Template revised September 22, 2016 COMMISSION AGENDA MEMORANDUM Item No. CTION ITEM March 28, 2017 Amount of this request: $751,100 Total estimated project cost: ACTION REQUESTED Request Commission authorization for the Chief Executive Officer to execute all documents necessary to complete the vacation of streets within the Northeast Redevelopment Area 2 (“NERA 2”) within t he City of Burien for a total request of $751, JUSTIFICATION The Port is pursuing development of light industrial facilities on Port owned property in NERA to support the Port’s Century Agenda goal s. This project is a large step forward in pursuing the Century Agenda Strategy of “Positioning the Puget Sound region as a premier international ��COMMISSION AGENDA Action Item No. ____ Page of Template revised September 22, 2016 ; format updates October 19, 2016 logistics hub.” In addition, it furthers the Airport’s strategic goal of maximizing non aeronautica income. Vacation of the streets creates a contiguous parcel of sufficient size to accommodate industrial development. At its November 22, 2016, meeting, the Commission approved a long term ground lease with Seattle Gateway 2, LLC, for the NERA 2 proper . The street vacations are requisite to the Port’s obligations under the NERA 2 ground lease DETAILS The Port and City of Burien have been working collaboratively for many years with a common vision of developing approximately 158 acres of property in Burien, of which the Port owns portion . The results of this joint work have been many including: n inter local agreement that defined steps for development. Building of the first phase of a storm water treatment facility that now serves Port property in NERA. Successfully master planning and zoning of the entire area. Collaborating on a new State Route 518 off ramp serving the area, now fully funded and in design. Successfully obtaining a $5,000,000 FAA grant for study and design of infrastructure req uired to develop NERA. The proposed development of the two properties (NERA 2 & NERA 3) by Panattoni Development Compa each ground leased to Panattoni limited liability companies, Seattle Gateway 2 LLC, and Seattle Gateway LLC, respectively, will create approximately 432 ,000 square feet of manufacturing, office, and supporting warehouse functions across the NERA 2 & 3 sites. Tenants will include food processors, manufacturers, and logistics and cold storage providers It is estimated that the futu re tenants will provide p to 500 600 family wage jobs. Construction of the site will be completed subject to the State of Washington prevailing wage and there will be an outreach for apprentice and small business participation. Scope of Work Execute a ll documents necessary to complete vacation of the streets from the City of Burien. Schedule The City of Burien intends to complete vacation of the streets in 2Q 201 ��COMMISSION AGENDA Action Item No. ____ Page of Template revised September 22, 2016 ; format updates October 19, 2016 ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 Do not complete vacation of the streets from the City of Burien. Cost Im plications: Savings of $7 51,100. Pros (1) The Port would not have to pay $7 51,100 to the C ity of Burien. (2) The property would be available for some other potential smaller use that could fit on the property with the existing streets in place. Cons (1) The Port would not receive $272,163 in annual rent equal to almost $15 million over the initial lease term (55 years) without considering escalations (minimum of 10% increase per each 5 year period) (2) her e would not be a leasehold excise tax paid of almost ,000 per year. (3) New construction jobs and permanent family wage jobs would not be created. This is not the recommended alternative. Alternative 2 Execute all documents necessary to complete vacation of the streets from the City of Burien. Cost Implications: 51,100 Pros (1) The Port would eceive $272,163 in annual rent equal to almost million over the initial lease term (55 years) without considering escalations (minimum of 10% increase per each 5 year period). (2) There w leasehold excise tax paid of almost $35 ,000 per year. (3) New construction jobs and permanent family wage jobs would be created. Cons (1) The Port would have to pay $7 51,100 to the C ity of Burien. (2) The property would not be available for some other potential smaller use that could fit on the property with the existing streets in place. This is the recommended alternative. ��COMMISSION AGENDA Action Item No. ____ Page of Template revised September 22, 2016 ; format updates October 19, 2016 FINANCIAL IMPLICATIONS Cost Estimate /Authorization Summary Capital Expense Total COST ESTIMATE Original estimate 51,100 51,100 AUTHORIZATION Previous authorizations Current request for authorization 51,100 51,100 Total authorizations, including this request 51,100 51,100 Remaining amount to be authorized Annual Budget Status and Source of Funds The funds will be from Airport Development Funds Future Revenues and Expenses ( Total cost of ownership ATTACHMENTS TO THIS REQUEST (1) City Council Ordinance (2) Presentation slide PREVIOUS COMMISSION ACTIONS OR BRIEFINGS November 22, 2016 NERA 2 Ground Lease approved by Commission