ITEM NO.    6c
DATE OF 
MEETING April 1, 2014 

THE INDUSTRIAL DEVELOPMENT CORPORATION 
OF THE PORT OF SEATTLE 
NOTICE OF A SPECIAL MEETING 

A Special Meeting of the Industrial Development Corporation of the Port of Seattle will be held on Tuesday,
April 1, 2014, in the Commission Chambers, Pier 69, 2711 Alaskan Way, Seattle Washington,, Washington, 
during a recess of the Port of Seattle Commission Regular Meeting, which convenes at l:00 p.m. The Agenda
includes: 
1.  Approval of the proposed minutes of the Industrial Development Corporation of the
Port of Seattle Special Meeting of April 9, 2013. 
2.  Approval of the Industrial Development Corporation of the Port of Seattle Board of
Directors and Officers for 2014. 
3.  Review of the Annual Report for the Industrial Development Corporation for year
ending December 31, 2013. 
4.  Attachment for reference:  Overview of the Industrial Development Corporation and
Frequently Asked Questions (FAQs). 

Adjournment of the Annual Meeting of the Industrial Development Corporation of the Port of Seattle. 








Page 1 of 16

INDUSTRIAL DEVELOPMENT CORPORATION AGENDA 
Item No.        1 
Date of Meeting    April 1, 2014 
DATE:        March 7, 2014 
TO:          Tay Yoshitani, Chief Executive Officer 
FROM:       Diane Campbell, Financial Analyst III, Corporate 
SUBJECT:      Approval of the Proposed Minutes of the Industrial Development Corporation of the
Port of Seattle Meeting of April 9, 2013 
ACTION REQUESTED: 
Request Board approval of the proposed minutes of the Industrial Development Corporation of the Port of
Seattle meeting of April 9, 2013. Draft minutes have been circulated to the Board of Directors and approved
minutes will be posted to the Port's website. 













Page 2 of 16

INDUSTRIAL DEVELOPMENT CORPORATION AGENDA 
Item No.        2 
Date of Meeting    April 1, 2014 
DATE:        March 7, 2014 
TO:          Tay Yoshitani, Chief Executive Officer 
FROM:       Diane Campbell, Financial Analyst III, Corporate 
SUBJECT:      Election of Officers 
REQUESTED ACTION: 
Request Board approval of the Industrial Development Corporation of the Port of Seattle Board of Directors
and Officers for 2014. 
BACKGROUND: 
In accordance with the Bylaws for the Industrial Development Corporation of the Port of Seattle, the
following is a list of the Board of Directors and Officers for the Corporation: 
Stephanie Bowman, Co-President 
Courtney Gregoire, Co-President 
Tom Albro, Secretary 
John Creighton, Assistant Secretary 
Bill Bryant, Director 

"Section A. Number and Qualifications. The officers of the Corporation shall be the same as the officers of
the Port Commission and such other officers as may be determined by the Board of Directors from time to
time to perform such duties as may be designated by the Board of Directors." 







Page 3 of 16

INDUSTRIAL DEVELOPMENT CORPORATION AGENDA 
Item No.        3 
Date of Meeting    April 1, 2014 

