PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      3b 
ACTION ITEM 
Date of Meeting     August 11, 2015 
DATE:    August 7, 2015 
TO:      Ted Fick, Chief Executive Officer 
FROM:   Linda Styrk, Managing Director Maritime 
Michael McLaughlin, Director Cruise & Maritime Operations 
Melinda Miller, Director, Portfolio & Asset Management 
SUBJECT:  Bell Street Cruise Terminal Lease Agreement 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to finalize negotiations and
execute: (1) Lease Agreement with Norwegian Cruise Line Holdings Ltd. at the Bell Street
Cruise Terminal at Pier 66; (2) Sublease Agreement with Norwegian Cruise Line Holdings Ltd.;
(3) Amended and Restated Cruise Terminal Lease Agreement with Cruise Terminals of
America LLC; (4) Second amendment to the Conference and Event Center Management
Agreement with Columbia Hospitality Inc.; (5) Lease Agreement with Columbia Hospitality Inc.
for premises in the World Trade Center West building; (6) As necessary to meet the Port's
obligations under the Bell Street Cruise Terminal Lease Agreement, an authorization for an early
lease termination agreement with owners of the Bell Street Deli; w ith the exception of item #6,
all substantially in the form provided with this memo. 
SYNOPSIS 
The Bell Street Cruise Terminal at Pier 66 opened in 1999 and was originally designed and
constructed for much smaller cruise ships than the larger ships of today and is becoming
obsolete. The new lease of the Bell Street Cruise Terminal will be with Norwegian Cruise Lines
Holdings LTD (NCHL/tenant) for a base term of 15 years with a 5-year option to extend. With
authorization,  this lease agreement  will be effective October 1,  2015.  The tenant will
immediately start the much needed renovation of the cruise terminal facility to accommodate
their growing business needs of continued homeporting their vessels in Seattle. The most critical
element of this project is the schedule. NCLH would like to open a new and improved Bell Street
Cruise Passenger Terminal at Pier 66 in April  of  2017. NCLH will undertake tenant
improvements to the premises including design, permitting, and construction. The project scope
of work will primarily pertain to improvements specific to the continued use of the facility as a
Cruise Passenger Terminal. As an additional element of work during the construction project,
some fit and finish improvements will be made to the facility by NCLH that solely pertain to the
use of the facility in the off-season as an events venue. The Port will provide a tenant
improvement allowance equal to 50 percent of the cost undertaken by NCLH not to exceed

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
August 7, 2015 
Page 2 of 10 
$15 million. As a public-private partnership project, the Port will provide funds estimated at
$2 million  for the collective costs related to lease terminations, lease amendments and
restatement of existing leases, relocation costs for affected Port tenants, mitigation fund for
construction impacts that may affect the conference and event center, and fit and finish items to
enhance event use. Plans and specifications are subject to the Port's review and approval. A
project labor agreement will be executed before construction begins between NCLH contractors
and the building trades. 
The Port will sublease the facility back from NCLH annually commencing the end of the 2017
cruise season in order to utilize the facility for event activities. The Port will also reserve a
license to conduct events when facilities are available during the cruise season. 
The third amendment and restatement of lease to the Cruise Facility Lease Agreement with 
Cruise Terminals of America (CTA) would remove the Bell Street Cruise Terminal from the
lease agreement. CTA will continue to lease Smith Cove Cruise Terminal at Terminal 91. 
The redesign of the space at Pier 66 within the building footprint maximizes efficiencies in
passenger flow and space utilization. This requires repurposing space inclusive of the Maritime
Event Center, Columbia Hospitality Inc. administrative offices, the Bell Street Deli and some
existing non-waterfront dependent tenant office space. 
