PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6a 
ACTION ITEM 
Date of Meeting    October 14, 2014 
DATE:    September 26, 2014 
TO:      Ted J. Fick, Chief Executive Officer 
FROM:   Mark C. Griffin, Director, Real Estate Development 
SUBJECT:  First Reading and Public Hearing of Resolution No. 3697, surplusing and sale of
the Tsubota Steel site 

Net Proceeds to the Port: $7,200,000 minus closing costs 
Anticipated Closing Date: Second Quarter of 2015 

ACTION REQUESTED 
Request First Reading and Public Hearing of Resolution No. 3697: A Resolution of the Port
Commission of the Port of Seattle declaring surplus and no longer needed for port district
purposes approximately 3.44 acres of Port-owned real property located in the City of Seattle and
further authorizing the sale of said real property to TRF Pacific, LLC or its assigns. 
SYNOPSIS 
Staff proposes to enter into a purchase and sale agreement to sell the Tsubota site to TRF Pacific,
LLC or its assigns. TRF Pacific presented the strongest offer from a competitive, request for
offers process completed earlier this year. TRF Pacific's proposed purchase price of $7.2 million
is consistent with the appraised fair market value of the site. 
The Port acquired the Tsubota Steel site in April, 2005 (See Attachment 1  Site Map). The site
has been under short-term lease since its acquisition. The site is considered "surplus," because it
is not essential to any current or anticipated Port operational need. 
BACKGROUND 
The Port acquired the 3.44-acre Tsubota Steel site in April, 2005. At the time, the Port was
engaged in a large-scale redevelopment planning effort that encompassed the Terminal 91
uplands site due west of the Tsubota site and anticipated acquiring additional sites directly
abutting the Tsubota site to include in that planning effort. Those additional acquisitions did not
occur, and the Port is no longer pursuing large-scale planning in the area. As a result, the
Tsubota site is an "island" in the Port's portfolio and can be considered surplus given its lack of a
direct tie to the Port's operations. The Tsubota site has been under short-term lease since its
acquisition. 

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted J. Fick, Chief Executive Officer 
October 6, 2014 
Page 2 of 7 
The Port acquired the Tsubota site knowing some environmental remediation would be required 
based on the due diligence leading to the acquisition.  The Port has not performed any
remediation, because there has been no critical, Port-driven need to do so. At this point, the
prospective buyer is best positioned to remediate the site as part of their site development work
given that the nature of the required clean-up (i.e., soil excavation, grading and backfilling) can
be easily folded into that work. Therefore, a key objective in considering a sale of the site has
been to sell the site on an "as is, where is" basis with the prospective buyer factoring the required
clean-up into their proposed purchase price and, as importantly, releasing the Port from all
claims related in any way to the environmental condition of the site. 
Since the rebound in the real estate market following the economic recession that began in 2008,
staff has undertaken two competitive processes to dispose of the Tsubota site on an as is, where
is basis. The first process began in February 2011 with a request for proposals (RFP) that invited
offers to either buy or long-term lease the site. Two proposalsone acquisition and one lease
were received. The acquisition proposal (from Goodman Real Estate) proposed purchase of only
the northern portion of the site or approximately 1.3 of the 3.44 total acres, which was not
consistent with the RFP's terms to purchase the whole site. The lease proposal (from Swan Nets
USA) requested the Port contribute as much as $1.8 million in site/tenant improvementsagain
contrary to the "as is, where is" requirement in the RFP. Both proposals were declined in favor
of continuing the short-term leases on the site until further improvement in the real estate market.
Staff obtained an appraisal of the site in October, 2013 before proceeding with the second
competitive process earlier this year. The appraisal valued the site at $8.23 million assuming the
site did not require any environmental remediation. After receiving the initial opinion of value,
Port environmental staff prepared a likely remediation scope of work based on the existing
environmental reports and prior clean-up estimate. Port project and construction management
staff then reviewed the scope of work and estimated the clean-up cost to be between $1 million
and $1.8 million depending on whether the Port performed the work or left it to a private sector
buyer. The appraiser then considered the clean-up estimate and other pertinent data and issued
an update to his earlier value in July, 2014 valuing the site between $6.4 million and $7.2 
million.
Staff issued a request for offers (RFO) in February to sell the site prompted by the growing
rebound in the real estate market and several unsolicited offers to purchase the site. The RFO
generated five initial offers from Panattoni Development, TRF Pacific, Goodman Real Estate,
Liane Tsubota, and Public Storage. Panattoni withdrew its offer shortly after the submission
deadline. Liane Tsubota offered to purchase only the northern portion of the site. The other 3
offers were for the entire site.
After an initial evaluation of each of the offers based the proposed purchase price, the desire to
sell the entire site as is, where is and other key offer terms, staff requested each bidder submit a
"best and final" offer.  Both TRF Pacific and Public Storage offered $6.2 million for the
site. Goodman Real Estate offered $3.3 million. Liane Tsubota chose not to make a best and
final offer over her initial offer of $800,000 for just the site's northern parcel. At this point, staff

