TSA funding for baggage system
~~
~ “optimizationis authorizédand appropriated”Within the "TSA" budgetand"wodld be
available to support the project subject to Congressional notification.
The Airport Airline Affairs Committee will be considering baggage system optimization as
a project to be approved within a new Signatory Lease and Operating Agreement.

Commissioner Albro requested a summary of the issues of interest to the Commission in a
question-and-answer format for follow-up on August 20, 2013.                                :

8.    NEWBUSINESS
Commissioner Albrocommented on his recent visit to Canada and on the alignment of Canadian
national, provincial, and local investment strategies to support becoming North America's gateway
to the Pacific for goods and travel. This includes rail investment that provides service east to west
and north to south all the way to New Orleans, Louisiana.  Rather than view their ports as a
resource to draw down for infrastructure investment, he stated that Canada seeks to augment
Canadian port investment in service to the Canadian economy.  Commissioner Albro called for
greater cooperation between Puget Sound ports, ii the State of Washington, and the state's
federal delegation.

9.    POLICY ROUNDTABLE

None.


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TUESDAY, AUGUST 6, 2013

10.  ADJOURNMENT

There being po further business, the regular meeting was adjourned at 4:05 p.m.



Minutes  aippro—-ed: September10, 2013.

BILL BRYANT

ASSISTANT SECRETARY



















Minutes of August 6, 2013, proposed for approval on September 10, 2013,