Item No. 6b_Attach 
Date of 
Meeting: April 10, 2012 

P.O. Box 1209 
Seattle, WA 98111-1209 
Tel: (206) 787-3000 
www.portseattle.org 


April 5, 2012

Karen Gruen
Managing Director, Corporate Real Estate
Alaska Air Group, Inc.
19300 International Blvd.
Seattle, WA 98188

Re:  Proposed North Sea-Tac Airport Renovation ("NorthSTAR") Program
Dear Karen:
The Port of Seattle (the "Port") and Alaska Air Group, Inc. ("AAG") have been working together
to facilitate AAG's plans for operations from Seattle-Tacoma International Airport (the
"Airport") following the completion of the current airline realignment. The Airport is the
keystone of AAG's operations. AAG wishes to promote a highly efficient operation in the north
end of the Airport that furthers its "Curb to Gate" conceptual vision. The Port is excited to work
with AAG to meet these objectives.
The purpose of this letter is to set forth how the Port and AAG will work together in the
planning, design and construction of the capital improvements at the north end of the Airport.
This letter also memorializes the Port's and AAG's common vision of the general character of
the project. While there is not perfect alignment between us, this letter purposely accentuates the
shared perspectives.
Overview 
While AAG is a highly valued  and our largest  customer, the Port is the owner and operator of
the Airport. We have an obligation to operate the Airport for the benefit of the travelling public
and the larger community in which the Airport is located. We must do so in conformance with
federal and state law. We have done so, and will continue to do so, with a sincere commitment
to do everything possible to facilitate our airline customers' needs and desires to provide
excellent airline passenger and cargo services at the Airport, while meeting our fundamental
responsibilities to the flying public and as an economic development agency for the region.
We recognize that AAG has a vested interest in the design, scope, cost and scheduled completion
of the improvements affecting the north end of the Airport. This is particularly true for the

Karen Gruen
April 5, 2012
Page 2

rebuilt North Satellite, which we expect, under the current airline realignment, that AAG will
occupy in its entirety. AAG hopes to implement certain innovative concepts in the rebuilt North
Satellite.

To this end, the Port anticipates unprecedented involvement by AAG in those
capital projects
affecting the north end of the Airport. That involvement will be in addition to  not in lieu of 
any input AAG may have by virtue of the Signatory Lease and Operating Agreement (or
successor agreement) ("SLOA") and the capital project consultation procedures attached to
SLOA as Exhibit G. Exactly how AAG is involved will depend on the nature of the particular
improvement. But the Port will  at specific, defined intervals  request AAG's
concurrence
with the manner in which the project is then proceeding. While not
a formal restriction on the
Port's ability to proceed, this concurrence will help validate the parties' continued
alignment.
In order to move work on the north end forward
as fast as possible, we propose to seek a two
step Majorityin-Interest ("MII") approval and Commission authorization for the primary North
Satellite elements that we have been discussing. As
soon as we have sufficient information, we
will request MII approval and Commission authorization for project
design of these North
Satellite elements. We would then proceed with design and
request further MII approval and
Commission authorization once sufficient design is completed and prior to
proceeding with
construction. For the remaining NorthSTAR Program elements,
we will follow a typical one
step MII approval process once we have sufficient scope and budget information to proceed with
design.

North Sea-Tac Airport Renovation Program

The specific North Satellite elements
on which we are immediately prepared to move forward

along with the other elements of what we are labeling the North SeaTac Airport Renovation
Program (hereafter referred to as "NorthSTAR" or "NorthSTAR Program") 
are detailed on
Attachment 1. A very preliminary budget estimate established by AAG for each is also
set forth
on Attachment 1. A very preliminary budget estimate established by the Port for the North
Satellite elements is set forth on Attachment 2. Some of those elements,
generally constituting
base airport infrastructure, would be constructed at the cost of the Port. Others, generally
constituting tenant improvements, would be constructed at the cost of AAG
on its own or
pursuant to tenant reimbursement agreements under Ch. 14.08 RCW. And yet others, where they
incorporate elements of both, would be constructed at the cost of both the Port and AAG.

