PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.       6c 
ACTION ITEM             Date of Meeting    April 9, 2013 

DATE:    March 20, 2013 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:   Michael Burke, Director Seaport Leasing & Asset Management 
Ticson Mach, Capital Project Manager 
SUBJECT:  Terminal 46 Lease Improvements Design Funding 
Amount of This Request:  $6,000,000            Source of Funds: General Fund 
Est. State and Local Taxes: Construction Phase only    Est. Jobs Created:  N/A 
Est. Total Project Cost: Range from $20,000,000 to $35,000,000 
ACTION REQUESTED: 
Request Commission authorization for the Chief Executive Officer to direct staff to develop design
documents, execute consultant contracts, apply for permits, and prepare construction documents as part
of the Terminal 46 (T-46) Lease Improvements project for an estimated cost of $6,000,000. 
SYNOPSIS: 
On December 11, 2012, Commission approved execution of the 13th Amendment to the lease with Total
Terminals, Inc., at Terminal 46. This memo requests Commission approval for permitting, design, and
project management funding in the amount of $6,000,000 to allow the Port to comply with Paragraph 9
"Alteration and Improvement" of the 13th Amendment.
BACKGROUND: 
Total Terminals, Inc. (TTI) is the current tenant at Terminal 46. Hanjin Shipping Lines is the majority
owner of TTI. Hanjin leased Terminal 46 in 1990, and later in 2003 assigned that lease to TTI. Hanjin is
part of the CKYH alliance, which also includes COSCO, K-Line and Yang Ming. K-Line and Yang
Ming operate terminals in the Port of Tacoma. 
Terminal 46 is an important component of the container terminal inventory, generating approximately
20% of the container cargo passing through the Port. Cargo volumes at Terminal 46 are currently
estimated to generate 3,200 direct, induced and indirect jobs annually. In addition, current activities at
the terminal are estimated to annually generate over $370,000,000 in business revenue and over
$24,000,000 in state and local taxes. Maintaining Terminal 46 as an operating container terminal is key
to the Port meeting its Century Agenda strategies of increasing container volume in Seattle to 
3.5 million TEUs and doubling the value of exports from Seattle. 
On December 11, 2012, the Commission authorized the Chief Executive Officer to execute the 13th
Amendment to the lease for Terminal 46 with TTI. This lease amendment extended the lease term by 10 
years and committed the Port to certain capital improvements to the terminal.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
April 1, 2013 
Page 2 of 6 
The Port intended to rehabilitate T-46 regardless of whether TTI continued to lease the facility after
2015 to keep the terminal leasable for any potential tenant. 
PROJECT JUSTIFICATION: 
Project Objectives: 
The objective is to fulfill the terms of the lease amendment authorized in December 2012. The proposed
capital improvements will maintain the economic and job benefits from the cargo business at 
Terminal 46. 
This is a preliminary estimated range of the project cost. The project team will provide an updated total
project cost in a future construction-funding request.
PROJECT SCOPE OF WORK AND SCHEDULE: 
The scope of the improvements is outlined in Paragraph 9 of the T-46 Lease, 13th Amendment, as listed
below: 
1)   Container Dock Apron: Upgrade approximately 200 lineal feet at the north end of existing dock
apron for 100-foot gauge cranes to match the load capacity of the existing 2,300 lineal feet of dock
apron. 
2)   Container Dock Structure: Rehabilitate the existing dock and improve as necessary with the
installation of pile caps and deck panels. This component is not in the scope of this authorization,
and is covered in CIP# C800603 T46 Dock Rehabilitation.* 
3)   Container Yard Pavement: Overlay existing pavement with up to (6) six inches of asphalt where
the existing pavement section is failing. 
4)   Storm Water Facilities: Construct improvements that meet current storm water standards, which is 
to be carried out in conjunction with Lessee's implementation of operational best management
practices. Port of Seattle obligations include upgrading the existing wash rack to meet existing
storm water standards. 
5)   Lighting: Upgrade existing lighting controls to allow for control of the lighting system from a
central point inside the terminal administration building, or at another location as determined
jointly by the Port and Lessee. 
