PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      4e 
ACTION ITEM 
Date of Meeting     August 9, 2016 
DATE:    July 29, 2016 
TO:      Ted Fick, Chief Executive Officer 
FROM:   Melinda Miller, Director of Portfolio & Asset Management, Economic
Development Division 
Lily Ninburg, Property Manager II, Portfolio & Asset Management, Economic
Development Division 
SUBJECT:  1st Amendment to Term Lease Agreement with Washington State Department of
Transportation (WSDOT) at Terminal 106 

Net Proceeds to the Port:  $1,254,544.80 (annual rent revenue if 1st option exercised) 
$2,546,725.94 (total rent revenue if both options exercised) 

ACTION REQUESTED 
Request Commission authorization for the Chief  Executive Officer to execute the First 
Amendment to term lease agreement (#002165) with the Washington State Department of
Transportation at Terminal 106 substantially as drafted and executed by WSDOT and attached to
this memorandum to add two additional options at higher rent rates. If both options are executed,
the new lease expiration would become February 18, 2019. 
SYNOPSIS 
WSDOT entered into a lease agreement with the Port in 2011 to secure warehouse space for
laydown, storage and parking for buses used in transporting workers to and from construction
sites of the SR-99 Alaskan Way Tunnel Project. The original lease of 4 years and 2 months plus
an exercised 1-year option will expire on February 18, 2017. Due to project delays, WSDOT has
requested additional options for lease extensions. The proposed First Amendment will add two
options (each up to 12 months) to potentially extend the lease term to February 18, 2019,
depending on how many months they request for each additional extension. 
BACKGROUND 
The Port originally acquired T-106 Building 1 from PARR Industries around 1970 and used the
building for the Port's warehousing business until approximately 2003. The building has largely
remained idle since that time, as various alternative uses have been considered for the site
including a Request for Proposal (RFP) for a possible logistics facility. The configuration of the
building does not meet  market industry standards and would require significant capital

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
July 22, 2016 
Page 2 of 4 
investment to meet current real estate marketplace needs. The future development of this
property is included in the upcoming Strategic Real Estate Plan. 
The original WSDOT lease was approved by the Commission on August 2, 2011. In December
2013, Seattle Tunnel Partners (STP) stopped tunneling approximately 1,000 feet into the tunnel
drive due to damage to the tunnel boring machine, leading to further delays to the Tunnel 
Project. Since WSDOT's lease at T-106 is an integral part of the Tunnel Project, the tenant has
requested two additional options to extend the lease term. The proposed amendment to
WSDOT's lease at T-106 demonstrates the Port's continued support for the Tunnel Project. 
AMENDMENT JUSTIFICATION AND PROPOSED TERMS 
Proceeding with the proposed amendment related to the construction of the SR-99 Alaskan Way
Tunnel Project is a benefit to the Port and will help to minimize the negative impact of the
project's construction on businesses and the traveling public. Improvements to SR-99 and city
streets will provide capacity in the transportation system for today and the future, and improve
access and mobility to and through the south of downtown area and to Port properties. Adding
two additional options to extend at a higher rent rate also generates additional revenue for the
Port. 
Amendment Objectives 
Minimizing Tunnel Project's construction impact waterfront and surrounding businesses. 
Supporting regional transportation and freight mobility initiatives. 
Protecting and guaranteeing revenue stream to the Port. 
Proposed Changes in Lease Terms: Current vs. 1st Amendment 
Key Lease Terms      Current Lease       Proposed 1st Amendment 
Premises        522,727 sf of warehouse     Same 
Total Term (with
5 years, 2 months          7 years, 2 months 
options) 
February 18, 2019 (if both
Expiration Date    February 18, 2017 
options executed) 
1 option of 12 months
Two additional options (each
Options to Extend   (already exercised and
up to 12 months) 
approved) 
Rate            $0.1597/sf/mo            $0.2000/sf/mo (eff. 2/19/2017) 
Fixed Annual Rate
3%               Same (3%) 
Increase % 
$104,545.40 (1st Option);
Monthly Rent     $81,036.63 
$107,681.76 (2nd Option) 

Revised March 28, 2016 

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
July 22, 2016 
Page 3 of 4 
Per RE-2 Procedure E.1.e,
the Port may enter into Term
Surety (Not
Agreements with federal,    Same 
Required) 
state or local public bodies
without requiring security. 
Material storage, vehicle
Use of Premises    parking and office associated  Same 
with the Tunnel Project 
Tenant responsible for all
Utilities                                   Same 
utilities 
Maintenance &   Tenant responsible for all
Same 
Repair (M&R)    M&R 
A WSDOT signed copy of the proposed First Amendment to WSDOT T-106 lease agreement is
attached to this Commission memo. 
STRATEGIES AND OBJECTIVES 
Amending the lease by adding two options is in alignment with both Century Agenda's Regional
Initiatives and its Strategic Objectives: 
1.  One of the four Regional Initiatives in Century Agenda is to "strengthen access to global 
markets and supply chains for Northwest businesses." Supporting the Tunnel Project is a
critical element to that Initiative. It increases freight mobility and access to major
facilities of the Port. 
2.  One of the four Strategic Objectives stated in Century Agenda, "position the Puget Sound
as a premier international logistics hub," is also consistent with and in alignment with the
this amendment. This proposed amendment will continue to support the Tunnel Project to
its completion to enhance the Port's competitiveness as a premier international logistics
hub. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1  Do not execute lease amendment with WSDOT lease at T-106. This action
potentially delays the Tunnel Project currently under way. 
Cost Implications: Potentially forgoing up to $2,546,725.94 of rent revenue over two years 
Pros: 
(1)  Maintaining complete flexibility for use of the space for property redevelopment. 
Cons: 
(1)  Disrupting the Tunnel Project. 
(2)  Potentially forgoing rent revenue stream to the Port. 

Revised March 28, 2016 

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
July 22, 2016 
Page 4 of 4 

This is not the recommended alternative. 
Alternative 2  Amend the T-106 lease by adding two options and execute the amendment as
proposed. This action minimizes construction impacts to the waterfront and other surrounding
businesses and will increase and protect the revenue stream to the Port at T-106. 
Cost Implications: Potentially increasing rent revenue by up to $2,546,725.94 over two years 
Pros: 
(1)  Minimizing construction impacts to waterfront and surrounding businesses. 
(2)  Protecting and increasing revenue stream to the Port at T-106. 
Cons: 
(1)  Property is constrained for at least the initial term. 
This is the recommended alternative. 

ATTACHMENTS TO THIS REQUEST 
WSDOT signed 1st Amendment to term lease with WSDOT at T-106. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
August 2, 2011  Twelfth Amendment to Terminal 46 Lease with Total Terminals
International LLC and term lease agreements with Washington State Department of
Transportation at Terminal 46 and Terminal 106. 







Revised March 28, 2016