The Port of Seattle currently employs Columbia Hospitality Inc. (CHI) as the manager of the Pier
66 conference and event centers. Under the terms of CHI's management agreement, it has rights
in certain portions of the Bell Street Cruise Terminals. The new lease would limit CHI's right to
make use of the Bell Street Cruise Terminal Lease Area. Therefore, an amendment to the
Conference and Event Center Management Agreement and the creation of a mitigation fund is
necessary. The current conference center including the additional support kitchen would remain
intact. 
CHI also has a lease for office space within the footprint of the new design. This authorization
includes their relocation to the World Trade Center West building for a term of not more than
five years and two months with relocation and improvement allowance not to exceed $500,000. 
Lastly, the renovation includes the installation of an automated luggage conveyer system that
would efficiently move passenger luggage from curbside to ship, allowing more overlap between
passenger disembarkation and the embarkation process. The need for street-facing space to build
improvements to efficiently receive embarking passenger luggage and transfer passenger luggage
to the ship will displace the Bell Street Deli. The current lease with the deli runs through June of
2016. We request authorization for an early lease termination agreement with the deli as needed
to accommodate the construction schedule. 
BACKGROUND 
Norwegian Cruise Line was the catalyst for substantial growth in the Seattle-to-Alaska cruise
market when it became the first cruise line to homeport a vessel at the Port of Seattle in 2000 at

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
August 7, 2015 
Page 3 of 10 
Pier 66. Since that time, cruise lines continue to build bigger vessels. The Port of Seattle and
Norwegian Cruise Line have been in discussions around a long-term preferential berthing
agreement in recent years and Norwegian Cruise Line has expressed concerns about the aging
Pier 66 cruise facility's not being able to continue to meet their cruise line's needs as a homeport
facility, considering the changes occurring in the industry with the deployment of larger vessels
in all major cruise brands serving markets around the world including Alaska. 
In the spring of 2014 Norwegian Cruise Lines began discussions with Port staff regarding
feasibility of expansion to improve passenger terminal efficiencies in anticipation of their
expected growth in their homeport cruise business serving Alaska from the Bell Street Cruise
facility. Throughout the last year, Port staff has worked with NCLH to perform feasibility studies
and concept development for expanding the cruise facility. The focus of this work was to address
the performance concerns of the aging facility, which is over 15 years old and approaching
obsolescence. 
In the fall of 2014, Norwegian Cruise Line acquired Prestige Cruise Holdings Inc. and
Norwegian Cruise Line Holdings Ltd. is now the parent company of Norwegian Cruise Line
Corporation and Prestige Cruise Holdings, which operates global cruise lines under Norwegian
Cruise Line, Oceania Cruises, and Regent Seven Seas brands. The Port of Seattle is a homeport
to both Norwegian Cruise Line and Oceania and also sees an occasional port of call from a
Regent Seven Seas vessel. 
In April 2015 formal negotiations commenced between the Port and NCLH for a potential
public-private partnership focused on improving the aging Pier 66 facility and securing the cruise
business of NCLH in Seattle through a long-term lease of Bell Street Cruise Terminal. NCLH
contracted with design consultant Bermillo Ajamil & Partners Inc. to produce conceptual
drawings of a proposed renovation project of the Pier 66 cruise facilities inclusive of expansion
of the cruise passenger terminal area into areas currently occupied by other uses. Design work
included discussions with U.S. Customs and Boarder Protection (CBP) to ensure the proposed
design for improvements would also meet the requirements of CBP passenger processing.
Through a series of meetings with CBP Area Port Director and Seattle team, CBP has provided
input to the re-design of the terminal and expressed support of the project. 
A Letter of Intent between the Port of Seattle and NCLH was executed on July 15. Intense lease
negotiations, project cost estimating and scheduling, design concept refinements and
collaboration with other leasehold tenants currently operating at Pier 66 have occurred over the
last month. The results of Port staff working together with our customers has produced an
historically unprecedented public-private partnership that  protects a major portion of our
homeport cruise business in Seattle, grows quality family-wage jobs for many years, allows for
public-private partnering on investment in Port facility improvements, and secures significant
economic benefits for our region.