6)   Crane Pin Down: Construct three additional crane pin-down locations within the existing dock
apron and install similar crane pin-down locations on the to-be-upgraded 200 lineal feet of
container dock apron. 
7)   Fender System: Add covers over the fender system to prevent ship line entanglement. 
*The Port intended to rehabilitate the T-46 dock whether TTI continued to lease the facility or not as that work was
necessary to keep the facility leasable for any potential tenant. Therefore, while the Container Dock Structure work
was listed in the 13th amendment under ALTERATIONS AND IMPROVEMENTS, it was not a new or incremental
obligation related to the 13th amendment  simply restated there, at the tenant's request. Only incremental obligations
of capital investment by the Port are included in this project scope of work and reflected in the associated financial
analyses.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
April 1, 2013 
Page 3 of 6 
Schedule: 
Design and construction phases will vary for each element of the scope listed above due to compliance
requirements, operational constraints, or availability of the terminal area due to the Alaskan Way
Viaduct Replacement and Tunnel Project. The design team will evaluate the scope of work and
coordinate with the terminal operator to determine a cost effective approach to implement the work. 
FINANCIAL IMPLICATIONS: 
Budget/Authorization Summary:             Capital      Expense       Total Project 
Original Budget                                 $0        $0             $0 
Previous Authorizations                            $0        $0             $0 
Current request for authorization                 $6,000,000        $0        $6,000,000 
Total Authorizations, including this request          $6,000,000        $0        $6,000,000 
Remaining budget to be authorized                  TBD      TBD           TBD 
Total Estimated Project Cost                $20,000,000 to        $0     $20,000,000 to
$35,000,000               $35,000,000 
Project Cost Breakdown:                           This Request      Total Project 
Construction                                             $0           TBD 
Construction Management                                $0          TBD 
Design                                          $3,650,000           TBD 
Project Management                               $1,700,000          TBD 
Permitting                                         $ 650,000           TBD 
State & Local Taxes (estimated)                                $0           TBD 
Total                                              $6,000,000     $20,000,000 to
$35,000,000 
Budget Status and Source of Funds: 
The Port's obligation for capital improvements at Terminal 46 under the terms of the 13th Amendment 
with TTI are estimated at between $20,000,000 and $35,000,000. The 2013 Draft Plan of Finance
included $37,500,000 under CIP #102554 T-46 Development associated with capital improvement
obligations under the 13th Amendment. These improvements will be funded from the General Fund. 
Financial Analysis and Summary: 
CIP Category     Renewal/Enhancement 
Project Type      Renewal & Replacement 
Risk adjusted    9.0% (rate used in TTI 13th amendment Commission Memo dated December
discount rate      11, 2012)

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
April 1, 2013 
Page 4 of 6 
Key risk factors    Key risk factors which may impact project costs include: 
Construction costs may increase if required work is more extensive than
currently known. The construction cost estimate will be refined during the
design process included in this request.
Project schedule could be delayed due to project complexity, weather,
permitting delays, potential scheduling conflicts with the Alaskan Way
Viaduct Replacement and Tunnel Project, and the need to minimize
disruptions to Terminal 46 operations. This risk is expected to be partially
mitigated with a phased construction approach. 
Incremental costs due to expansion of project scope resulting from the
presence of contaminated materials, subsidence, or other unanticipated
damages. 
Project cost for    $20,000,000 to $35,000,000 for capital improvements specified in the 13th 
analysis          Amendment.
Business Unit
Container Operations 
(BU) 
Effect on business  Below is an estimate of the incremental impact of the 13th Amendment to the
performance     Terminal 46 lease on NOI after Depreciation. The results shown below for
years 2013 through 2018 reflect the initial six years of the new thirteen year
minimum annual guarantee (MAG) rent plus a container lift rate fee lease rate
structure.
Incremental impacts were calculated by comparing the new MAG lease rate
structure to the prior lease terms (at Eagle Rate) for the remaining 3 years of
the prior lease that was scheduled to terminate on December 13, 2015. If this
lease extension had not occurred, it was expected that Terminal 46 would
become vacant after 2015, so years 2016 through 2018 reflect the incremental
positive impact of the MAG lease rate structure.