DATE:        March 7, 2014 
TO:          Tay Yoshitani, Chief Executive Officer 
FROM:       Diane Campbell, Financial Analyst III, Corporate 
SUBJECT:      Industrial Development Corporation Annual Report for 2013 
SYNOPSIS: 
The Industrial Development Corporation of the Port of Seattle, also known as IDC, was established in 1982
pursuant to Revised Code of Washington (Chap. 39.84). The IDC is a special purpose government with
limited powers and was established for the purpose of facilitating industrial expansion through tax-exempt
financing by providing companies with access to the tax-exempt credit market through the facilities of the
IDC.
Any company with a project that qualifies for tax-exempt financing and qualifies under both RCW 39.84 and
IDC policy may apply for IDC financing. The Port is not the lender and cannot lend credit or give money to
the IDC. Debt issued by a company through the IDC is the sole responsibility of the company and is always
non-recourse to the Port and to the IDC. Bond proceeds go directly to the company borrowing through the
IDC. The companies pay their debt service (principal and interest) to a trustee. 
Any city, county or port in Washington state may establish an IDC, and a number of other jurisdictions have
done so, including King and Pierce Counties; the cities of Seattle, Auburn, Redmond and Kent; and several
other ports.
A majority of projects financed through the Port's IDC occurred between 1982 and 1986. Since then the
activity has declined, primarily due to the Tax Reform Act of 1986, which made a number of changes in the
tax-exempt financing code sections to minimize the use of an IDC as a financing tool. Accordingly, the Act
adversely affected the benefits of using these bonds for both the issuers and investors. For issuers, the Act
reduced the number of qualifying projects by narrowing the definition of types of projects, and eliminated
certain depreciation tax advantages. The code change also reduced the pool of investors, (e.g. banks, who
were the majority investor) in this market segment. Item No. 4, FAQs provides more details. 
The IDC is governed by a board of directors comprised of the members of the Port Commission; accordingly,
both the IDC Board and the Port Commission must approve any IDC bond issue. The IDC Board meets at a
minimum once a year during a Commission meeting to elect new officers and review the IDC's annual
financial results. 
ANNUAL REPORT SUMMARY: 
Attached are the financial statements of the IDC. The IDC had assets totaling $273,412 at year-end 2013.
Total income of $17,915 came primarily from Sysco Food Services of Seattle, Inc. debt service related
customer fees. Administrative and other expenses of $4,320 were also incurred.


Page 4 of 16

STATUS OF IDC BONDS: 
At the end of 2013, there were two companies with outstanding IDC debt totaling $74,725,000, as shown in
the table below: During the year, Sysco Food Services paid in full $8,000,000 of outstanding debt originally
scheduled to mature in 2025. 
Company                  Outstanding Debt (12/31/2013)  Maturity Date 
Crowley Marine Services                   $ 8,700,000         2021 
Delta Air Lines, Inc. (1)                        66,025,000          2030 
TOTAL                      $ 74,725,000 
(1) Previously Northwest Airlines Corp. (NWA). NWA merged with Delta Air Lines, Inc. (Delta) in 2008. NWA bonds refunded with Delta
bonds, October 2012. 
MANAGEMENT DISCUSSION: 
The IDC collects customer fees from the companies, based on a customer fee rate and their annual debt
service. The fee can be paid annually or a one-time lump sum paid at the time the company issues bonds, and
is calculated using the present value of debt service over the life of the bonds. Annual, on-going customer
fees were collected from Sysco and Crowley. Delta made a one-time lump-sum payment in 2012 for
refunding the Northwest Airlines bonds.
Customer fees in 2013 include $16,002 for debt service related fees from Sysco. related to the company's pay
down of the outstanding debt. Crowley is the one remaining company paying an annual ongoing customer
fee, and because the debt has a variable rate, the annual ongoing customer fee will fluctuate with interest
rates. Due to the low interest rate environment, the estimated customer fee for 2014 is projected to be $40. 
IDC assets are invested in the Port's investment pool and the allocated interest income from the pool in 2013 
was $1,873. The investment income for 2014 is projected to be approximately $2,000. 
Expenses totaling $4,320 include Port's staff administrative time and the State Audit. The IDC is subject to
the Washington State Auditor process at least once in every three years. The 2013 audit expense was $3,010 
and covered the 2010 to 2012 time period. Expenses anticipated for 2014 are for Port's staff time.
The Economic & Trade (E&T) Fellowship Reserves is the undistributed balance of awards to the E&T
Fellowship. The program ended in 2011, and the recipients have five years to spend the award, therefore the
reserve balance is expected to be drawn down by the end of 2015. 
The IDC's charter permits its funds to be transferred only to the Port. Under an amendment to RCW
39.84.130, funds of the IDC that are not otherwise encumbered for the payment of revenue bonds and are not
anticipated to be necessary for administrative expenses of the IDC may be transferred to the Port to be used
for growth management, planning or other economic development purposes. In order to transfer funds, the
Board of Directors of the IDC needs to adopt a resolution authorizing the transfer. Any transfer of funds
would reduce the assets of the IDC and the interest earnings on these assets. 
MINIMUM FUND BALANCE RECOMMENDATION: 
Staff recommends that the IDC maintain the current balance of $271,375 to ensure adequate investment
earnings to fund annual operating and triennial audit expenses over the next three years. The low interest rate
environment requires a higher fund balance to earn sufficient interest earnings to cover these anticipated
expenses. 