The Port has contracted with Cruise Terminals of America (CTA) to manage cruise operations
since May 2000 when the Port began its homeport cruise business. With the dramatic growth in

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Ted Fick, Chief Executive Officer 
August 7, 2015 
Page 4 of 10 
cruise business, the Port opened an interim cruise terminal at Terminal 30. The First Amendment
to Cruise Facility Lease Agreement was signed in 2006 to reflect the relocation of the second and
third cruise berths to the Port's newly built Smith Cove Cruise Terminal at Terminal 91. The
current lease agreement with CTA extended their seven-year lease an additional seven years. As
a condition of the agreement with NCLH, a third amendment to the Cruise Facility Lease
Agreement would remove the Bell Street Cruise Terminal from the lease agreement. The Port
and NCLH have cooperatively worked with Cruise Terminals of America to negotiate such an
amendment and restatement of the CTA Lease. 
Summary Lease Information  Full documents attached 
New Lease Bell Street Cruise Terminal Pier 66 with Norwegian Cruise LineHoldings 
(NCLH). The new lease will include approximately 152,000 square feet of finished space within
the Pier 66 facility to be used as a cruise passenger terminal after the completion of the tenant
improvements. The lease premises will also include the apron/dock structure/cruise ship berth.
The tenant will be responsible to undertake tenant improvements and manage the cruise terminal
operations at Pier 66 as described in attached documents. 
a)  Premises: Bell Street Cruise Terminal (BSCT) to be expanded per design concept
drawings 
b)  Term: 15 years through year 2030 Cruise season + 5 year option to extend through 2035 
c)  Investment Cost Split: Up to $15 million from Port, $15 million plus from NCL for Pier
66 Improvements 
d)  Rights & Maintenance: NCLH shall have rights during cruise season; 
a.  The Port will have rights during off-season through a sublease agreement. 
b.  NCLH will be responsible for cruise operations equipment maintenance 
c.  The Port will maintain the terminal building: its systems and the dock structure 
e)  A fee structure will be established that includes Port Directed Cruise Fees, Marketing
Allowance, Passenger Incentive, and New Business Incentive. 
f)  Operational Cost Offset: provision to accommodate NCLH cost of starting up operations 
g)  Estimated Net Returns (Adjusted Impacts: Estimated $73 million to Port; $11,000 to
NCLH over 15 years) 
h)  Agreement conditioned on reaching agreement on amendments to the Port's CTA and
CHI agreements 
i)  NCLH agreed to pay prevailing wage rates for construction contracts to undertake tenant
improvements and a Project Labor Agreement (PLA) will be established between NCLH
contractor and the building trades unions prior to the commencement of work
j)  Port to provide funds estimated at $2 million to cover costs of termination agreements,
tenant relocation costs, mitigation for construction impacts and additional fit and finish
interior work to accommodate event operations. 
New Lease in World Trade Center West. Columbia Hospitality Inc. (CHI) occupies
approximately 9,500 square feet on the second floor at Pier 66 with leases that run until October
31, 2017. Their leased area will become part of the new cruise terminal redevelopment and so it
is important to move them out of the building. In exchange for early termination of their existing

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Ted Fick, Chief Executive Officer 
August 7, 2015 
Page 5 of 10 
lease, we have proposed relocating CHI across the street to the second floor of World Trade
Center West Building including the following provisions: 
a)  New term lease to expire on October 31, 2020 
b)  Port will honor the rent terms of the current Pier 66 lease through October 31, 2017 
c)  Rent will escalate on November 1, 2017, to a rate equivalent to similar leases in the
building 
d)  In order to provide CHI with equivalent space, the Port has agreed to provide a
Tenant Improvement Allowance not to exceed $500,000 to cover design,
construction, and relocation costs to be reviewed and approved by Port staff. 
