PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.       6a 
ACTION ITEM             Date of Meeting   August 7, 2012 

DATE:    August 2, 2012 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:   Michael Burke, Director, Container Leasing and Asset Management 
SUBJECT:  First Reading of Resolution No. 3665, Amending Unit 20 of the Comprehensive
Scheme of Harbor Improvements of the Port of Seattle (Lower Duwamish Industrial
Development District) by declaring Certain Real Property Surplus and No Longer
Needed for Port District Purposes and deleting said property from Unit 20, and
amending said Unit 20 to add certain real property transferred to the Port by BNSF; 
and to Fund Net Closing Costs Estimated to be $51,000. (Pre-final estimate as of
August 7, 2012 via draft Escrow Settlement Statement from Chicago Title.) 
Amount of this Request: $51,000                Source of Funds: General Fund 
ACTION REQUESTED: 
Request First Reading and Public Hearing of Resolution No. 3665: A Resolution amending Unit
20 of the Comprehensive Scheme of Harbor Improvements of the Port of Seattle (Lower
Duwamish Industrial Development District) by: (i) declaring certain real property surplus and no
longer needed for port district purposes; (ii) authorizing its transfer to BNSF Railway Company;
(iii) deleting said property from Unit 20 of the Comprehensive Scheme; and (iv) adding to Unit
20 of the Comprehensive Scheme certain real property transferred by BNSF to the Port. Further
requesting authorization for the Chief Executive Officer to take all necessary steps and execute
all documents, including an Exchange Agreement necessary to accomplish the exchange of
properties with BNSF Railway, Inc., in accordance with state law; and requesting authorization
for Port staff to approve escrow settlement for the Port's net cost at closing of approximately
$51,000. The Port's obligation for closing costs of approximately $167,000 will be partially
offset by BNSF's $97,000 reimbursement to the Port for BNSF's share of the surveycosts
incurred related to this land exchange transaction and offset by other prepaid credits. These
offsetting payment obligations are reflected in the closing documents for the land exchange title
transfer.
SYNOPSIS: 
The Port of Seattle (the Port) and BNSF Railway Company (BNSF) entered into a Memorandum
of Agreement (MOA) and a Letter Agreement (Agreement) on May 31, 1994. Pursuant to the
Agreements, the Port and BNSF have certain obligations in connection with the exchange of
property between the parties. Specifically, in exchange for BNSF's agreement to provide the
property requested by the Port for the expansion of Terminal 5, the Port agreed to provide BNSF

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 2, 2012 
Page 2 of 6 
with replacement property and track of sufficient space and condition to support existing rail
operations and required operating capacity to support shipping at BNSF's Buckley Yard. The
Port and BNSF are now ready to enter into an Exchange Agreement (Exchange Agreement) and
complete the exchange of property contemplated in the Agreements.
The Exchange Agreement includes the following: 
The Port will convey 10.97 acres (477,853 square feet) to BNSF together with all right,
title and interest of the Port to those un-vacated streets and alleys abutting the Port
property conveyed to BNSF. The Port will also grant BNSF an easement over a Port
road on Terminal 5. 
BNSF will convey to the Port 9.33 acres (406,415 square feet), and will grant the Port
two road access easements and a utility easement. 
Escrow is expected to close on August 31, 2012. 
BACKGROUND: 
In the early 1990s, American President Lines (APL) put out a request for proposals (RFP) for an
expanded gateway to complement their facility in Southern California.  At that time the
competition was between Oakland, Tacoma and Seattle. The existing configuration at Terminal 5
did not meet the requirements of the RFP due to the limitations of terminal size with the existing
BNSF West Seattle yard. The Port developed a proposed terminal that met the requirements by
proposing to relocate the BNSF yard west and making that yard parallel with the Terminal 5
dock. This proposed relocation put a bend in the BNSF yard reducing its efficiency. Since the
Port had no condemnation rights over a railroad, it was necessary to reach agreement with BNSF
on the land swap and yard relocation. Without this agreement there would have been no
Terminal 5 expansion. 