Page 5 of 16

INDUSTRIAL DEVELOPMENT CORPORATION
OF THE PORT OF SEATTLE
BALANCE SHEET
December 31,    December 31,    December 31,
2013        2012        2011

ASSETS
Cash and Cash Equivalents                 $ 273,375        $ 261,184        $ 114,285 
Accounts Receivable                    $ 36             120          116
TOTAL ASSETS                   $ 273,411      $ 261,304      $ 114,401 

LIABILITIES AND EQUITY
Economic & Trade Fellowship Reserves        $ 27,091       $ 28,578       $ 37,628 
Equity                              $ 246,321              232,725         76,774
TOTAL LIABILITIES & EQUITY           $ 273,412      $ 261,304      $ 114,402 
(1) The Economic & Trade Fellowship Reserves, is the undistributed balance of approved Scholarship awards to the E&T Fellowship.













Page 6 of 16

INDUSTRIAL DEVELOPMENT CORPORATION
OF THE PORT OF SEATTLE
INCOME STATEMENT
AND CHANGES IN EQUITY
December 31,  December 31,  December 31,
2013      2012      2011
INCOME
Customer Fee                  $ 16,042      $ 166,232       $ 82 
Investment Income                      1,873       1,513       4,181
Miscellaneous Income -      15 
TOTAL INCOME         17,915        167,759         4,262 
EXPENSE
Administrative Expense              $ 1,058      $ 8,817      $ 628 
Scholarship Expense - -     10,000
B&O Tax Expense                    252      2,991
Other Expenses:
State Audit                           3,010 -            511 
Washington State Tourism Promotion - -       155,000 
TOTAL EXPENSE          4,320        11,808        166,139 
NET INCOME             $ 13,595     $ 155,952     $ (161,876) 

BEGINNING EQUITY           $ 232,725      $ 76,774     $ 238,650 
ENDING EQUITY             $ 246,321      $ 232,725      $ 76,774 







Page 7 of 16

INDUSTRIAL DEVELOPMENT CORPORATION
OF THE PORT OF SEATTLE
STATEMENT OF CASH FLOWS
December 31,    December 31,    December 31,
2013        2012        2011
CASH FLOWS FROM OPERATING
ACTIVITIES:
Cash received from bond issuers           $ 16,126       $ 166,228        $ 29 
Miscellaneous cash receipts -      15  - 
Cash paid for expenses                        (5,807)        (20,858)       (170,175)
Net cash provided by
operating activities                     $ 10,319        $ 145,385        $ (170,146) 
CASH FLOWS FROM INVESTING
ACTIVITIES:
Interest on investments                           1,873          1,514          4,181
Net cash provided by
investing activities                     $ 1,873       $ 1,514       $ 4,181 
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS              12,191      146,899     (165,965)
CASH AND CASH EQUIVALENTS
Beginning of year                     $ 261,184        $ 114,285        $ 280,250 
End of year                         $ 273,375        $ 261,184        $ 114,285 
Notes: 1. Unaudited. 2. Differences due to rounding








Page 8 of 16

INDUSTRIAL DEVELOPMENT CORPORATION AGENDA 
Item No.        4 
Date of Meeting    April 1, 2014 

DATE:        March 7, 2014 
TO:          Tay Yoshitani, Chief Executive Officer 
FROM:       Diane Campbell, Financial Analyst III, Corporate 
SUBJECT:      Overview of the Industrial Development Corporation Frequently Asked Questions (FAQs). 