Conference and Event Center Management Agreement (CECMA) modifications. The
proposed Bell Street Cruise Terminal project will require the Port to remove certain portions of
the exclusive and extension premises that are currently under the management of CHI. The
impacts from the redevelopment of the terminal will adversely affect the manager's base
management fee and incentive management fee for the period of the redevelopment.
In exchange for waiver of the required two-year notification to remove premises from the
CECMA, we propose that CHI be guaranteed a "Minimum Assured Income" for three years or,
if the project is delayed, six months after substantial completion of the cruise terminal project. 
"Minimum Assured Income" will be derived using the 2015 Operating Budget or the 2015
Actuals, whichever is greater, as the baseline, and mitigation will be paid only when there is an
actual shortfall in operating revenues. Several sections of the agreement have also been modified
to allow for the impacts of the project without penalizing CHI. 
To improve the efficiency of managing the agreement and its auditability, there are additional
process improvements that are proposed by Port staff that will simplify the budgeting process,
modify language about "shared employees" and remove the 90-daycap on temporary use of
other Port property for events. 
Potential Early Termination of Bell Street Deli Lease. The Bell Street Deli occupies 1,936
square feet of retail and storage space on Alaskan Way and is another area that will be affected
by the project. The lease expires on June 30, 2016, and the project team's intent is to phase
demolition plans to avoid impact to the area. The construction phasing is very complex and,
while likely, cannot be guaranteed. So, to expedite the project, the authority to execute an early
termination agreement is included in this request. The financial impact is undetermined but
would be nominal. 
Amended and restated lease with Cruise Terminals of America (CTA). An amended and
restated Cruise Facility Lease agreement removes Pier 66 from the lease premises. CTA will
continue to lease and manage the two-berth cruise terminal located at Smith Cove Cruise
Terminal at Terminal 91.
a)  Term of this agreement shall continue from the restatement date until December 31,
2019.

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Ted Fick, Chief Executive Officer 
August 7, 2015 
Page 6 of 10 
b)  As condition precedent to this amended agreement, the Port shall execute a lease
agreement with NCLH under which NCLH will assume management of the Pier 66
Cruise Facility and CTA shall execute an agreement with NCLH for the management of
the Pier 66 cruise terminal operations for the 2016 cruise season. 
c)  In consideration for tenant agreeing to terminate its right in relation to the Pier 66 facility,
the Port agrees to pay the sum of $1 million, one half of which shall be funded by NCLH 
PROJECT JUSTIFICATION AND DETAILS 
The long term market outlook of the Alaska cruise itineraries looks strong and there is interest in
shorter Pacific Northwest itineraries, but in order for Seattle to remain competitive and continue
to serve cruise line needs, the infrastructure at Bell Street Cruise Terminal needs to be updated
and configured in a way to accommodate the future growth in ship size and business volume
serving the Alaska and Northwest Cruise Market. 
In the proposed public-private partnership, NCLH commits to 214,000 revenue passengers in the
2016 cruise season and 276,000 revenue passengers for the remainder of the term for 15 years
securing continued growth to our local economy. In 2015 the cruise industry economic impacts
on our region are estimated at $441 million in annual business revenue, 3,647 jobs, and
$17.2 million in annual state and local taxes. It is estimated that each time a homeport ship
docks, it contributes $2.5 million to the local economy. 
