ITEM NO: ______6c_Supp______ 
DATE OF MEETING: June 5, 2012

Des Moines Creek Business Park 
Puget Sound Energy Ground Lease 
City of Des Moines Second Development Agreement

Site Map

Site Plan

Ground Lease  Key Terms 
Lessee 
PSE 
PSE assigns to Benaroya 
Benaroya develops facilities and leases back to PSE 
Term 
20-year initial term 
3, 10-year options to extend

Ground Lease  Key Terms 
Premises 
42.3 acres (permanent) 
7.8 acres (initial additional acreage) 
Use 
Warehouse: 281,000 square feet 
Storage Yard: 21 acres 
Potential future office component of 75,000 - 125,000 square
feet

Ground Lease  Key Terms 
Base Rent 
$0.58/sf/year NNN 
$920,000 in annual revenue ($1.1 million initially) 
20-year NPV @ 8.5% of $11.4 million 
Rent Adjustments 
CPI every 5 years (2.5% to 4.5% compounded
annually) 
Reappraisal of land for 3 extension options

Ground Lease  Key Terms 
Operating Expenses 
Absolute net to Port 
PSE pays all utilities, taxes, insurance, maintenance 
Rent Credits 
South 208th Street ($550,000 maximum) 
South 212th Street ($550,000 maximum) 
Stormwater detention pond ($736,000 maximum)

Ground Lease  Key Terms 
Right of First Offer 
Third party sale 
One-time right to purchase 
Non-assignable; personal to PSE 
Brokerage Commission 
Roughly $400,000 
Half due in 2012 and half in 2013

Ground Lease  Key Terms 
Economic Benefits 
Jobs: 250 permanent; 200+ construction 
Construction Value: $75 million to $80 million 
Development Value: $100 million 
Ongoing Revenue: $7 million annually 
$676,000 to City 
One-time Revenue: $7.4 million 
$646,000 to City

Development Agreement  Key Terms 
Frontage Improvements In-Lieu Fees 
Port (developers/tenants) responsible for 50% of
frontage improvements for 24th Ave. S. and S. 216th 
Street 
City builds improvements from in-lieu fees collected 
Fees due when building permits issued 
Fee for PSE parcel will be pending 
City requests early payment of all fees (pending and
future)

Development Agreement  Key Terms 
S. 216th Street  In Lieu Fee 
$2.5 million payment (instead of $4.3 million) 
Frontage improvements requirement fully satisfied 
City has $4 million grant if construction starts in Q1
2013 
24th Avenue S.  In Lieu Fee 
$3.5 million payment (instead of $4.8 million) 
Frontage improvements requirement fully satisfied 
$2.6 million reimbursed by PSE

Development Agreement  Key Terms 
No early in-lieu fee     Early in-lieu fee
payment           payment 
Prevents City access     $3.1 million in savings 
to committed grants       $2.6 million from PSE 
Delays construction       20th Ave. S. signal in 
Higher future fees        No traffic impact fees 
PSE pays directly to      Expedites construction 
City                   Provides grant
matching funds 
12

Development Agreement  Key Terms 
Risks (early in-lieu fee payment) 
Unable to lease the remainder of site and recover the
$3.4 million to be paid by future tenants 
Financial Implications (early in-lieu fee payment) 
Payback in 2016 from just PSE lease revenue
20-year NPV @ 8.5% of $7.1 million 
Payback accelerates with additional leases

Development Agreement  Key Terms 
Retail Use 
City has until 9/28/12 to request retail option on
southern 22 acres 
If yes, option agreement negotiated before 12/31/12 
2-year maximum 
Assignable 
If no, Port pursues other business park uses

Development Agreement  Key Terms 
Internal Streets 
South 208th Street 
Dedicated to City upon completion 
South 212th Street 
Phased construction 
Each phase dedicated to City upon completion 
Stormwater Management 
Industrial pond (deeded to City upon completion) 
Retail pond (future construction)

Development Agreement  Key Terms 
Duration 
15 years, unless extended 
Terminates upon full build-out 
May be terminated sooner by agreement 
Vesting 
Development regulations vest for 15 years 
Building code changes and others regulations
excepted