The Port recognizes AAG's desire to implement all of the NorthSTAR
Program elements and to
do so quickly. As set forth above, the Port intends to immediately
move forward with the North
Satellite elements, C Concourse vertical circulation, and baggage tunnel rebuild work. The Port
will expeditiously move forward with the remaining C and D Concourse and
baggage handling
system elements. The Port will also collaborate with AAG to develop a plan for the Main
Terminal element. Although the parties recognize the challenge, the Port will
manage the design
and construction of the Main Terminal improvements in
as expeditious manner as possible and

Karen Gruen
April 5, 2012
Page 3

seek to have all of the NorthSTAR Program elements finished concurrently with the
completion
of the North Satellite elements.

The Port will continue to manage concessions before, during and after construction of the
NorthSTAR Program. Nonetheless, the Port
agrees to work closely with AAG on the character
and quality of the concession program in the North Satellite
as part of the NorthSTAR Program.
In addition, when the Port is ready to determine future concessions
concepts and, then, select
concessionaires, AAG will have input into those processes.
Opportunity for Input
In order to broadly facilitate AAG's involvement in the NorthSTAR
Program, the Port will
integrate members of AAG's project team within the Aviation Project Management Group, the
internal organization that has lead responsibility for development of Airport
capital improvement
projects. In this way, AAG will be provided with real-time
access to information on scope,
schedule, budget, risks and decisions. In addition, the Port will welcome AAG's participation
directly in all design meetings, charrettes and workshops.

To facilitate this integration, the Port will specifically make available three desks
among the
Port's Aviation Project Management Group staff
on the second oor of the Airport Office
Building. In addition, the Port and AAG will develop
a protocol (the "Communication
Protocol") that describes how the representatives of the Port and AAG will interact
on a dayto
day basis and how AAG will interact with the designers.

In the event the frontline representatives of the Port and AAG
are unable to reach an accord on
any issue material to the NorthSTAR Program, the Port further agrees that such issues may be
escalated as follows:
Tier 1: George England and AAG's designated construction representative
Tier 2: Wayne Grotheer and Susan Kostoff
Tier 3: Mark Reis and Karen Gruen
In order to promote efficient and informed resolution of
any issues that develop, it is our
expectation that senior management of both the Port and AAG will insist that the agreed
protocols and escalation paths are followed.

Although the Port is vested with the legal responsibility to develop and manage the airport in the
public's interest, it recognizes the importance of AAG's perspective
on matters related to
operational impacts, cost impacts, schedule impacts and quality.
Guiding Principles

As a compass to guide the parties' actions through the
course of the NorthSTAR Program, the
Port and AAG agree that they will be guided by the following
principles:

Karen Gruen
April 5, 2012
Page 4

Renovations will incorporate AAG's "Curb to Gate" conceptual vision. The work will
promote efficient operations and incorporate traveler-friendly innovations that promote
easeofuse.
Public facing spaces will, unless otherwise agreed, have a levelof-finish, comfort and
style consistent with AAG and Port standards.
Employeefacing spaces will optimize workflow and promote functionality, value and
sense of community.
Projects will observe the Port's contemporary design, construction and operations
standards for the Airport.
Projects will, when measured over their lifecycle and when taking into account airline
rates and charges, be of reasonable cost.
The parties will develop the design of the project to ensure that public safety, regulatory
and security standards are always satisfied.
Projects will emphasize sustainable construction practices. The Port will consider LEED
certification of renovations from the US Green Building Council.
Collaboration promotes efciency in construction and better design and operation of the
Airport. AAG and the Port will integrate their project teams to promote greater and more
effective collaboration. In this regard, communication of issues, changes, or problems that
arise with any aspect of the work should occur
as early as possible in the process, and not
wait for explicit due dates or deadlines. Each party will work cooperatively and in good
faith toward resolution of any such issues.
Transparency promotes trust between the parties, which in turn promotes open
collaboration and efficiency. AAG and the Port will share information to the greatest
extent practicable.

These touchstones emphasize all that we agree on and mark the
common ground between us as
we develop the NorthSTAR Program.

