PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA             Item No.      6d 
Date of Meeting    January 24, 2012 

DATE:    January 12, 2012 
TO:     Tay Yoshitani, Chief Executive Officer 
FROM:    Mike McLaughlin, Director, Cruise and Maritime Operations 
Rod Jackson, Capital Project Manager, Seaport 
SUBJECT:  Terminal 91 Waterline Replacement 
CIP #800298 
Amount of This Request: $320,000      Source of Funds: General Operating Funds & 
Tax Levy 
Total Project Cost: $4,575,000 
ACTION REQUESTED:
Authorization for additional funding to complete construction of the Terminal 91 Waterline
Replacement project at an additional cost of $320,000 for a total project cost of $4,575,000. This
funding exceeds the original budget amount of $4,255,000. 
SYNOPSIS:
Portions of the underground waterlines at Terminal 91 (T-91) in the vicinity of the Magnolia
Bridge and upland area were installed over 60 years ago (when facility was under US Naval use).
These old, deteriorated systems are unreliable and have exceeded their useful design/service life.
These pipelines distribute the domestic water throughout the terminal and supply water to the fire
protection systemscritical to terminal/tenant operations and safety. Replacement of these aged
pipelines is necessary to prevent continued failures which create costly repairs and interruption
of operations for both the Port and our customers. Multiple water main failures during the past
few years have resulted in repair costs of over $150,000 plus the additional costs including
negative impacts absorbed by our tenants when waterlines fail. 
The Commission approved the construction funds for this project on October 12, 2010, and
construction commenced November 2010. The site construction work is near 80% complete.
Current projections for cost to complete this project exceed original budget authorization.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 12, 2012 
Page 2 of 5 
ADDITIONAL BACKGROUND: 
During construction the project team discovered the need to replace a 1200 foot long segment
of pipe and valves which were not in the original work scope. At the time of discovery, the
team felt that the project would have adequate contingency to absorb the costs of additional
pipeline installation and the decision was made to proceed with the additional work and to 
closely monitor expenditures as construction continued. 
The pipe supplied for the project including the additional work area was found to be
defective. This was discovered during pressure testing of the system. The supplier agreed to 
replace the defective materials and reimburse the Port for the labor cost to redo the work;
however, per accounting policies, the funds recovered do not go back to the project budget.
The recovered funds will be placed in the Port's general fund. 
Additional complications were experienced during construction such as, buried concrete
obstructions (not shown on the plan) and underground utility obstructions.
These challenges were unforeseen during the design phase, and as a result, depleted the project's
contingency fund. Moving forward, based on current projections, the project will need an
additional $320,000 to complete the construction work. 
PROJECT STATEMENT AND OBJECTIVES: 
Project Statement: 
This project replaces deteriorated waterlines, valves, and hydrants, separates domestic and fire
system lines, installs back-flow preventers, dry pipe valves, and above-ground hot boxes at
several existing T-91 facilities including buildings M-19, M-28, W-39, W-40, W-50, W-390 and
W-391 
PROJECT SCOPE OF WORK AND SCHEDULE: 
Scope of Work: 
The project was designed in-house, the construction portion utilized Port Construction
Services and Marine Maintenance crews to demolish and replace deteriorated waterlines,
valves, and hydrants; prepare base materials; provide new future utility stub connections for
additional future Upland capacity; separate domestic and fire system water service at several
of the existing facilities while installing back flow preventers per City of Seattle and National
Fire Protection Codes; and restore surface pavement as required.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 12, 2012 
Page 3 of 5 
Schedule: 
Start                  Finish 
Pre Design       January 2010         March 2010   (COMPLETED) 
Design           March 2010          September 2010 (COMPLETED) 
Permits           September 2010       October 2010   (COMPLETED) 
Construction       November 2010       April 2012   (IN PROGRESS) 
Close Out         May 2012           September 2012 
FINANCIAL IMPLICATIONS 
Budget/Authorization Summary 
Original Budget                                      $ 0 
Previous Authorizations                                 $4,255,000 
Current request for authorization                             $ 320,000 
Total Authorizations, including this request                     $4,575,000 
Remaining budget to be authorized                          $ 0 
Total Project Cost                                       $4,575,000 
Project Cost Breakdown 
Construction                                      $3,792,000 
Sales Tax                                        $ 150,000 
Soft Costs                                         $ 547,000 
REMEDIATION Environmental Remediation Liability            $ 86,000 
Total Project Costs                                     $4,575,000 
Source of Funds 
This project was included in the 2012 Plan of Finance under Committed CIP# C800298, T-91
Water Main Replacement N. of Bridge, in the amount of $4,255,000. The additional $320,000
required to fund the balance is available due to deferred projects such as the Terminal 25 South
Redevelopment Phase 2 project. 
The Environmental Remediation Liability (ERL) portion will be charged to expense in
accordance with Port Policy AC-9. The cash funded by ERL, which pays for the environmental
cleanup project, is funded by the Port's Tax Levy. Previous ERL costs have been decreased for
the project by $59,000 because the potential of encountering contaminated soils is reduced as
construction moves away from the previous Tank Farm footprint area. 
The remainder of the project will be funded from the General Fund.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 12, 2012 
Page 4 of 5 
Financial Analysis Summary:
CIP Category   Renewal/Enhancement 
Project Type    Renewal & Replacement 
Risk adjusted  NA 
Discount rate 
Key risk       Project schedule and costs could increase if there are continued unforeseen
factors        complexities such as underground obstructions. These risks are mitigated as
the project continues through the construction phase. 
The environmental component of the project may be more extensive as site
specific information becomes available. This risk is also mitigated as the
project continues through the construction phase. 
Project cost for  $4,575,000 
analysis 
Business Unit   Seaport Industrial Properties 
(BU) 
Effect on      This project will not generate any incremental revenue. 
business
performance    Total depreciation expense from this project is estimated to be approximately 
$90,000 per year based on a fifty year life. The allocation of actual project
costs to specific assets will be finalized near the end of the project, estimated
to be the end of the third quarter 2012. Net Operating Income after
Depreciation for this facility will decrease by the associated depreciation
expense of this project. 
NOI (in $000's)        2012     2013     2014     2015     2016 
NOI              $0      $0      $0      $0      $0 
Depreciation          ($22)     ($90)     ($90)     ($90)     ($90) 
NOI After Depreciation   ($22)     ($90)     ($90)     ($90)     ($90) 
IRR/NPV       NPV
(in $000's)
($4,575)
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS: 
Alternative 1: Shut down the project without completing the work. This is not the 
recommended alternative. 
Alternative 2: Complete replacement of the failing underground water distribution systems
serving the existing facilities and tenants at T-91 to maintain water service throughout the
facility and provide required fire protection systems. This alternative will restore the
waterlines to full beneficial use and will minimize the possibility of future failures. This

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 12, 2012 
Page 5 of 5 
upgrade will also provide needed capacity and additional connection points for future
development of the terminal. This is the recommended alternative. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS: 
On October 12, 2010, Commission authorized $3,555,000 to proceed with the Construction
phase of the T-91 Waterline replacement project. 
On March 9, 2010, Commission authorized $700,000 to proceed with the Design and the
Permitting phase of the project including construction document preparation.