COMMISSION AGENDA 
Ted J. Fick, Chief Executive Officer 
October 6, 2014 
Page 3 of 7 
rejected all the offers, because none were deemed strong enough. All the offers were below the
site's appraised value even when the needed environmental remediation was taken into account.
Two of the bidders (TRF Pacific and Public Storage) from the RFO process expressed continuing
interest in the site upon learning their initial best and final offers were declined. Staff indicated a
willingness to consider any new offers. Both TRF Pacific and Public Storage submitted new
offers in June. TRF Pacific offered $7 million with closing contingent upon Department of
Ecology (DOE) approval of an environmental clean-up plan for the site. Public Storage offered
$7.2 million with three contingencies related to DOE's approval of an environmental clean-up
plan, securing full land-use entitlements from the City of Seattle, and modification of an existing
sewer easement. In addition, Public Storage's new offer was conditioned on the Port being
responsible for environmental remediation costs exceeding $800,000.
Staff then requested that TRF Pacific and Public Storage submit a second best and final offer.
Both bidders increased their proposed purchase price by $200,000 with TRF Pacific's offer at
$7.2 million and Public Storage at $7.4 million. In addition, Public Storage deleted the provision
making the Port responsible for clean-up costs above $800,000 but kept the three closing
contingencies described above. 
In the final evaluation of the second round of best and final offers, staff chose TRF Pacific's
offer over Public Storage's offer. Both bidders were determined to be capable of performing and
closing on the transaction.  However, TRF Pacific's offer was deemed stronger, because it
contained two fewer contingencies that would have allowed  the buyer to terminate the
transaction and provided for a quicker closing. These factors, on balance,  compensated for
Public Storage's slightly higher proposed purchase price. 
Staff executed a letter of intent with TRF Pacific to sell the site in July, 2014. TRF Pacific is a
local developer that owns and manages the Whole Foods-anchored shopping center immediately
north of the Tsubota site among other properties in the region. 
PURCHASE AND SALE AGREEMENT PROVISIONS 
The draft purchase and sale agreement is attached as Attachment 2. The key terms of the
proposed agreement include: 
Seller. Port of Seattle. 
Buyer. TRF Pacific, LLC and/or assigns. With Seller's prior written consent, Buyer may
assign its interest to any entity in which it has a controlling interest. 
Property. An approximately 3.44-acre site located at 1819 15th Avenue West in Seattle's
Interbay neighborhood (the "Property"). In addition to the real property, Buyer will also
purchase all of Seller's rights, title and interest in all of the fixtures and improvements
associated with the Property.

COMMISSION AGENDA 
Ted J. Fick, Chief Executive Officer 
October 6, 2014 
Page 4 of 7 
Property Condition - Release. Seller will deliver the Property to Buyer at closing in its "as
is, where is" condition, with all faults and defects, known and unknown, without warranty or
representation of any kind or character by Seller. Buyer will release Seller from all claims
related in any way to the environmental condition of the Property.
Purchase Price. Buyer will pay Seller a purchase price of $7.2 million in cash for the
Property. 
Environmental Contingency.  Seller will enroll the Property in the voluntary cleanup
program ("VCP") with the DOE. At Buyer's cost, Buyer will engage its environmental
consultant to design an Independent Remedial Action Plan ("IRAP") for submission to DOE
under the VCP. Buyer shall be solely responsible for all costs associated with DOE's
services under the VCP. Buyer will waive the environmental contingency once DOE issues
its opinion on the proposed IRAP.
Existing Leases. Buyer acknowledges that two short-term lease agreements (Utilikilts and
Clear Channel) currently encumber the Property. Buyer will accept assignment of all of
Seller's rights and obligations under these leases as of Closing.
Closing. The proposed transaction will close within 30 days of waiver or completion of any
contingencies including the Environmental Contingency. 
Default. If there is a default by Seller, Buyer may (i) terminate the agreement and obtain
return of its initial deposit of $25,000, (ii) waive such breach and proceed to Closing, or
(iii) pursue specific performance. If there is a default by Buyer, Seller may (i) terminate the
agreement and retain Buyer's initial deposit of $25,000, (ii) waive such breach and proceed
to Closing or (iii) pursue specific performance.
Brokerage Commission. Seller represents that it has not engaged a broker to assist with the
proposed transaction. Buyer will be responsible for paying the commission of any broker it
chooses to engage. Buyer will indemnify, defend and hold harmless Seller from and against
any and all commissions and commission claims.
FINANCIAL IMPLICATIONS 
The Port acquired the Tsubota site for approximately $6.1 million or approximately $41 per
square foot. This amount included  a purchase price of $5.5 million and related due diligence,
assignment and closing costs of approximately $575,000.  The site has been under short-term
lease since its acquisition. It currently generates about $26,000 in annual revenue. 
The proposed purchase price of $7.2 million equates to a sale at approximately $48 per square
foot. As mentioned above, a current appraisal values the site between $6.4 million and $7.2 
million.  TRF Pacific's proposed purchase price of $7.2 million is at the top end of this range.

