THIRD-PARTY MANAGEMENT SERVICES AGREEMENT                 INTERNAL AUDIT 
Bell Harbor International Conference Center / World Trade Center 
BACKGROUND 
Bell Harbor International Conference Center and the World Trade Center are public facilities 
owned by the Port of Seattle. On June 1, 2012, the Port of Seattle entered into a third party 
management agreement with Columbia Hospitality, Inc. (CHI) to manage operations for Bell 
Harbor International Conference Center (BHICC) and the World Trade Center (WTC). The 
initial term of the agreement is 10 years, expiring on May 31, 2022. 
CHI receives a base management fee equal to 3.5% of gross revenues. If net operating profit 
is greater than or equal to 15% of the gross revenue, CHI receives an incentive management 
fee equal to 15% of the net operating profit. 
AUDIT OBJETIVES AND SCOPE 
FINANCIAL HIGHLIGHTS 

BELL HARBOR INTERNATIONAL CONFERENCE CENTER 
REVENUE AND EXPENSE DESCRIPTION                               2015           2016 
REVENUES                                                             $8,844,226         $6,669,867 
EXPENSES (EXCLUDING BASE AND INCENTIVE MANAGEMENT FEES)                  (6,568,645)                (5,535,645) 
BASE MANAGEMENT FEE                                                    (309,576)               (233,417) 
INCENTIVE MANAGEMENT FEE                                                  221,268                  31,538 
NET OPERATING PROFIT                                                       $1,966,005*         $900,805* 
Data Source: PeopleSoft Financials (*Includes Smith Cove Conference Center Data) 


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THIRD-PARTY MANAGEMENT SERVICES AGREEMENT                 INTERNAL AUDIT 
Bell Harbor International Conference Center / World Trade Center 

FINANCIAL HIGHLIGHTS (continued) 

WORLD TRADE CENTER 
REVENUE AND EXPENSE DESCRIPTION                                2015           2016 
REVENUES                                                               $1,245,568         $1,297,661 
EXPENSES (EXCLUDING BASE AND INCENTIVE MANAGEMENT FEES)                     (873,483)          (976,478) 
BASE MANAGEMENT FEE                                                (43,595)               (45,418) 
INCENTIVE MANAGEMENT FEE AUDIT OBJETIVES AND SCOPE                                            (43,204)                (34,915) 
NET OPERATING PROFIT                                                 $328,490         $275,765 
Data Source: PeopleSoft Financials 







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THIRD-PARTY MANAGEMENT SERVICES AGREEMENT                 INTERNAL AUDIT 
Bell Harbor International Conference Center / World Trade Center 

AUDIT OBJECTIVES AND SCOPE 
The purpose of the audit was: 
1. To determine whether Port management internal controls were effective to ensure: 
a. Reported revenues and operating expenses were complete and accurate. 
b. Expenses were appropriate and in accordance with the Agreement terms and 
conditions. 
c. Related party events were held in accordance with the Agreement terms and 
conditions. 
2. To ensure Columbia Hospitality, Inc. complied with significant terms of the Agreement. 
We reviewed and analyzed records for the Audit period. For purposes of rendering our 
opinion, we focused on the period January 1, 2015 through December 31, 2016. 


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THIRD-PARTY MANAGEMENT SERVICES AGREEMENT                 INTERNAL AUDIT 
Bell Harbor International Conference Center / World Trade Center 
AUDIT RESULT 
CHI generally complied with key terms in the contract. 
We identified opportunities for management to strengthen monitoring controls. We also identified 
an opportunity to amend the contract. 
AUDIT RESULT REPORTABLE FINDING 
a.  Internal Controls could be improved to ensure compliance with the terms of the Agreement. 
The Port overpaid payroll by approximately $26,300. 
b.  Related and Affiliated Party Transactions - The agreement is silent regarding the use of Port 
owned facilities by CHI. We identified more than 100 CHI events, including team member 
orientations, employee parties, and trainings, in which CHI held events at BHICC at a 
discounted rate (68% discount). Some of these events were held at affiliate locations. 