What is the purpose of an IDC? 
To facilitate industrial expansion through use of tax-exempt financing made available to companies
for qualified projects. 
What does the term "tax-exempt financing" mean? 
It means bondholders (investors) who purchase the bonds do not pay federal income tax on the
interest received on such bonds, as they normally would do on interest-bearing bonds.
How does tax-exempt financing help the institution that is funding capital projects?
Because investors pay no income taxes on interest income, they are generally willing to accept a lower
interest rate than if the bonds were issued on a taxable basis. Thus, tax-exempt bonds provide the
ability to finance many public infrastructure capital projects at a reduced cost. 
What changed in the tax law to make tax exempt financing through the IDC less attractive now than it was
when these projects were financed? 
There are several factors that have adversely affected the use of tax exempt financing over the years.
When our state initially authorized the use of nonrecourse tax-exempt financing, federal tax rules
permitted the financing of a very broad spectrum of projects, including wholesale and retail facilities
as well as warehouse facilities. There was almost no limit on the types of facilities that could be
financed. There are a lot of warehouse facilities in the State (due in large measure to our agricultural
base). As a result, tax-exempt financing was an option for most capital expansion projects. Further,
interest rates were very high (substantially higher than the current interest rate environment). As a
result, tax-exempt financing was especially attractive, when compared to conventional interest rates. 
The Tax Reform Act of 1986 made a number of changes in the tax-exempt financing code sections that
adversely affected the use of tax exempt bonds for business expansion. The tax rules imposed substantial
limitations on the types of facilities that may be financed with tax-exempt bonds.  These limitations
eliminated at least 50-60% of the facilities that had been financed pre-1986.
In addition, before 1986, banks were the largest investors in tax-exempt bonds. The 1986 Tax Reform
Act eliminated banks from the market, by making their effective rate for holding private activity
bonds equivalent to a taxable rate.

Page 9 of 16

Users of tax-exempt bond financing were also restricted in their depreciation methodology for tax-
exempt bond financed property.  Interest on private activity bonds also is subject to alternative
minimum taxes. The US Treasury proposed the enactment of these rules in order to minimize the
availability of this financing tool.
Who can establish an IDC? 
Any city, county or port in the State of Washington can establish an IDC. 
When and how was the Port's IDC formed? 
The Port's IDC was established on February 9, 1982, pursuant to RCW 39.84. 
What is the boundary of the Port's IDC? 
King County  as defined, it is the "Corporate boundaries of the Port". The IDC may finance projects
within King County. 
What is the Port's IDC's structure? 
It is a special purpose government with limited powers. 
It is governed by a board of directors who are the same as the members of the Port Commission. 
The Port cannot lend credit or give money to IDC. 
Debt is always non-recourse to the Port and to the IDC. 
What law(s) govern the IDC? 
Washington State law RCW 39.84, which is the statute that covers all IDC-related issues. 
Federal law (tax code), which significantly narrows the type of projects that can be financed with tax-
exempt bonds and the type of borrowers who can avail themselves of tax-exempt bonds. Projects that
qualify include those involving manufacturing, processing, airports, docks and wharves, mass
commuting facilities, facilities for the furnishing of water, sewage facilities, solid waste disposal
facilities, qualified residential rental projects, facilities for the furnishing of local electric energy or
gas, local district heating or cooling facilities, qualified hazardous waste facilities, high-speed intercity
rail facilities, environmental enhancements of hydro-electric generating facilities, and qualified public
educational facilities. 
Resolutions on policy adopted by the IDC board. 
What does that resolution stipulate for eligibility of projects? 
The Commission has adopted a policy for judging eligibility of projects:
The IDC will consider only projects or proposals which will further the purposes and objectives of the
Port of Seattle within the confines of state and federal law. 
Tax exempt private activity bonds will be issued only for the financing of projects which broaden and
strengthen the economic base of the Port District by enhancing trade and the movement of passengers
and cargo by air or sea, including: 
o  the development or improvement of marine terminals and airport facilities or components
thereof; 