NorthSTAR Milestones and Concurrence

In order to ensure that the Port and AAG remain aligned in their interests and goals through the
course of the NorthSTAR Program, the Port will seek AAG's concurrence at the specific
milestones (the "NorthSTAR Milestones") set forth below. The Port will apply these
NorthSTAR Milestones to each listed project element 
or when packaged together, like for the
North Satellite, each package of elements  identified
on Attachment 1:

Completion of Project Notebook.
.U'PS'UQT'       A&E service agreement scope of work.
Approval of final conceptual (15%) design submittal, if one is required.
Approval of final schematic (30%) design submittal.
Approval of the NorthSTAR Program Budget and NorthSTAR Phasing Schedule (as
defined below).
F"    Approval of final construction (100%) design submittal.

Karen Gruen
April 5, 2012
Page 5

At each of these NorthSTAR Milestones, the Port will
request AAG 's concurrence in writing.
At NorthSTAR Milestones l, 3, 4 and 6, concurrence will extend to the thencompleted
definition/design and the accompanying cost estimate and schedule. After a mutually agreed
upon review period for the Milestone deliverable, AAG will have seven (7) business days
following receipt of the Port's request for concurrence within which to respond. To keep the
NorthSTAR Program moving forward, the parties acknowledge the importance of
a prompt and
definitive answer by AAG when concurrence is sought. Comments at that late
stage will be
given due consideration as the parties move forward but cannot qualify AAG's endorsement.
If AAG does not concur, the Port will give due consideration to AAG's stated
reasons and
concerns and may elect to cancel the relevant NorthSTAR Project element
or the entire
NorthSTAR Project. But AAG acknowledges the Port's legal responsibilities related
to
management of the Airport and recognizes that the Port may also elect to proceed despite the
divergence of views. Our earnest willingness to work closely with AAG cannot encumber the
Port's carefully balanced rights under SLOA.

The NorthSTAR Program, and its specific elements, will necessarily involve
myriad other
decisions as they progress through definition, design and construction,
many of which are
outlined on Attachment 3. This Attachment, which parallels the capital project consultation
procedures set forth in SLOA, provides some guidance about how the concepts memorialized in
this letter overlay that process. The opportunities for input by AAG will be
replete through that
process, and as a result concurrence will be formally validated only at the NorthSTAR
Milestones.

Reconciliation Process

If the parties are confronted with a material variance from cost, schedule,
quality or operational
assumptions previously established in the process in connection with any element (or package of
elements), then the Port will follow a "reconciliation" process to chart the path forward. The
Port will seek AAG's insight and recommendations prior to determining whether
or not to:
Redesign the particular project to achieve budget, schedule, quality or operational goal.

' Adjust the particular project budget, schedule, quality or operational goals to account for
the change. This specifically includes the possibility of reallocating
budget from other
sources including other elements of the NorthSTAR Program.

' Cancel the particular project or the entire NorthSTAR Program.
The focus will be keen on the common ground memorialized in this letter, and the Port will
not
lightly proceed as allowed by SLOA without recognizing that.

Management to Budget and Schedule

The parties acknowledge that the size and
scope of the NorthSTAR Program will affect each
party's current and future operations at the Airport during construction. They also acknowledge
that cost the NorthSTAR Program will signicantly affect rates and
charges for airlines,
including AAG, operating at the Airport. As a result, the parties both acknowledge the

Karen Gruen
April 5, 2012
Page 6

importance of carefully managing and monitoring the NorthSTAR Program's budget and
schedule through the course of Program development.

As an initial baseline, the Port will develop its own preliminary cost estimates for each
NorthSTAR Program element (or package of elements) and an aggregate preliminary cost
estimate for the entire NorthSTAR Program based on the Port's experience prosecuting its
capital improvements and the most current information. The Port will develop this preliminary
budget no later than April 15,2012. This estimate, however, will necessarily be limited by the
lack of definition associated with certain NorthSTAR Program elements desired by AAG and the
constrained technical resource availability. The inclusion of
any particular element in the
preliminary budget is unrelated to the renegotiation of the airline agreement.

When the Port has developed the design of the North Satellite element of NorthSTAR Program
to the schematic (30%) design stage, the Port will develop a "not to exceed" NorthSTAR
Program budget that establishes a revised cost estimate for each element (or package of
elements) of the NorthSTAR Program and the entire NorthSTAR Program ("NorthSTAR
Program Budget"). As reflected on Attachments 1 and 2, there is a significant difference
between the parties' preliminary estimates, and AAG and the Port expect the refined budgets
developed through the further definition and early design development of the NorthSTAR
Program (and particularly at the 30% design stage for the North Satellite elements) will help
inform the evolution of the Project scope prior to establishing the formal NorthSTAR Program
Budget.