Project Objectives 
Establish a long-term lease agreement with co-investment through public-private partnership to
improve a Port-owned facility (Pier 66) that will generate: 
$2.3 billion in Total Business Revenue over 15 years from the Pier 66 cruise facility 
898 total jobs over 15 years (Direct, Indirect, Induced) 
$66.9 million state and local taxes 
Cruise Line Passenger Guarantee: 15 years with a 5-year option to extend 
Cruise Line Investment: $15 million into a Port-owned facility 
Cruise Terminal Improvements will accommodate larger vessels and increased passenger
volumes 
Revenue to the Port from cruise operations at Pier 66 estimated at $73 million over the
base term of the lease with NCLH 
Scope of Work 
NCLH to perform tenant improvements at the Pier 66 cruise facility that will expand the portion
of the existing building used for processing cruise passengers from 44,262 square feet to a new
total of approximately 151,471 square feet. The improved space can be used for events through
the CHI event management agreement and Port operations in the off-season and on non-cruise
days throughout the year. The terminal improvements include the installation of two new
passenger boarding gangways with walkway connections from and between the terminal
building and the cruise ship berth. The terminal expansion within the building footprint will

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
August 7, 2015 
Page 7 of 10 
require repurposing certain areas currently used for offices, retail deli food vendor, and the space
formerly used as a maritime events center. Total cost of tenant improvements for the cruise
terminal to be completed by NCLH is estimated at $30,000,000. Relocation of some tenants
displaced as part of the expansion will be relocated in the World Trade Center Building.
Schedule 
The commencement date of the lease agreement is October 1, 2015. The tenant will begin its
improvements to the facility immediately with design, permitting, and demolition. The target
completion date is April 1, 2017. 
FINANCIAL IMPLICATIONS 
Budget Status and Source of Funds 
The tenant improvement allowance to offset 50 percent of the cost of the improvements to the
Bell Street Cruise Terminal in an amount not to exceed $15,000,000 was not specifically
included in the 2015 Draft Plan of Finance. Funding for the allowance is available under CIP
C800002  Contingency Renewal & Replacement for years 2015-2017. 
The project will be funded from the Tax Levy. 
Financial Analysis and Summary 
CIP Category       Revenue/Capacity Growth 
Project Type        Business Expansion 
Risk adjusted       7.00% 
discount rate 
Key risk factors       Terminal improvements do not sufficiently improve the capacity
of the facility. Mitigated by expert facility design. 
Impact to financial contribution of Bell Harbor International
Conference Center is more significant than currently anticipated. 
Obsolescence of Bell Street Cruise Terminal and related loss of
cruise passengers and economic benefit if improvements are not
made to the Bell Street Cruise Terminal requiring NCLH to
deploy the new larger vessels at other ports. 
Actual passenger volumes and vessel calls could be less than
those assumed in forecast below and tenant is only responsible
for volumes equal to the Passenger Guarantee. 
Project cost for      $15,000,000 
analysis 
Business Unit (BU)    Cruise and Central Harbor Management 
Effect on business    Following is the approximate incremental impact of the new NCLH
performance        lease on Net Operating Income (NOI) and NOI After Depreciation
for 2016-2020. Depreciation estimates are based on an estimated 20
year average life and a total project cost of $30 million with an in-

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Ted Fick, Chief Executive Officer 
August 7, 2015 
Page 8 of 10 
service date of May 2017. Actual depreciable lives of assets to be
constructed are not yet available. 
Direct Impact of NCLH Lease 
Incremental Incr/(Decr)
NOI (in $000's)       2016    2017    2018    2019    2020
Revenue          $547    $456    $181    $203    $221
Operating Exp         1,000     0      0      0      0
NOI            (453)   456    181    203    221
Depreciation           0     1,000    1,500    1,500    1,500
NOI After Depreciation   ($453)   ($544)   ($1,319)  ($1,297)  ($1,279)
The following schedule reflects the additional impact to NOI caused
the cost to mitigate loss es of displaced tenants and opportunity cost
of lost leasable space, approximately 13,000 sq. ft., at Pier 66.
Schedule also reflects the estimated impact on Conference & Event
Center Revenue and management fee mitigation costs for third party
manager, Columbia Hospitality. 