COMMISSION AGENDA 
Ted J. Fick, Chief Executive Officer 
October 6, 2014 
Page 5 of 7 
Financial Analysis and Summary 
CIP Category             N/A 
Project Type              N/A 
Risk adjusted discount rate     N/A 
Key risk factors             N/A 
Project cost for analysis        Closing costs are to be determined 
Business Unit (BU)          Portfolio Management  Commercial Properties 
Effect on business performance   A non-operating gain on sale of approximately $1.1
million (closing costs have not yet been finalized) will
be recognized upon closing on the sale. 
Incremental decreases to annual rental revenue of
$26,000 and net operating income of $13,000.
IRR/NPV             N/A 
STRATEGIES AND OBJECTIVES 
This authorization aligns with the Real Estate Division's 2014 business plan strategy to manage
our finances responsibly to increase the net operating income by, among other means, acquiring
or disposing of assets as circumstances warrant.  The proposed sale of the Tsubota site is
consistent with this strategy. The sale proceeds provide a capital source to pursue potential
acquisition of other assets that are more closely aligned with the Port's mission and operations. 
TRIPLE BOTTOM LINE 
Economic Development 
Selling the Tsubota site would generate revenue that could be used to purchase new assets that
are more directly connected to the Port's mission and operations. In addition, the proposed
buyer intends to develop the site with uses that will generate jobs and local tax revenue above
that of the Port's current use.
Environmental Responsibility 
The Tsubota site is a brownfield that requires some environmental remediation. The proposed
buyer will remediate the site as part of its development. 
Community Benefits 
The community will benefit from development of the Tsubota site with opportunities for jobs
and additional services in the area and removing  potential blight from the surrounding
neighborhood.
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Halt the proposed sale and continue short-term lease of the site. This
alternative is inconsistent with the Real Estate Division's strategy of disposing of assets to

COMMISSION AGENDA 
Ted J. Fick, Chief Executive Officer 
October 6, 2014 
Page 6 of 7 
generate new revenue as circumstances warrant such as when an asset is surplus to the Port's
operations. Terminating the proposed sale at time when market conditions are favorable, as is
the case currently, would mean the loss of the expected sales proceeds with no guarantee that a
comparable or better offer could be secured in the future. This alternative would also not permit
the pursuit of other acquisitions, with the Tsubota sales proceeds, that are more closely related to
the Port's operations. This is not the recommended alternative. 
Alternative 2)  Competitively solicit new offers to buy the site. A new competitive process 
may not result in a comparable or better offer. Instead of a staff-driven process as was the case
with the recent RFO, a real estate broker could be retained to list the Tsubota site in an attempt to
generate greater market exposure and possibly additional prospective buyers with potentially
higher offers. However, the Port would owe a commission to the broker upon any such sale.
Assuming a commission at the Port's maximum permitted rate of 7.5% on the proposed sale
price of $7.2 million, the commission due the broker would be $540,000. This approach would
decrease the Port's net sales proceeds. This is not the recommended alternative. 
Alternative 3)  Competitively solicit new offers to long-term lease the site. Long-term lease
deals are almost always less attractive to the real development community because of the
challenge of securing financing for the development. Consequently, long-term leases attract
fewer interested developers and would not necessarily result in a better deal. While a long-term
lease deal would preserve the Port's and the public's ownership of the site, there is no
compelling strategic reason to maintain ownership, because the Tsubota site isn't essential to any
current or anticipated Port operational need. This is not the recommended alternative. 
Alternative 4)  Proceed with the proposed sale. The proposed sale aligns with the surplus
status of the site. This alternative is consistent with the Real Estate Division's strategy of selling 
assets to secure new revenue when circumstances warrant.  In this case, real estate market
conditions are currently favorable, and there is no guarantee that they would be more favorable
in the future such that a comparable or better offer could be secured. The Tsubota sales proceeds
could be used to acquire other assets more closely aligned with Port's operations and objectives.
This is the recommended alternative. 
RESOLUTION NO. 3697: 
Resolution No. 3697 provides that the Tsubota Steel site located in the City of Seattle, King
County and any improvements located thereon, is no longer needed for Port purposes, declares it
surplus to Port needs and authorizes its sale to TRF Pacific, LLC or its assigns. The Resolution
further delegates to the Port's Chief Executive Officer the authority to execute all documents
necessary to complete the sale of the property. See Attachment 3 for the full resolution.

COMMISSION AGENDA 
Ted J. Fick, Chief Executive Officer 
October 6, 2014 
Page 7 of 7 
ATTACHMENTS TO THIS REQUEST 
Attachment 1  Site Map 
Attachment 2  Draft Purchase and Sale Agreement 
Attachment 3  Resolution No. 3697 
Powerpoint presentation 

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
May 24, 2011, Commission briefing on the offers received from Tsubota Steel request for
proposals. 
January 25, 2005, Commission authorized acquisition of the Tsubota Steel site.