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THIRD-PARTY MANAGEMENT SERVICES AGREEMENT                 INTERNAL AUDIT 
The Airport Club at SEA Lounges 
BACKGROUND 
The Port of Seattle owns the Club at SEA lounges at the Sea-Tac airport 
(formerly known as - the International and Cascade Clubs). 
The Port has outsourced the day-to-day management of the Club at SEA lounges 
to ALD. The services include sales and marketing, airlines services, solicitation 
of new clients, and overall accounting services for both lounges. 
ALD receives a base management fee of $15,208 per month, and an Incentive 
Management Fee up to 6% of the Net Operating Profit. 
AUDIT OBJETIVES AND SCOPE 
FINANCIAL HIGHLIGHTS 
NET INCOME FOR THE 12 MONTH PERIOD ENDING MARCH 31, 2016
Gate - A          Gate - S             Total
Revenue                                      $836,468         $1,941,407         $2,777,875
Expense                                         349,807            861,103                  1,210,910 
Total Net Income                                    $486,661          $1,080,304          $1,566,965
Source: The Club at SEA Financial Statements


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THIRD-PARTY MANAGEMENT SERVICES AGREEMENT                 INTERNAL AUDIT 
The Airport Club at SEA Lounges 

AUDIT OBJECTIVES AND SCOPE 
The purpose of the audit was: 
1) To determine whether management controls were effective to ensure: 
a)airlines usage billings/invoices (revenue) were complete and accurate 
b) lounge expenses were   proper and in accordance with the terms of the 
agreement 
2) To determine whether Airport Lounge Development Corporation (ALD) complied 
with significant terms of the agreement, including the City of SeaTac Proposition-1 
for minimum wage rates. 

We reviewed information for the period April 1, 2015 through March 31, 2016. 


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THIRD-PARTY MANAGEMENT SERVICES AGREEMENT                 INTERNAL AUDIT 
The Airport Club at SEA Lounges 
AUDIT RESULT 
Airport Development Lounge Corporation materially complied with the significant 
terms of the management agreement. We; however, determined that Port management 
monitoring controls can be improved.  The Port overpaid compensation costs, benefits, 
and  payroll  taxes  by  a  net  amount  of  $54,139.  It  also  overpaid  insurance  by 
approximately $4,222. In addition, we noted some instances where time card reports 
were  not available to support  hours worked. See the Schedule  of Findings and 
Recommendations. 
AUDIT RESULT REPORTABLE FINDING 
1.  MANAGEMENT CONTROLS NEED IMPROVEMENT 
a. Payroll was overpaid by $54,139 
b. Lack of Support for some hours worked and charged to the Port 
c. We observed the Port was charged and paid for non-required insurance. ALD allocated 
$4,222 from its umbrella commercial property insurance to the Port.  The Port is selfinsured
for its properties and does not require commercial property insurance. Therefore, 
this was unnecessary cost. 
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LIMITED OPERATIONAL AUDIT                                    INTERNAL AUDIT 
Centralized International Support Services Agreement 
BACKGROUND 
On December 8, 2014, the Port of Seattle entered into Agreement with VIP 
Hospitality to provide passenger and baggage services in the Federal Inspection 
Services (FIS) area. VIP staff assist the Customs and Border Patrol (CBP) officers 
in facilitating the movement of international passengers and baggage through 
FIS area. 
FINANCIAL HIGHLIGHTS 
PORT OF SEATTLE PAYMENTS TO VIP HOSPITALITY
PERIOD                               2015                2016
JANUARY - MARCH                            $297,151                 $391,481
APRIL - JUNE                                      411,961                            646,864 
JULY - SEPTEMBER                               393,226                          494,705 
OCTOBER - DECEMBER                          381,555                         578,719 
TOTAL                           $1,483,893           $2,111,769
Data Source: PeopleSoft Financials



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LIMITED OPERATIONAL AUDIT                                    INTERNAL AUDIT 
Centralized International Support Services Agreement 

AUDIT OBJECTIVES AND SCOPE 
The purpose of the audit was: 
1) To determine whether management internal controls are effective. 
2) To ensure VIP complied with significant terms in the contract. 
3) To ensure compliance with the City of SeaTac Proposition-1 for minimum hourly 
wage rates. 
We reviewed and analyzed records for the period January 2015 through February 2016. 




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LIMITED OPERATIONAL AUDIT                                    INTERNAL AUDIT 
Centralized International Support Services Agreement 
AUDIT RESULT 
From January 2015 to February 2016 internal controls were not operating effectively. As a 
result, the Port overpaid VIP $55,000. 
VIP complied with the significant terms in the contract. 
VIP complied with the City of SeaTac Proposition 1  minimum hourly wages (from December 
1, 2015 through December 31, 2016. 
. 
AUDIT RESULT REPORTABLE FINDING 
1.  INTERNAL CONTROLS WERE NOT EFFECTIVE TO ENSURE ACCURACY OF PAYMENTS 
Between January 1, 2015 through February 29, 2016, VIP billed rates that were not 
included in the contract. Management knowingly authorized invoiced rates that did not 
agree to the terms and rates in the agreement. Although Port management reviewed and 
approved the invoices, the review was not effective at preventing the overpayment. As a 
result, the Port overpaid VIP by $55,000 from the period January 1, 2015 through 
February 29, 2016. 

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