The Port will also develop a preliminary phasing schedule for the entire NorthSTAR Program in
parallel with the conceptual (15%) design of the North Satellite elements and a nal phasing
schedule in parallel with the schematic (30%) design of the North Satellite elements (the
"NorthSTAR Program Phasing Schedule"). In developing these schedules, the Port will seek to
accommodate AAG's gate phasing plans. The phasing schedules will be based
upon the most
current information then available and will specifically outline the dates on which portions of the
Airport are expected to become unavailable (or differently available) to AAG because of
implementation of the NorthSTAR Program. The phasing schedules will also outline when
portions of the Airport are again expected to become available for use by AAG. AAG and the
Port will work together to plan for possible loss of gates during Project phasing and to
support
AAG's network schedule development and annual gate allocation
process. The 2013 gate count
will be established not later than July 2012.

To ensure discipline in managing against the NorthSTAR Program Budget and NorthSTAR
Program Phasing Schedule, the Port will  with AAG's input  develop a change control process
and summary document to be used throughout the life of the NorthSTAR Program's
implementation that will track all potential changes in scope and schedule from the NorthSTAR
Program Budget and NorthSTAR Program Phasing Schedule. Prior to the approval of the
NorthSTAR Program Budget and NorthSTAR Program Phasing Schedule, the implementation
will be monitored against the preliminary budget and phasing schedule. As each element of the
NorthSTAR Program progresses through denition and design, it will be monitored through this

Karen Gruen
April 5, 2012
Page 7

change control process, and the Port will  in connection with seeking AAG's concurrence at
designated NorthSTAR Milestones  demonstrate how the program scope is tracking to the
budget and phasing schedule. If the cost estimate or phasing schedule for
any particular element
(or package of elements) exceeds the "notto-exceed" cost estimate in the NorthSTAR Program
Budget or materially affects the NorthSTAR Program Phasing Schedule, the Port will follow the
reconciliation process outlined above.

AAG Costs

All costs associated with AAG's involvement in the development and prosecution of
NorthSTAR will be borne by AAG (provided, however, that
some costs may be reimbursed
pursuant to separately negotiated Tenant Improvement Reimbursement Agreements). Unlike the
Airline Technical Representative, which facilitates carrier-wide coordination of Airport projects,
AAG's involvement is primarily for the furtherance of its specific interests. The Port
expects
that the Airline Technical Representative will continue to monitor and provide input into
any
NorthSTAR Project Elements as set forth in the capital project consultation procedures
set forth
in SLOA, and the Port will continue to fund that involvement
as agreed to in SLOA.

AAG has requested reimbursement of approximately $2 million in outofpocket costs associated
with work for AAG by HOK. The NorthSTAR Program is based
on work done for AAG by
HOK. The Port will consider reimbursing AAG an amount equal to the savings to the overall
project costs the Port would have incurred but for such work by HOK. The Port looks forward to
AAG providing the Port with additional information demonstrating these cost savings.

Unresolved Issues Identied for Future Agreement

While this letter is intended to set forth how the Port intends to work with AAG to develop the
NorthSTAR Program, the Port acknowledges that there
are certain details where the parties'
perspectives diverge. These include:

0  The balance between scope, schedule, and budget. AAG prefers
a decision hierarchy when
the Project is confronted with a material variance in
scope, schedule or cost where budget
is most important, schedule is next most important, and
scope is least important. While
the Port may strike this balance in any particular instance, it cannot commit to favor
one
over any other in all instances in which such tradeoffs are
necessary. Instead, the
reconciliation process can and should resolve the question
on a case-by-case basis.

The NorthSTAR Program schedule. The Port will work with AAG and its designers
to
expedite the project and will endeavor to establish a project schedule for the entire
NorthSTAR Program in conjunction with phasing work
on the 15% and 30% design of the
NSAT elements outlined above. The Port's current assessment of the project schedule is
that the Program will be complete in December 2016 at the earliest. The Port and AAG
acknowledge that in developing the NorthSTAR Program, they will seek to expedite this
project schedule while balancing other project and operational considerations.

