PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6a 
ACTION ITEM 
Date of Meeting     January 12, 2016 
DATE:    January 6, 2016 
TO:      Ted Fick, Chief Executive Officer 
FROM:   Michael Ehl, Director, Airport Operations 
Paul Bintinger, Senior Port Counsel 
SUBJECT:  Settlement Agreement and First Amendment to Concession Agreement with Puget
Sound Dispatch, LLC 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to execute a Settlement
Agreement and First Amendment to Concession Agreement, both with Puget Sound Dispatch,
LLC, related to its operation of outbound, on-demand taxi operations at Seattle-Tacoma
International Airport. 
SYNOPSIS 
Staff seeks authorization to execute both a Settlement Agreement and a First Amendment to
Concession Agreement with Puget Sound Dispatch, LLC, dba Yellow Taxi ("PSD") to address
certain internal audit findings. PSD currently holds the concession for outbound, on-demand taxi
service from the Airport. A recent Internal Audit Report identified the likelihood of underreporting
of gross receipts by PSD and a consequent underpayment of concession fees. As
recommended by the Internal Audit Report, Port management has worked with PSD to quantify
the underpaid concession fees, seeks to execute a Settlement Agreement memorializing the
amount of the underpayment, and also recommends a First Amendment to the Concession
Agreement to mitigate the risk of under-reporting until the concession agreement ends. 
BACKGROUND 
PSD was selected as the exclusive provider of outbound, on-demand taxi service from the
Airport in a request for proposals process conducted in 2009. PSD started providing outbound,
on-demand taxi service beginning November 1, 2010. PSD is obligated to pay the Port the
greater of a minimum annual guarantee of $3.67 million or thirteen percent (13%) of its annual
gross receipts. However, under the terms of the Concession Agreement executed by PSD, the
parties recognized that outbound, on-demand taxi service would be provided by independent
contractors and, as a result, PSD may not have complete visibility into the gross receipts
generated by those independent contractors.  The parties thus  agreed to utilize the best
information available to PSD to determine an average fare, which would then be multiplied by
the reconciled number of outbound trips to determine the total gross receipts. 

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
January 6, 2016 
Page 2 of 4 
Since commencement of its operations, PSD has paid the minimum annual guarantee in equal
monthly amounts. PSD has also provided monthly reports of its gross receipts. Those reports
identified an average fare and specific number of trips for a variety of locations. The reports
reflected that the amount of the minimum annual guarantee exceeded 13% of PSD's extrapolated
gross receipts; as a result, no separate concession fee was paid by PSD. 
However, questions about PSD's gross receipts began to surface in mid-2015. PSD implemented
a new computer system in the second quarter of 2015 that captured, albeit incompletely, more
detailed information about the outbound, on-demand trips from the airport. More specifically, the
system captured dates, times, locations, and the metered fare for a majority of the trips from the
airport. In addition, other stakeholders began to question whether PSD's revenue reporting was
correct. As a result, the Managing Director of the airport asked the Port's Internal Audit
department to conduct an audit of PSD's concession agreement to determine whether PSD had
complied with the terms of the agreement. 
As requested, the Internal Audit department completed an audit of the concession agreement
between the Port and PSD. Internal Audit sought to determine, among other things, whether the
Port management's monitoring controls were adequate to ensure compliance with the agreement
as well as whether PSD appropriately reported gross receipts and properly calculated concession
fees. Internal Audit Report No. 2015-13 was issued December 1, 2015 and is scheduled to be
presented to the Port's Audit Committee prior to the January 12, 2016 Commission meeting. The
Internal Audit Report concluded that Port management's monitoring controls were inadequate to
address the unique risk presented by "average fare" methodology for determining gross receipts
set forth in the concession agreement. The Internal Audit Report further concluded that PSD
inaccurately and incompletely reported its gross receipts. However, the Internal Audit Report
noted that key information necessary to calculate the precise extent of under-reporting were not
available. As a result, the Internal Audit Report recommended that Port management work with
PSD to determine the impact of under-reported gross receipts on the concession fee. 
Consistent with the Internal Audit Report's recommendation, Port staff has met and
communicated with PSD staff repeatedly over the months of November and December 2015.