Page 10 of 16

o  the development and improvement of commercial and industrial land, manufacturing facilities,
warehouses, terminal and transfer facilities, and related improvements which enhance trade via
Port-owned or operated airport and marine facilities; 
o  the development and improvement of facilities which will enhance or promote the Port's
Comprehensive Scheme; and 
o  the development and improvement of facilities which directly support and assist the movement
of passengers and cargo by air or waterborne transportation, including, but not limited to,
aircraft and ship construction and repair facilities, facilities necessary for the inspection,
weighing, storage, and packaging of cargo; and connecting surface transportation facilities. 
Who assists the Port in deciding which projects to fund? 
When bonds are issued, outside bond counsel is engaged to review and confirm legal compliance and
eligibility of the project for tax-exempt financing. The bond counsel certifies that the issuer has the
legal authority to issue the bonds and that the securities qualify for federal income exemption. 
Who may apply for financing through the IDC? 
Any company with a project that qualifies for tax exempt financing and qualifies under RCW 39.84
(the RCW that covers all IDC issuances) and the IDC policy listed above may apply for IDC
financing.
How much can be spent on financing the project?
The amount of the bond issuance depends of the borrower's ability to repay as determined by
investors; as non-recourse bonds, this is determined solely by the borrower's credit. Generally, all
proceeds from the bond issuance are used for project spending with some exceptions. Under section
147(g) of the Federal Tax Code, any amount of bond proceeds that may be applied to finance the costs
associated with the issuance of qualified private activity bonds (both before and after the issue date) is
limited to 2% of the proceeds of the bond issue. As a general rule, qualified private activity bonds
must satisfy a use test whereby 95% or more of the net proceeds of the bond issue must be used to
finance the qualified purpose for which the bonds were issued.
How does the IDC get compensated? 
The IDC is compensated for administrative expenses related to the bonds by the borrower. The
compensation is based on a percentage of the debt service. Payment is generally a lump-sum paid
when bonds are issued; older bonds had the option of payments made annually through the life of the
bond. 
How does the bond counsel get compensated? 
Bond counsel is paid a fee that is negotiated with the borrower. The fee may be fixed or hourly. A
flat fee is generally based on the type and size of the bond issue. Fees are paid at the time of issuance,
generally out of bond proceeds.
Who are the current outstanding borrowers of IDC funds? 
There are currently two projects that used IDC bonds to finance the project: 
o  Crowley Marine Services: Acquisition and construction of improvements to certain dock facilities
(Pier 16/17) owned by the Port of Seattle. 
o  Delta Air: In 2001, the IDC issued bonds on behalf of Northwest Airlines for the construction of a
two-bay maintenance hangar and a cargo handling facility at SeaTac Airport. In September of

Page 11 of 16

2012, the Commission gave approval for the bonds to be refinanced by Delta Airlines, which has
acquired Northwest Airlines, so Delta Airlines is now the borrower.  The facility is still in
operation. 
These projects are all completed, but the bond debt is still being paid down. 


















Page 12 of 16


IDC Frequently Asked Questions 
Appendix A 
Chapter 39.84 RCW 
INDUSTRIAL DEVELOPMENT REVENUE BONDS 
Chapter 39.84 RCW Industrial Development Revenue Bonds can be found in the Washington State
Legislature web site, via the following hyperlink:    http://apps.leg.wa.gov/rcw/default.aspx?cite=39.84.
















