PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6c 
ACTION ITEM 
Date of Meeting      May 26, 2015 
DATE:    May 22, 2015 
TO:      Port Of Seattle Commission 
Ted Fick, Chief Executive Officer 
FROM:   Mark Reis, Managing Director, Aviation 
R. Borgan Anderson, Director, Aviation Finance & Budget 
SUBJECT:  International Arrivals Facility Preliminary Funding Plan Motion 
ACTION REQUESTED 
Request Commission approval of a motion providing guidance to the CEO for modeling funding
of the Airport 5-year Capital Improvement Program 
SYNOPSIS 
The purpose of this motion is to provide guidance in order to model a preliminary funding plan
for the International Arrivals Facility (IAF) for the purposes of issuing revenue bonds related to
the Airport's comprehensive capital improvement program. This pricing will be negotiated
approximately July 2015. The motion explains the Commission's intent to avoid establishing
competitive advantages or disadvantages between and among Sea-Tac Airport airline tenants, but
instead maintain a level playing field. It also reflects the Commission's direction to develop a
balanced overall funding plan such that all airline rates and passenger airline cost per enplaned
passenger (CPE) are fair and are within the market of peer and/or competitor airports. This
motion will also guide quarterly and annual updates to the Airport's financial forecast that drives
the annual plan of finance update. 
The timing of this motion is important because the funding plan for the IAF becomes a key
assumption in the development of the Airport's financial forecast. The Port is currently
preparing to issue revenue bonds that will both provide new money and refund 2005 bonds that
could produce net present value savings of approximately $30 million. These revenue bonds will
fund a number of projects including the NorthSTAR program (comprehensive improvements of
the North Satellite) and center runway. Even though the bond issue will not provide funding for
the IAF, guidance is necessary at this time because the IAF funding plan directly impacts airline
rates and charges and thus the Airport's financial forecast.
BACKGROUND 
As authorized by the Federal Aviation Administration, the Passenger Facility Charge (PFC)
Program allows the collection of PFC fees up to $4.50 for boarded passenger at commercial

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
May 22, 2015 
Page 2 of 3 
airports controlled by public agencies. Airports use these fees to fund FAA-approved projects
that enhance safety, security, or capacity; reduce noise; or increase air carrier competition. 
As explained in staff briefings on January 27, 2015, and on April 14, 2015, the Port has two
mechanisms to manage airline rate base impacts:
1.   PFCs can be used to pay capital direct construction costs and ongoing debt service for
projects approved for PFC use by the Federal Aviation Administration, and 
2.   Under section 8.4.4 of the Signatory Lease and Operating Agreement (SLOA III) with
the airlines, the Port may use non-aeronautical revenues to offset the Federal Inspection
Services (FIS) requirement and reduce the FIS fee.
PFCs are the more flexible tool in that they can be used to reduce rates in all cost centers,
whereas section 8.4.4 of SLOA III can only be used to impact FIS rates. 
PFCs Used Since 1992 to Reduce Airline Rates 
The Port has used over $1 billion of PFCs since 1992 to reduce the airline rate base impacts of
major capital projects since costs paid with PFCs are excluded from airline cost center rate bases. 
As staff outlined at the April 14, 2015 briefing, through 2014, the Port of Seattle used 
approximately 57 percent of PFC funds to airfield projects and 43 percent to terminal work.
Between 1992 and 2014, no PFC revenues went toward the FIS area. For example, the Port has
used PFCs extensively to fund the Third Runway and the Concourse A expansion projects and
their related ongoing debt service costs to reduce the rate base impacts on the landing fee
(airfield cost center) and terminal rents (terminal cost center). Having commission direction will
ensure the funding plan is developed and maintained consistent with the commission's
intentions.
Airline Agreement Permits Port to Reduce FIS Costs 
Section 8.4.4 of SLOA permits the Port to use non-aeronautical revenues to offset the FIS
requirement and reduce the FIS fee. This comes out of the fact that the agreement established
multiple aeronautical cost centers and specified the FIS area as a separate cost center. Staff
would implement this by excluding from the FIS rate base the amortization cost of cash invested
as direct project funding for the IAF. Using this provision, however, reduces the airport's total
revenues, thereby reducing debt service coverage and revenue sharing to the airlines. Thus, the
use of this provision directly impacts the Airport's and thus the Port's financial results. Having
commission concurrence on the use of this provision ensures that assumptions underlying the
Port's financial forecast are consistent with the commission's guidance. 
Use of Cash for IAF Permits PFCs to Be Used for Airfield and Terminal Projects 
A key element of the IAF funding plan is for the Port to commit up to $200 million of cash
towards construction of IAF that would not be amortized in the Federal Inspection Services (FIS)
rate base. This significantly reduces the FIS rate and it allows the Port to allocate more revenue
from Passenger Facility Charges (PFCs) to pay for airfield and terminal costs, thereby reducing
the rate impacts on the landing fee and terminal rents. In particular, this funding approach will

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
May 22, 2015 
Page 3 of 3 
permit the Port to allocate significant PFCs to the construction costs of the North Satellite
expansion project. 
Funding Guidance Rather Than Specific Funding Amounts Preferable At this Time 
The motion acknowledges that the total project cost is not yet finalized nor will it be for some
time. Many of the factors that will affect the FIS rate in 2019 (the year the IAF will open and the
costs will be included in the FIS rate) are subject to change (and likely will). Therefore, the
motion directs staff to update the commission quarterly on changes to the estimated cost to
complete the IAF. The motion also directs staff to annually (following the budget and plan of
finance) provide updates to projected FIS rates, landing fee rates and CPE for a five-year forecast
period. Locking in on precise dollar amounts by funding source is not advised at this time.
The final funding plan will be prepared in advance of the 2019 budget, at which time the
decision on the amount of PFCs to offset IAF revenue bond debt service will also be made. Prior
to that point, there will be significant further public discussion in order to best incorporate varied
stakeholder perspectives and ensure complete transparency of the process. 
Known key dates when additional information about the ultimate project cost will be available
include the following: 
January 2016  design/build validation complete 
Q2 2017  guaranteed maximum price (GMP) set 

ATTACHMENTS TO THIS REQUEST 
Draft Motion of The Port of Seattle Commission Providing Guidance to the CEO for
modeling funding of the Airport 5-year Capital Improvement Program 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
April 14, 2015  IAF Funding Plan Update 
January 27, 2015  IAF Funding Plan Update 
April 22, 2014  Airport capital program and funding update 
July 23, 2013  Authorization for preliminary project funding for IAF 
July 9, 2013  IAF briefing 
April 9, 2013  IAF briefing 
June 26, 2012   Airport Terminal Development Challenges at Seattle-Tacoma
International Airport