PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6b 
ACTION ITEM 
Date of Meeting    October 14, 2014 
DATE:    October 7, 2014 
TO:      Theodore J. Fick, Chief Executive Officer 
FROM:   Melinda Miller, Director, Portfolio and Asset Management 
Patricia Spangler, Real Estate Manager 
SUBJECT:  Conference and Event Center Management Agreement Amendment 
ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to execute a First
Amendment to the Conference and Event Center Management Agreement between the Port and
Columbia Hospitality Inc. to expand the premises under its management agreement at the World
Trade Center Seattle by 1,448 rentable square feet. 
SYNOPSIS 
Staff proposes execution of a First Amendment to the Conference and Event Center Management
Agreement (CECMA) between the Port and Columbia Hospitality, Inc. (CHI) that would expand
the premises of the World Trade Center Seattle (WTCSE) by an additional 1,448 rentable square
feet. The management agreement is based on a defined description of the premises so any change
to the premises requires Commission authorization. The Port would fund approximately $80,000
from the Real Estate General Fund to convert the premises from the currently vacant office use
to a members' lounge which will include an auxiliary dining room with small meeting rooms and
a refreshment station. The primary purpose of this expansion is to keep the facility relevant and
competitive by allowing for expanded marketing of and event programming for the Holland
America Dining Room. Currently, when there is a buyout or event in the dining room they must
turn away lunch guests which create uncertainty when members are making their lunch plans. By 
creating a drop-in members' lounge, we will be able to assure that members always have access
to dining during the operating hours of the facility. 
BACKGROUND 
On November 22, 1994, the Commission approved the purchase of the World Trade Center
Seattle license. The Port sought the license to assist the development of the Central Waterfront
Development Project. The World Trade Center West Building was completed in 1998 and is the
location of the World Trade Center Seattle (WTCSE). The WTCSE serves as a dynamic venue
for international trade and business development events in our region and currently has 600 
member/sponsors (members) representing large and small businesses. CHI, as manager, is
responsible for the day-to-day operations and marketing of the facility for dining, conferences,
meetings, and private events as well as sponsorship and membership sales. 

Template revised May 30, 2013.

COMMISSION AGENDA 
Theodore J. Fick, Chief Executive Officer 
October 7, 2014 
Page 2 of 5 

Again, to ensure that WTCSE remains relevant and competitive, it is important to continue to
develop and expand the programming and offerings. CHI has proposed that the Port consider the 
expansion of the WTCSE premises to include the former Suite 400, which is immediately
adjacent to the WTCSE. This area is currently vacant and has been a challenge to lease as an
office and by adding it to the WTCSE CHI can address some of the challenges they have had
with their dining operations. The intent is to create a drop-in members' lounge that will always
be available during WTCSE operating hours. This will assure that during "buyouts" in the dining
room, members will be still able to dine at the WTCSE. This revision will enhance and add value
to the WTCSE customer's experience and increase revenue to the Port. No significant physical
upgrades or facility modifications have been made to our facility since WTCSE began operating.
The proposed new amenities will attract new members and bring additional vibrancy to the
building. 
With improvements to the space, we can provide the following additional services and benefits: 
1.  A daily Monday through Friday a-la-carte luncheon experience that will always be
available to members. 
2.  Increased revenue by growing the a-la-carte lunch business because members will
have confidence that WTCSE is always available; board rooms will be yielded for
events with more attendees instead of being used frequently for small meetings of two
to six people; the dining room can be more aggressively promoted as an international
event space at all times without restriction. 
3.  Trade meetings, weddings and other events will be more inclined to utilize WTCSE 
because they have access to the lounge as ancillary space. 
4.  Weddings and other weekend events will be significantly enhanced by the
"residential" quality of the new space. 
5.  The overall member experience is significantly improved enhancing the WTCSE 
competitive position as the most effective venue in Seattle for promoting trade and
facilitating business and nonprofit collaboration and coordination. 
OFFICE LEASE VS. WTCSE NPV PROJECTIONS 
To compare the two options, Port staff created an office lease pro forma based on market rates
and CHI staff prepared a WTCSE pro forma. These proformas both used a term of five years,
which is a typical office lease term. It was determined that the WTCSE use was projected to
generate $107,000 more in net present value than the office lease ($165,000 versus $58,000,
respectively) in the period analyzed.