Leveraging the work undertaken by the Internal Audit team as well as the new information
available through PSD's recently implemented computer system, the Port and PSD have been
able to agree on a current average fare for outbound, on-demand trips from the Airport  $38.58.
This average rate has then been regressed backwards in time to account for two fare increases
approved by King County since the commencement of operations under the concession
agreement. The Port and PSD have also been able to agree on an appropriate, historical
adjustment to the total number of outbound trips from the Airport, as measured by the Port's
automated vehicle identification (AVI) system, to account for non-revenue trips. Combining this
information, the parties agree that under-reported concession fees total $879,535.00. 
Port staff now seeks Commission authorization to execute a Settlement Agreement with PSD
memorializing this amount. The full amount due will be payable on or before January 31, 2016.
If PSD is unable to pay the full amount, the Port intends to draw upon the security provided by

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
January 6, 2016 
Page 3 of 4 
PSD to support the concession agreement. Given the Internal Audit Report's conclusions about
the failures on both the Port's and PSD's sides, however, Port staff is recommending that the
Port waive late fees, interest and audit costs that would otherwise be due under the terms of the
concession agreement. 
Port staff also seeks approval to execute a First Amendment to Concession Agreement with PSD.
The purpose of the First Amendment is two-fold. First, recognizing the difficulty of accurately
accounting for PSD's gross receipts, Port staff seeks to convert PSD's financial obligation under
the Concession Agreement to a per-trip fee for the period November 1, 2015 through the end of
the agreement. The amount of the proposed per-trip fee is $5.01, or 13% of the $38.58 average
fare identified as the basis for the proposed settlement. Second, Port staff seeks to extend the
term of the concession agreement until June 30, 2016  the term necessary for the Port to
complete a request for proposals process for a successor operator and conduct an orderly
transition. A separate Commission request seeks permission to proceed with this process. By its
terms, the concession agreement expired on October 31, 2015. While the agreement has
continued on a month-to-month basis, the Port seeks to introduce more certainty around the
remaining term for the benefit of both taxi operators and those who would compete for the new
opportunity. 
STRATEGIES AND OBJECTIVES 
The proposed Settlement Agreement and First Amendment resolve questions and reduce risk
around the current outbound, on-demand taxi concession and permits the Port to move forward
with a new request for proposals process. This concession generates critical non-aeronautical
revenue and will help the Port to meet region's air transportation needs at Seattle-Tacoma
International Airport for the next 25 years. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Do not approve either the Settlement Agreement or the First Amendment to
Concession Agreement. 
Pros: 
None. 
Cons: 
This will leave the issue of under-reporting unresolved with no clear path to
resolution. Port staff has worked with PSD to identify the best-available data in order
to determine an average fare, as required by the terms of the concession agreement. It
is unclear what additional information may be used to make a better determination of
this value. 
The failure to approve the First Amendment continues to leave the Port exposed to
continued problems around the determination of gross receipts. 
This is not the recommended alternative.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
January 6, 2016 
Page 4 of 4 
Alternative 2)  Approve the Settlement Agreement but not First Amendment. 
Pros: 
Approval of the Settlement Agreement will address the issue of previous underreporting.
Cons: 
Failure to approve the First Amendment will leave Port exposed to the problem of
future under-reporting. 
This is not the recommended alternative. 
Alternative 3)  Approve both the Settlement Agreement and the First Amendment. 
Pros: 
This alternative addresses all of the concerns identified in the Internal Audit Report. 
Cons: 
None. 
This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Draft Settlement Agreement 
Draft First Amendment to Concession Agreement 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
December 15, 2009  The Port Commission authorized the Chief Executive Officer to
award the contract for on-demand taxi services to Puget Sound Dispatch, LLC. 
June 14, 2011  The Port Commission ratified the Chief Executive Officer's exercise of
delegated authority related to the terms of the August 6, 2010 Concession Agreement
with Puget Sound Dispatch, LLC. 
October 6, 2015 Audit Committee Meeting  The Audit Committee approved an
addition to 2015 Internal Audit Work Plan to undertake an audit of the Puget Sound
Dispatch, LLC concession agreement. 
January 6, 2015 Audit Committee Meeting  The Internal Audit department presented
its Audit Report No. 2015-13 related to Puget Sound Dispatch, LLC to the Audit
Committee.