Karen Gruen
April 5, 2012
Page 8

Betterments and tenant improvements. The Port and AAG acknowledge that they are
generally planning for a NorthSTAR Program that will not include any betterments but
instead will adhere to a standard consistent in quality, function, fit and finish with that
constructed on Concourse A. Program elements that are reasonably consistent with those
on Concourse A will not be considered betterments. In addition, the Port may entertain
elements in addition to those provided on Concourse A if those elements would have
utility to most airlines (if they were to lease space at the North Satellite) and the benefit
outweighs the cost. In this regard, reference to national airport practices or standards may
be made. As design proceeds, however, the Port and AAG may find that they disagree
about whether a proposed feature is consistent with Concourse A or whether it provides
cost-effective utility. Should that occur, the Port and AAG will work to reach an
agreement before funds are committed. At this stage in the design, the Port is concerned
that exterior stairs to support aft unloading (as opposed to emergency egress) on
Concourses C and D and the North Satellite do not meet this standard and, thus, could be a
betterment. Additional research by both parties will serve as a basis for a future
discussion on that issue. Should a program element be determined to be a betterment,
AAG will be expected to bear the full cost of these. Likewise, AAG will be expected to
bear the cost of any tenant improvements unless eligible for reimbursement under the
Port's established tenant improvement program and subject to a separate tenant
improvement reimbursement agreement. Some program elements will be tenant
improvements. The Board Room is an example. Betterments (if any) and tenant
improvements will be executed by the Port only subject to separate written agreements.

Karen, I sincerely hope that this letter makes clear the Port's wholehearted commitment to
AAG's deep engagement in and collaboration on these exciting and critical projects. While the
Port will not restrict its right to proceed with projects as allowed by SLOA, we do not focus on
that point here. Instead, we emphasize our willingness to continue to work with AAG to
accommodate your plans for operations from the Airport following the completion of the current
airline realignment. While this letter does not establish any legally enforceable rights or
obligations on the part of either party, it does set forth a framework under which the Port
commits to move forward with AAG on the NorthSTAR Program.

Sincerely,

PORT OF SEATTLE


Managing Director, Aviation

Cc:   Wayne Grotheer, Port of Seattle

Attachment 1
North SeaTao Airport Renovation Projects
Budget provided by AAG fall 2011 and updated 2/8/ 12

Project Element            Preliminary Budget Established by AAG

North Satellite Element
Remodel Concourse                          $41,000,000 *
Add Three Gates                             $15,000,000 *
New Board Room                         $15,000,000 *
Upgrade Seismic with Stairs                        $25,300,000 *
Upgrade MEP Systems                        $60,000,000 *
Remodel AAG Staff Space                      $15,000,000 *
Relocate AAG Staff (except Line Mtx)                  $1,000,000 *
Refresh North Satellite STS Lobby                      $300,000 *
Refresh C Concourse STS Lobby                    $1,000,000 *
Refresh Main Terminal STS Lobby                   $1,000,000 *
Concessions Buyout                            $1,818,000 *
Partial Dual Taxilane                              $2,200,000 *
SUBTOTAL                     $178,618,000

Baggage Handling System Element
Refurbish Baggage Handling System                 $24,000,000

Concourses C&D/Main Terminal Elements
Upgrade Employee Space on Concourse C              $1,200,000
Regional Vertical Transportation                      $17,800,000
Q400 Realignment                           $2,000,000
Refresh Concourse C STS Lobby                    $1,000,000
Mainline Exterior Stairs, Concourses C&D               $17,000,000
Main Terminal Improvements                     $14,000,000
SUBTOTAL                      $52,000,000

TOTAL                         $254,618,000


* The
projects listed with an asterisk constitute the North Satellite renovations that the Port has
fasttracked and which will be handled together in a twostep MII
process.