The executed agreements in 1994 were the starting point for a set of extremely complex business
relationships between BNSF, competitor railway Union Pacific, and the City of Seattle
requirements to accommodate the relocation by stipulating the terms for future street vacations to
accommodate the improvements to Terminal 5. Due to the foregoing, including state mandated
environmental impact review and the magnitude of the rail yard relocation, it is not unusual for
railway relocations to take a long time to complete. A substantive and relevant issue embedded
in the business relationships includes the fact that BNSF was not compelled to complete this
transaction, and in fact, had little motivation or business requirements to pursue this change to
their operating rail "footprint."
The value of land and easements that the Port will convey and grant to BNSF is $8,814,000. The
value of land and easements that BNSF will convey and grant to the Port is $7,323,500. The net
difference in the exchange value is due to providing BNSF the equivalent replacement area for a
functional rail yard.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 2, 2012 
Page 3 of 6 
The Port has also agreed to pay closing costs associated with the land exchange, as additional
consideration to induce BNSF to complete the exchange. Specifically, the Port will pay the
excise tax on the land being transferred from BNSF to the Port in the estimated amount of
$130,216 and the Port will pay BNSF's share of the escrow fee in the estimated amount of
$1,600. BNSF will reimburse the Port $97,000 for half of the Port's survey related expenses
associated with engineering and survey work. 
Prior to the land exchange, the Buckley Yard was a long narrow strip of land with an average
width of 200 feet extending in a northwest to southeast direction from just south of Salty's
Restaurant to 26th Avenue Southwest just north of Spokane Street. The southern portion of the
Buckley Yard ran diagonally through the proposed Terminal 5 expansion area. 
The Port took the southern portion of the Buckley Yard (9.33 acres) and incorporated thisland 
into its existing Terminal 5 along with other Port-owned land. The Port then rebuilt the southern
portion of the Buckley Yard. The rebuilt portion of the Buckley Yard was moved to the outer
edge of Terminal 5 just north of Spokane Street on the south and along the western edge of the
Port's expanded Terminal 5 where it reconnected to the northern portion of the Buckley Yard. To
rebuild the southern portion of the Buckley Yard, so that it and the remaining north portion of the
Buckley Yard provided BNSF with a functionally equivalent rail yard to sustain its rail
operations in West Seattle, required 10.97 acres of Port property. 
Prior to the exchange of land and the Port's expansion of Terminal 5, BNSF was able to access
the southern portion of the Buckley Yard via West Marginal Way Southwest which lay
immediately east of and adjacent to this part of the Buckley Yard. This public roadway provided
the access BNSF needed to perform maintenance in the south portion of the Buckley Yard. West
Marginal Way Southwest was removed by the Port as a result of a street vacation petition filed
with the City of Seattle. Vacation of this and several other streets was essential to the expansion
of Terminal 5. The final ordinance needed to vacate these streets has not yet been passed by the
Seattle City Council. 
The only way BNSF can now access the rebuilt southern portion of the Buckley Yard for
maintenance is via Port property. The Port will grant BNSF a perpetual, non-exclusive easement
over a Port-owned road to provide a way for BNSF to access the rebuilt portion of the Buckley
Yard for maintenance purposes. 
After the reconfiguration of the southern portion of the Buckley Yard, it was also essential for
BNSF to grant the Port easements that would allow it to cross over BNSF property to access
certain portions of Terminal 5 and other property owned by the Port in the vicinity of Terminal 5.
BNSF will grant the Port perpetual, non-exclusive easements for this purpose.  As part of
closing documents BNSF will also execute future easement agreements that will provide the Port
vehicular access across BNSF property acquired in the future as a result of Port initiated street
vacations within Terminal 5. These easements will be recorded once the terms of these future

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 2, 2012 
Page 4 of 6 
street vacations are completed, as stipulated in 1995 within the City of Seattle Conditions for the
Terminal 5 Street Vacations. 
The exchange parcels and easement areas were appraised by the Port.  Following is a summary
of the value of land and easements from the appraisal.