COMMISSION AGENDA 
Theodore J. Fick, Chief Executive Officer 
October 7, 2014 
Page 3 of 5 
FINANCIAL IMPLICATIONS 
Budget/Authorization Summary              Capital     Expense   Total Project 
Original Budget                            $0          $0          $0 
Previous Authorizations                       $0          $0          $0 
Current request for authorization              $80,000          $0       $80,000 
Total Authorizations, including this request       $80,000          $0       $80,000 
Remaining budget to be authorized               $0          $0          $0 
Total Estimated Project Cost                $80,000          $0      $80,000 
Project Cost Breakdown                     This Request       Total Project 
Allowance                               $80,000          $80,000 
Other                                        $0              $0 
Total                                        $80,000            $80,000 
Budget Status and Source of Funds 
This tenant improvement allowance was not included in the 2014 Capital Plan because it was
anticipated that a new office lease would begin in 2013, requiring related improvements in 2013.
It is expected that lower spending on other budgeted capital projects will offset this 2014
unplanned capital expenditure. 
The source of funds will be the Real Estate General Fund.

COMMISSION AGENDA 
Theodore J. Fick, Chief Executive Officer 
October 7, 2014 
Page 4 of 5 
Financial Analysis and Summary 
CIP Category          Revenue/Capacity Growth 
Project Type           New Business Development 
Risk adjusted discount rate  7.0% 
Key risk factors          Revenue risk  WTCSE  event use provides demand driven
revenues that are not guaranteed, whereas an office lease
provides a guaranteed revenue stream. Over a typical office
lease term of 5 years, CHI's WTCSE  proforma  projects 
generating  revenues 1.6 times greater than an office lease
($281K vs $172K), so proforma WTCSE revenues would have
to fall by 40% or more to be outperformed by an office lease.
Occupancy risk  would be reduced. Since 2009, the office suite
has been occupied a total of 16.5 months (24% occupancy). The
CECMA terminates in 7+ years, resulting in WTCSE' long term
occupancy of this suite. 
Payback risk  WTCSE relies on non-guaranteed revenues for
payback of improvements. This risk is partially mitigated by
WTCSE' shorter payback period (two years compared to an
office tenant's 3 year payback). 
Project cost for analysis     $80,000 
Business Unit (BU)        Portfolio Management, Real Estate Division 
Effect on business        Net Operating Income after Depreciation for Years 1 through 5
performance           is shown below: 
Incremental Incr/(Decr)
NOI (in $000's)       Year 1   Year 2   Year 3   Year 4   Year 5
Revenue          $32    $31    $34    $32    $31
Expenses         ($11)    $0     $0     $0     $0
NOI            $21    $31    $34    $32    $31
Depreciation          $4      $4      $4      $4      $4
NOI After Depreciation   $17     $27     $30     $29     $28
Incremental revenue is generated by the converting the use from
office space to WTCSE space. Incremental expense decreases in
Year 1 because broker fees are not required for the WTCSE use
but are required for an office lease. The depreciation increase is
primarily a result of WTCSE requiring $44K more of capitalized
improvements than an office user would.
IRR/NPV           Incremental Incr/(Decr)
NPV   IRR  Payback
(in $000's)   (%)     Years
$107    NM    (1)
The Net Present Value is based on incremental net cash flows
generated by WTCSE use and does not factor in the underlying
value of the land and improvements.  The Payback  period 
decreases from 3 years for an office lease to 2 years with 
WTCSE, an incremental decrease of one year.

COMMISSION AGENDA 
Theodore J. Fick, Chief Executive Officer 
October 7, 2014 
Page 5 of 5 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Reject this request for a First Amendment to CECMA and the Port would
forego approximately potential $160,000 of additional revenue  over the five year  period 
commencing January 1, 2015. The Port would continue to pursue an office lease and would 
incur costs associated with the lease-up, such as broker fees, tenant improvements and rent
abatement. Suite 400 has been actively marketed through a professional broker for over a year
and we have not secured an office lease. The Port will continue to lose revenue during the
period the space remains vacant with the possibility of increased tenant improvement costs.
Additionally, not expanding the WTCSE would keep WTCSE from enhancing its competitive
position as the most effective venue in Seattle for promoting trade and facilitating business and
nonprofit collaboration and coordination. This is not the recommended alternative. 
Alternative 2)  Approve this First Amendment to CECMA, expanding the WTCSE to provide
additional space as a members' lounge with a la carte dining, meeting rooms and events, and
potentially increase revenue to the Port by approximately $160,000 over the initial five year 
period commencing upon Commission approval. The additional space will significantly improve 
the overall sponsor experience, enhancing the WTCSE competitive position as the most effective
venue in Seattle for promoting trade and facilitating business and nonprofit collaboration and
coordination. This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
First Amendment to Conference and Event Center Management Agreement. 
PowerPoint Presentation. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
August 23, 2011  Commission approved for the Chief Executive Officer to execute a
Management Agreement for the Port's Conference and Event Centers 
August 9, 2011  Commission was briefed on the proposed comprehensive Conference
and Event Center Management Agreement.