Page 1 of l

Attachment 2
North SeaTac Airport Renovation Projects
Budget prepared by Port 3/27/12


Project Element             Preliminary Budget Established by Port

North Satellite Element
Remodel Concourse                          $49,400,000 *
Add Three Gates                             $18,600,000 *
New Board Room                         $18,900,000 *
Upgrade Seismic                             $10,700,000 *
Aft Unloading Stairs                             $20,900,000 *
Upgrade MEP Systems                       $78,100,000 *
Remodel AAG Staff Space                      $25,100,000 *
Relocate AAG Staff (except Line Mtx)                  $1,000,000 *
Refresh North Satellite STS Lobby                      $300,000 *
Concessions Buyout                            $3,000,000 *
Partial Dual Taxilane                              $4,600,000 *
Regulated Materials Management                    $5,000,000 *
Scope Reserve                               $2,800,000 *
SUBTOTAL                     $238,400,000

Baggage Handling System Element
Refurbish Baggage Handling System                    pending

Concourses C&D/Main Terminal Elements
Upgrade Employee Space on Concourse C                pending
Regional Vertical Transportation                        pending
Q400 Realignment                             pending
Refresh Concourse C STS Lobby                           *
pending
Mainline Exterior Stairs, Concourses C&D                 pending
Main Terminal Improvements                       pending
Refresh Main Terminal STS Lobby                          *
pending

* The
projects listed with an asterisk constitute the North Satellite renovations that the Port has
fasttracked and which will be handled together in a twostep MII process.



Page 1 of 1

Attachment 3
Typical Project Progression

Preliminary Planning and Project Development

The Port intends to apply its standard planning and definition
process to those elements of the
NorthSTAR Program on Attachment 1. For those elements of the NorthSTAR Program for
which the Port is financially responsible, it will develop
a Project Notebook pursuant to its
applicable procedures. Where it makes logical sense (such as for the North Satellite), the Port
may package more than one element together. Each Project Notebook shall include
identification of objectives, assumptions, linkages,
resource requirements, cost estimates,
potential problems, schedule and other project characteristics. AAG shall collaborate with the
Port in developing each Project Notebook. As the parties cooperatively work through that
process, they will specifically analyze how project restrictions, opportunities, linkages, and
schedules will affect (and potentially further) other elements within the NorthSTAR Program,
specifically including those for which AAG is financially responsible. The goal of this analysis
will be to ensure that the NorthSTAR Program (or those portions actually prosecuted) is
conducted as efficiently as reasonably practical.

As the parties develop Project Notebooks for
any element of the NorthSTAR Program, the work
contracted by AAG and performed by HOK will be foundational.

At the completion of each Project Notebook for each NorthSTAR element (or package of
elements), the Port will solicit AAG's concurrence with the Project Notebook. That
concurrence
will be sought prior to Port submission to the Signatory Airlines of
any notice required under
SLOA.

Selection of Architects and Engineers for Design Development

The architects and/or engineers for any particular element of the NorthSTAR Program for which
element the Port is responsible will be selected by the Port in accordance with Chapter 39.80 of
the Revised Code of Washington and Port policy. During the course of this process, the Port will
provide AAG direct input into the scope of the contract and the RFP. In addition, AAG may
serve as a voting member of any selection panel. As a condition of this involvement, however,
AAG and its representatives must comply fully with the Port's ethics policies
as if it were a paid
consultant in order to ensure the competitive integrity of the procurement.

Following the selection of the particular architect and/or engineer based on their qualifications,
the Port will  based on its standard contracting methodologies  negotiate the
agreement with
the contractor.

Prior to execution of the service agreement with the lead architect
or engineer, the Port will
solicit AAG's concurrence with the final contract
scope of work.


Page 1 of 4

Design Development

The Port will be responsible for contract administration and will
manage the consultants retained
for design development. AAG
may provide specific input regarding these elements to the
designers directly in the method established in the Communication Protocol. AAG
may
participate fully in all design meetings, charrettes and workshops and review and comment
on all
design submittals. The Port agrees that AAG will be the "owner" lead for development of the
design vision for AAG employeefacing spaces and may collaborate with the Port
on customer
facing spaces. The Port understands that AAG seeks to incorporate into the design AAG's
customer experience vision of travelerfriendly innovations, emphasizing
ease of use; and
reflecting AAG's brand in level of finish, comfort, and style.

The Port intends to follow its standard protocols through the
course of design development. This
typically includes submission and review of 30%, 60%, 90% and 100% design documents,
although specific projects may utilize other milestones (and the Port intends to require
a 15%
design deliverable for the North Satellite package of elements). Each appropriate design
submittal will be accompanied by budget estimates appropriate to the thencurrent level of
design. In developing those budget estimates the Port will follow its standard framework for
cost
estimating.