Page 13 of 16

Appendix B 
RESOLUTION NO. 2 
A RESOLUTION of the Industrial Development Corporation of the Port of Seattle
adopting a master policy for the purpose of determining the eligibility of projects or
proposals for financing. 
WHEREAS, the Industrial Development Corporation of the Port of Seattle (the "Corporation") is a public
corporation created pursuant to Chapter 300, Laws of Washington 1981 (Reg. Sess.) codified as Chapter
39.84 of the Revised Code of Washington and Resolution No. 2845 adopted by the Port of Seattle
Commission on February 9, 1982; and 
WHEREAS, the Corporation is now desirous of adopting a master policy to determine the eligibility of
projects or proposals coming before the Corporation; and 
WHEREAS, the Corporation wishes to establish and empower a Chief Staff Officer for the Corporation with
the authority to amend, update and revise, when necessary, the initial procedures to carry out the adopted
policies herein; and 
WHEREAS, the initial procedures have been submitted to the Board of Directors of the Corporation and by
adoption of this Resolution represents Board concurrence in the general context and form. 
NOW, THEREFORE, BE IT RESOLVED BY THE INDUSTRIAL DEVELOPMENT CORPORATION OF
THE PORT OF SEATTLE, WASHINGTON, as follows: 
Section 1. It is the basic policy of the Corporation to comply with the applicable Federal and State of
Washington laws and amendments thereto in determining the eligibility of any project or proposal coming
before the Corporation for consideration and/or approval for financing. 
Section 2. The Corporation hereby adopts the following additional policy to determine the eligibility of
projects or proposals for financing by the Corporation: 
A.  The Corporation will consider only projects or proposals which will further the purposes and objectives
of the Port of Seattle as adopted by the Port Commission December 9, 1980 or as further amended from
time to time. 
B.  Tax exempt industrial revenue bonds will be issued only for the financing of projects which broaden and
strengthen the economic base of the Port District by enhancing trade and the movement of passengers
and cargo by air or sea, including: 
(1)  the development or improvement of marine terminals and airport facilities or components thereof; 
(2)  the development and improvement of commercial and industrial land, manufacturing facilities,
warehouses, terminal and transfer facilities, and related improvements which enhance trade via Portowned
or operated airport and marine facilities; 
(3)  the development and improvement of facilities which will enhance or promote the Port's
Comprehensive Scheme; and 
(4)  the development and improvement of facilities which directly support and assist the movement of
passengers and cargo by air or waterborne transportation, including, but not limited to, aircraft and
ship construction and repair facilities, facilities necessary for the inspection, weighing, storage, and
packaging of cargo; and connecting surface transportation facilities. 
A.  The Corporation will not consider projects or proposals that: 


Page 14 of 16

(1)  unnecessarily or unjustifiably subsidize users, i.e., proponents must demonstrate reasonable need
for this form of financing; 
(2)  create unfair competition or dislocate the balance of competition within the Port District; 
(3)  duplicate existing facilities which already adequately meet current needs; 
(4)  are proposed by others than the directly interested party, or by any proponent unable to
demonstrate a sound operating and financial history; and 
(5)  are not otherwise authorized by the 1981 Local Economic Development Act or other applicable
laws. 
Section 3. The Chief Staff Officer of the Corporation shall be the Executive Director of the Port of Seattle.
The chief staff officer is hereby authorized to carry out the purposes of the policies hereby and henceforth
adopted by the Corporation and may amend, update and revise the procedures of this Resolution as it is from
time to time necessary due to changes in law and/or operations of the Port without prior Commission
approval, except as to fees and assessments to be charged. 
The initial procedures have been submitted to the Board of Directors of the Corporation and by this
Resolution they concur in the general context and form. 
ADOPTED by the Board of Directors of the Industrial Development Corporation of the Port of Seattle,
Washington this 27th day of April 1982. 
JACK BLOCK 
PRESIDENT 
ATTEST: 
HENRY L KOTKINS 
SECRETARY 
(SEAL) 









Page 15 of 16

IDC Frequently Asked Questions 
Appendix C 

Examples of some local area IDCs** 
City of Kent Economic Development Corporation 
King County Economic Enterprise Corporation 
Industrial Development Corporation of the City of Everett 
Economic Development Corporation of Pierce County 
City of Seattle Industrial Development Corporation 
City of Redmond Economic Development Corporation 
City of Auburn Economic Development Corporation 
Industrial Development Corporation of Kitsap County 
** Entities listed established IDCs. This is a partial representative list, and does not include all
IDCs and Entities with the IDCs in the State of Washington. 












http://collab.portseattle.org/sites/CommMemos/Commission Document Sets/IDC Annual Meeting/IDC memo
20140303.docx 3/26/2014 10:44 AM 
Page 16 of 16