COMMISSION 
AGENDA MEMORANDUM                        Item No.          8l 
ACTION ITEM                            Date of Meeting     November 9, 2021 

DATE :     October 25, 2021 
TO:        Stephen P. Metruck, Executive Director 
FROM:    Jessica Carlson, Senior Real Estate Manager 
Trevor Panger, Real Estate Property Manager 
Melinda Miller, Director, Real Estate Asset Management 
SUBJECT:  Fourth Amendment to Ground Lease with Duke's Shilshole Bay Chowder House
LLC. at Shilshole Bay Marina 
Amount of this request:                    $0.00 
Total estimated project cost:                $0.00 
ACTION REQUESTED 
Request Commission authorization for the Executive Director to execute the fourth amendment
to the ground lease with Duke's Shilshole Bay Chowder House LLC, for a new restaurant
currently in the design stage, to increase the square footage of the premises with resulting
increased rent based on a newly submitted design footprint, substantially similar to the exhibit
shown  in the attached draft amendment. If approved, the proposed amendment would, 
effective December 1, 2021, increase the square footage from 6,040 square feet to 7,822 
square feet. No other substantive provisions beyond an increase to the Premises,  and
proportional increase in the total rent, are being sought. 
EXECUTIVE SUMMARY 
In June of 2020, the ground lease with Duke's Shilshole Bay Chowder House LLC was amended
(Third Amendment) with a smaller footprint to allow for unprecedented pandemic disruptions
with unknown durations; most pressingly, drastically increased construction costs and troubling
forecasts of COVID-19's long-term effects on the dining industry. With more than a full
additional year of experience navigating the operational challenges of rapidly alternating
market and staffing conditions, and with construction costs becoming more stable and
manageable, Duke's has been able to reassess the risk factors of returning to a slightly larger
design for their building and trusting in its financial viability. 
Another factor was the failure of key benefits to materialize from a proposed innovative design
and operational model proposed by a consultant that promised to maximize the functionality

Template revised January 10, 2019.

COMMISSION AGENDA  Action Item No. 8l                                   Page 2 of 4 
Meeting Date: November 9, 2021 
and profitability of smaller scale kitchen and prep areas. No other provisions of the ground
lease, as previously amended, will be altered with this Fourth Amendment, and the only
consequences to the Port will be a proportional increase in rent and taxes based on the added
square footage. 
JUSTIFICATION 
While currently in design, approval of the amendment will not alter prior ground lease
provisions as previously amended, such as existing "Construction Phase" rent being paid or the
scheduled start of "Post Construction Phase" rent set for April 1, 2023, regardless of whether 
construction is completed or not. 
The expansion model is in response to the current market, including the impact of COVID,
which includes accommodations for requirements of physical distancing. 
The benefits to Duke's are readily apparent  more seating capacity allows for higher revenue;
and a larger kitchen ensures more consistent control over menu offerings while allowing for
easier adaptations across Duke's locations to maintain a unified, signature brand of seafoodcentric
dining. 
To the Port's benefit, allowing for an expanded capacity for guests and a more full-range menu
will only advance Shilshole Bay Marina's operational goal of providing a first-class facility to its
water-dependent customers. The expansion will not only further enrich the live-aboard lifestyle 
at the marina,  it will  also foster  a more vibrant and diverse draw of visitors from the
surrounding neighborhoods, the region, and much farther locations, including tourists wanting
memorable experiences of the Puget Sound, showcasing the recreational boating industry, our
other tenant services, and the diversity of roles that the Port plays in the larger community. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Duke's management proposed the expansion of their premises to better reflect the anticipated
future viability of the restaurant which is better understood as impacts of the pandemic have
become clearer. 
Alternative 1  Reject Duke's proposal for a lease amendment. 
Cost Implications: this alternative would have no impact on costs. 
Pros: 
(1)   None. 
Cons: 
(1)   The Port would not see the substantial increase in rent with proposed increase in
leasehold size. 
(2)   Marina customers and visitors would be denied a restaurant with increased seating
capacity and a more diverse menu that a larger kitchen could provide. 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8l                                   Page 3 of 4 
Meeting Date: November 9, 2021 
(3)   Restaurant operations would be more strained in attempts to maintain physical
distancing for staff and guests. 
This is not the recommended alternative. 
Alternative 2  Agree to terms as initially proposed by Duke's. 
Cost Implications: this alternative would have no impact on costs. 
Pros: 
(1)   Significant increase to Port revenue. 
(2)   More marina customers and visitors could be accommodated without waiting, and
would have a more ideal dining experience with the larger kitchen. 
(3)   More physical distancing possible for staff and guests. 
Cons: 
(1)   None. 
This is the recommended alternative. 
FINANCIAL IMPLICATIONS 
This is a ground lease and the development and construction costs are borne by the tenant.
There are no incremental costs to the Port for this request 
Financial Analysis and Summary 
Project cost for analysis              No incremental costs to the Port for this request 
Business Unit (BU)                  Maritime Portfolio Management 
Effect on business performance    This amended lease agreement will generate the Total
(NOI after depreciation)             Cash Flow of $3,537,781 for the remainder of the lease
term until April 30, 2041. The first-year post-construction
lease revenue for this amendment will be $112,871.
IRR/NPV (if relevant)                Total Effective Rent: $3,537,781 
Discounted Effective Rent at 4.5%: $2,023,244 
CPE Impact                       N/A 
Future Revenues and Expenses (Total cost of ownership) 
Future revenues will be generated based on lease rates and terms stated above in the fourth 
amendment. 
ATTACHMENTS TO THIS REQUEST 
(1)   Draft Fourth Amendment to the Ground Lease 


Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8l                                   Page 4 of 4 
Meeting Date: November 9, 2021 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
June 23, 2020  Commission authorized Third Amendment to the Ground Lease 
September 24, 2019  Commission authorized Second Amendment to the Ground Lease 
January 9, 2018  Commission authorized First Amendment to the Ground Lease 
May 9, 2017  Commission approved the Ground Lease with Duke's Chowder House, LLC 
















Template revised June 27, 2019 (Diversity in Contracting).