Impactto Pier 66 Lease and Conference & Event Center NOI 
Incremental Incr/(Decr)
NOI (in $000's)       2016    2017    2018    2019    2020
Revenue          ($3,934)  ($3,181)  ($1,915)  ($281)   ($288)
Operating Exp        (2,380)   (2,623)   (1,274)    0      0
NOI           (1,554)   (558)   (641)   (281)   (288)
Depreciation           0      0      0      0      0
NOI After Depreciation  ($1,554)   ($558)   ($641)   ($281)   ($288)
IRR/NPV        NPV reflects the incremental impact of the new lease as compared
to base case which assumes comparable vessel sizes, calls and
passenger volumes as used in the 2015 Budget and continued use of
Tariff Rates. NPV also reflects the impact to the Port of foregone
lease revenues at Pier 66 and the estimated impact of the reduction
in financial contribution from Bell Harbor International Conference
Center due to reduced activity in 2016-2018, as well as the cost to
mitigate the impact of reduced management fees to Columbia
Hospitality. 
NPV    IRR   Payback
(in $000's)    (%)      Years
($16,650)     NM       NA

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Ted Fick, Chief Executive Officer 
August 7, 2015 
Page 9 of 10 
TRIPLE BOTTOM LINE 
Economic Development 
The proposed business commitment that results in the expanded cruise facilities and passenger
volume guarantees is estimated to generate in total over the 15-year term of the Bell Street
Cruise Terminal Lease: 
o  $2.3 billion in Total Revenue over 15 years 
o  898 total jobs over 15 years (Direct, Indirect, Induced) 
o  $66.9 million state and local taxes 
Environmental Responsibility 
There are a variety of sustainability opportunities to promote Maritime environmental
responsibility such as use of locally sourced, recycled, re-used /refurbished material and
use of more energy efficient appliances, lighting and equipment. 
The improved utilization of existing space within the building envelope encourages
efficient use of available space resources and infrastructure without loss of land. 
Newer cruise vessels have marine propulsion engines that are also more energy efficient
and will produce less greenhouse gas emissions during voyages.
Community Benefits 
The improved design of the facility will facilitate efficient movement of people and
traffic. 
Project will maintain Port and Port Tenant competitiveness keeping workingwaterfront 
and cruise ship provisioning jobs in the community. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Turn down the opportunity. The Pier 66 cruise facility would be unable to
attract larger cruise ships. There is a risk of losing market share as ship sizes continue to
increase. The prospect is minimal growth in passenger volume and limited growth in economic
value the cruise business brings to Seattle and our region. This is not the recommended
alternative. 
Alternative 2)  Enter into a lease agreement with Norwegian Cruise Line Holdings Ltd. at the
Bell Street Cruise Terminal at Pier 66 for a term of 15 years and execute related lease
amendments as described in attached documents. This alternative secures a minimum passenger
guarantee of 214,000 in the 2016 cruise season and 276,000 each cruise season for the remainder
of the term of the agreement and an unprecedented commitment from a cruise line to invest in
Port cruise terminal facilities. NCLH will undertake improvements to the terminal sufficient to
accommodate their fleet of cruise ships and potential upsizing. The Port will provide a tenant
improvement allowance equal to 50 percent of the cost undertaken by NCLH not to exceed
$15 million. The Port will provide additional funds of $2 million to cover program costs of
termination agreements, tenant relocation costs, mitigation for construction impacts,  and

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Ted Fick, Chief Executive Officer 
August 7, 2015 
Page 10 of 10 
additional fit and finish interior work to accommodate event operations. Total Port investment
for this program is estimated at $17 million. This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Bell Street Cruise Terminal Lease Agreement between the Port and NCLH 
Bell Street Cruise Terminal Sublease Agreement between the Port and NCLH 
Amended and Restated Cruise Terminal Lease Agreement between the Port and CTA 
Second Amendment to Conference and Event Center Management Agreement between
the Port and CHI 
Lease Agreement with CHI for office space in the World Trade Center Seattle 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
July 14, 2015  Staff Briefing  Pier 66 Terminal Improvements 
June 23, 2015 Special Order of Business  Cruise Industry Trends