At the completion of the conceptual (15%) design (if
one is required), schematic (30%) design
and final (100%) design, the Port will solicit AAG's
concurrence. As noted, not all NorthSTAR
Program elements (or packages of elements) will require a conceptual (15%) design.
Concurrence at this point will be requested only if the designer for the
particular element (or
package of elements) is required, under the terms of the applicable service agreement,
to provide
a conceptual (15%) design submittal. With
respect to the North Satellite package of project
elements, concurrence on the final (100%) design will be sought prior to submission
to the
Signatory Airlines of notice seeking the second MajorityinInterest approval agreed to in this
letter.

Contracting Methodology and Award
The contractor(s) for any particular NorthSTAR Project Element for which the Port is
responsible will be selected by the Port in accordance with Title 39 and Chapter 53.08 of the
Revised Code of Washington and Port policy. Presumptively, NorthSTAR Projects Elements
will be prosecuted as designbidbuild, but the Port
agrees to consider opportunities for
efficiencies and cost savings from alternative public works methodologies.
Projects will use the
Port's standard terms and conditions suitable to the particular
contracting methodology.

During the course of this process, the Port will provide AAG input into the contracting
methodology, the contract packaging and the invitation for bids. To the extent that the Port
elects to pursue any contracting methodology involving qualificationsbased
evaluation, AAG
may serve as a voting member of any selection panel. As with any participation in the selection
of the designer, AAG and its representatives will be expected
to comply fully with the Port's
ethics policies as if it were a paid consultant in order to
ensure the competitive integrity of the
procurement.

Page 2 of 4

AAG will also be permitted to attend
any bid opening and review the bids prior to award. To the
extent that the Port undertakes any analysis of those bids prior to award, AAG will be entitled
to
participate in such review. In the event that the apparent low bid exceeds the budget/engineer's
estimate by more than ten percent, the Port
agrees to follow the "reconciliation" process before
proceeding with award.

Concurrence will not be obtained with respect to issues of contracting
methodology or award.
Construction

The Port's construction management
group will manage construction of all elements of the
NorthSTAR Program for which it is financially responsible. This will also extend to any
betterments and/or tenant improvements that the Port has elected to
construct. Through the
construction management group, the Port will administer the contract and
process any change
orders and payments. All construction projects will be managed according to the Port's standard
operating procedures.

Although the construction management group regularly interfaces with the Aviation Project
Management group, the construction management group is separate and independent from the
project management group. Through the course of construction, AAG
may continue to maintain
its integrated team members within the Aviation Project Management
Group, and AAG may, as
set forth in the Communication Protocol, provide input directly to the Port's construction
management group. However, AAG will not have staff integrated within the Port's construction
management group. This will necessarily limit AAG's involvement in daytoday construction
activities.

Through its continued participation with the project management
group, AAG will have the
opportunity to attend all construction meetings, coordinate construction impacts
on AAG
operations, coordinate its tenant improvement work with the base building work, and participate
in all sequencing and phasing decisions made through the
course of construction. In addition,
AAG will be provided with realtime
access to information on material changes to schedule,
budget, and scope as they arise and will be kept abreast of trending issues, risks and decisions.
AAG will also have the opportunity to contemporaneously review
QA/QC activities and reports
and participate in punchlisting.

The Port will continue to provide maintenance, utilities and public
safety services at customary
standards to the portions of the Airport remaining in,
or returning to, operations while
construction occurs on the other portions.

Concurrence will not be obtained with respect to
any construction activities.
Commissioning and Activation
The Port intends to follow its standard commissioning and activation
procedures for any
NorthSTAR Project Element. We invite AAG's participation in development of
commissioning
and activation plans. We recognize that AAG will have
a role in developing activation plans and

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that AAG will coordinate with all AAG stakeholders affected by such activation. While the Port
will make activation decisions with regard to the operational needs of the Airport generally, the
Port will solicit and give due consideration to AAG's comments and concerns. AAG will be
responsible for coordinating with AAG stakeholders regarding any activation process.

Concurrence will not be obtained with respect to any commissioning or activation activities.



















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