Appraisal dated: August 24, 2010 
Transferred      Transferred To    Interest        Size (s.f.)      Value 
From 
Port        BNSF         Fee Simple        477,853     $ 8,600,000.00 
Port        BNSF         Easement         118,919        214,000.00 
Total Land/Value                          596,772     $ 8,814,000.00 
Transferred      Transferred To    Interest        Size (s.f.)      Value 
From 
BNSF      Port        Fee Simple      406,415    $ 7,300,000.00 
BNSF      Port        Easement        2,178       3,900.00 
BNSF      Port        Easement        2,614       4,700.00 
BNSF      Port        Easement        8,276       14,900.00 
Total Land/Value                             419,483     $ 7,323,500.00 
The fee value of the land being transferred between the parties is $18.00 per square foot. 
The total value of Port fee simple land being transferred to BNSF equals $8,600,000. 
The total value of Port easements being transferred to BNSF equals $214,000 (the
appraised value of easements is 10% of the value of fee ownership).
The total value of BNSF land and easements being transferred to the Port equals 
$7,323,500.00. 
The net difference in fair value of the land exchange is $1,490,500 of combined fee and
easement property in favor of BNSF. 
The appraised difference in fair value does not reflect the operational impacts or benefits to
either party. Irrespective of the valuation differential, BNSF is receiving property that provides
equivalent operating requirements to their prior rail yard with no net gain in real terms, with the
Port receiving more usable property with the exchange parcel allowing an assemblage that is
more productive from a Port lease and operating standpoint. 
PROJECT JUSTIFICATION: 
Project Objectives: 
Finalize ownership exchange and terminate existing lease for operating properties
currently occupied by the Port and BNSF.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 2, 2012 
Page 5 of 6 
FINANCIAL IMPLICATIONS: 
The Terminal 5 BNSF land exchange is essentially a non-cash transaction. For financial
reporting purposes, the Port is expected to recognize a gain on sale for this land exchange
transaction. Accounting treatment of this land exchange transaction compares the fair market
value of the property that BNSF conveys to the Port, against the historic cost (book value) of the
property the Port conveys to BNSF. Since the fair market value of the property being received in
the land exchange is expected to exceed the historic cost of the property being conveyed to
BNSF, the Port will likely to record a gain on sale from this exchange transaction. The amount
of any such gain will be calculated when the transaction is booked, and will be recorded as Non-
Operating Revenue/(Loss). 
The proposed BNSF land exchange will have no impact to Terminal 5 lease revenues because
the Terminal 5 acreage under lease to APL will not change as a result of this transaction. The
APL lease was originally drafted to include the leasable area that will be conveyed to the Port
from BNSF. A land lease currently in effect between the Port and BNSF for that acreage,will 
terminate simultaneously  with the effective date of the proposed  BNSF land exchange 
transaction.
The net cash obligation of the Port at closing is estimated to be $51,000, which will be paid from
the general fund. The Port's obligation for closing costs, of approximately $167,000, will be
partially offset by BNSF's $97,000 reimbursement to the Port for BNSF's share of the survey
costs incurred related to this land exchange transaction and offset by other prepaid credits. These
offsetting payment obligations are reflected in the closing documents for the land exchange title
transfer. No other funds are required for this request.
ENVIRONMENTAL SUSTAINABILITY: 
As part of the Terminal 5 expansion project, the Port entered into several formal cleanup
agreements with the Washington State Department of Ecology and the United States
Environmental Protection Agency that apply to the areas of Terminal 5 included in this land
exchange. The Port will retain its long-term reporting, monitoring, and maintenance obligations
associated with these agreements and will continue to meet these obligations as it has in the past. 
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST: 
Resolution No. 3665, BNSF Exchange T-5 
Exhibit A: BNSF Exchange Surplus Resolution 
Exhibit B: BNSF Exchange Surplus Resolution 
Exchange Agreement 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS: 
July 24, 2012  The Port Commission received a briefing on the proposed land exchange
with BNSF.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
August 2, 2012 
Page 6 of 6 
June 22, 1993  The Port Commission authorized the Executive Director to execute both,
the Sixth Amendment to Lease No. L-1648 with American President Lines, Ltd, and the
Memorandum of Agreement with Burlington Northern Railroad.