The $4,000,000 impact fee paid to TTI in December 2012 (upon execution of
the 13th Amendment) is amortized over the thirteen-year term of the MAG
structure as a reduction in revenue, in accordance with GAAP guidelines for
financial reporting.
Net Operating Income  without new cranes: 
NOI (in $000's)           2013    2014    2015    2016    2017    2018
Incremental Revenue     (4,995)  (5,512)  (5,383)  10,205   10,590   10,876
Incremental Expense      (200)    (205)    (210)    (215)    (221)    (226)
NOI Before Depreciation   (5,195)   (5,717)   (5,593)   9,990   10,369   10,650
Depreciation - -   (535) (1,130) (1,724) (2,319)
NOI After Depreciation     (5,195)   (5,717)   (6,128)   8,860    8,645    8,331
Estimated annual depreciation is based on the $35,000,000 capital investment
(high end of the range). Actual depreciation will depend on the specific assets
constructed, and may be lower if the required terminal improvements can be

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
April 1, 2013 
Page 5 of 6 
constructed at a lower cost in the range of estimates provided.
IRR/NPV      The estimated incremental impact of the 13th Amendment to the Terminal 46
lease is shown below. The analysis results are based on the MAG lease rate
structure at Terminal 46 for the thirteen-year term from January 1, 2013, 
through December 31, 2025. Not included in the below calculations is the
opportunity cost of land or possible future investment in facilities, including
the T-46 Dock Rehabilitation project (C800603).
Financial Impacts  without new cranes
Terminal 46 Impact Only    NPV    IRR   Payback
(range of required investment)    (in $million's)           (in years)
$20 million capital investment   $22.2     18.6%     8
$35 million capital investment    $9.9     12.7%     9
The tenant has the option (until December 31, 2017) to request the Port to
purchase and install two new Super Post Panamax cranes. The analysis results
shown above does not include an investment in new cranes, as the tenant has
not yet exercised that option and, per the terms of the amendment, TTI will
reimburse the Port for the costs of the new cranes through a special
improvement rent.
Lifecycle Cost and Savings: 
Extending the useful service life of our existing assets defers eventual replacement costs, supporting the
economic vitality of our operations. 
STRATEGIC OBJECTIVES: 
This project will support our Century Agenda Strategic Objective to grow Seaport annual container
volume to more than 3.5 million TEUs. 
ENVIRONMENTAL SUSTAINABILITY: 
This project will provide the opportunity to apply environmental sustainability principles associated with
the new improvements, including: 
Practices to avoid and minimize potential negative environmental effects; 
Upgrading the drainage system to better manage stormwater; 
Improvements aimed to balance one-time capital improvement and annual maintenance and
operational costs. 
BUSINESS PLAN OBJECTIVES: 
Comply with Port responsibilities under the existing terminal lease agreement.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
April 1, 2013 
Page 6 of 6 
TRIPLE BOTTOM LINE SUMMARY: 
Maintaining Terminal 46 as an operating container terminal is key to the Port meeting its Century
Agenda strategies of increasing container volume in Seattle to 3.5 million TEUs and doubling the value
of exports from Seattle. Environmental sustainability principles will be employed consistent with Port
policy. In addition, procedures set forth in the Port's Small Contractors and Suppliers Program and other
small business participation opportunities in support of the Century Agenda goals will be used when
applicable in the project contracting process. 
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS: 
Alternative 1: No action. Delay or cancellation of the project work would violate the terms of the lease
amendment. 
Alternative 2: Request Commission authorization with individual projects. This action would not allow
maximum efficiency of a coordinated design approach, and increase in both construction and soft costs.
This would create additional burdens on terminal operation due to a lack of coordination on the required
improvements. 
Alternative 3: Proceed with action request. Comply with the terms of the lease amendment. This is the
recommended alternative. 
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST: 
None 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS: 
On December 11, 2012, Commission approved execution of the 13th amendment to the lease for
Terminal 46 with Total Terminals, Inc.