PORT OF SEATTLE 
MEMORANDUM 

COMMISSION AGENDA             Item No.      6b 
Date of Meeting  February 23, 2010 
DATE:    February 17, 2010 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:    Melinda Miller, Director, Portfolio Management 
Patricia Spangler, Real Estate Manager 
SUBJECT:  Term Lease with Arctic Storm Management Group, LLC at Pier 69. 
Amount of This Request: $344,557              Source of Funds: Tax Levy 

ACTIONS REQUESTED: 
Request for authorization for the Chief Executive Officer to execute a five-year lease, with an
option to renew for one additional five-year term, with the Arctic Storm Management Group,
LLC and to provide funds for tenant improvements and broker fee in the amount of $344,557. 
BACKGROUND: 
Early in the fall of 2009, Fugro Seafloor Surveys, Inc., (SSI) occupying approximately 20,000
square feet on the west end of the first floor of Pier 69 notified the Real Estate Division staff that
the company planned to close its Seattle office and vacate at the end of their lease expiration
date of March 31, 2010. 
The Real Estate Division in collaboration with the Seaport Division reviewed current Seaport
customers for possible interest in the coming available space. In addition, the Real Estate
Division prepared a flyer marketing the space specifically targeting water dependent users and 
distributing the flyers to brokers within the greater Puget Sound area. This distribution of the
flyer to the brokers resulted in one response from a broker representing Arctic Storm
Management Group, LLC (ASMG). The Port staff and ASMG represented by their broker
entered into negotiations. 
ASMG was formed in October 2001 and provides management services to the fishing vessels
Arctic Storm Inc., Arctic Fjord Inc. and Sea Storm Fisheries, Inc. ASMG has been a long-term
customer of the Port mooring vessels at other Port properties.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
February 17, 2010 
Page 2 of 5 
TERMS OF THE PROPOSED LEASE: 
The major elements of the proposed term lease are outlined below: 
Term:               Five years and three months, commencing March 1, 2010 through
May 31, 2015. 
Renewal Options:        Option to extend lease for one five-year term. 
Use:                 General office and/or professional business purposes and related 
storage/warehouse and equipment repair for water dependent user. 
Moorage:            Lessee shall have use of the vessel berth at Pier 69 for moorage 
with an agreement negotiated between Port's Dock's Operations 
group, which is part of the Seaport Division. 
Premises:              Premises consists of approximately 9,430 square feet of office and 
10,230 square feet of storage/warehouse. 
Rent:                 9,430 sf office @ $19.00 sf/yr with annual base rent increases of 
$.50 psf. 
10,230 sf storage/warehouse @ $5.70/sf/yr with annual base rent 
increases of 3% psf. 
Triple Net Costs:         Lessee will be billed monthly their share of the operating costs 
(leasehold taxes, insurance and common area operating 
expense). 
Rent Abatement:        Eight months office June 2010 thru January 2011.
Four months storage/warehouse June 2010 thru Sept 2010. 

Port Improvements:       Port will provide funds toward improvements in the 9,430 sf 
office portion of the premises only in the amount of $30.00 psf 
totaling $282,900. 
Maintenance:           Lessee is responsible to pay for repairs and maintenance for the
interior and exterior of the premises. 
Utilities:                 Lessee is responsible to pay for all utilities either directly or
indirectly serving their premises.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
February 17, 2010 
Page 3 of 5 

Security:               Lessee shall provide a cash deposit, corporate surety company
bond, irrevocable stand-by letter of credit or other security in the
amount of $125,258, which is equal to the average of six months
base rent over the term of the lease as security. 
Guaranty:             Arctic Storm, LLC and Arctic Fjord, LCC each will be a Guarantor
to the lease. 
Insurance/Liability:        $2 million General Liability/ $1 million Auto Liability. 
Assignment/Sublease:     Conditioned on the Port's prior written consent.
FINANCIAL ANALYSIS: 
Budget/Authorization Summary 
Previous Authorizations                                          $0 
Current request for authorization                                  $344,557 
Total Authorizations, including this request                           $344,557 
Remaining budget to be authorized                                   $0 
Project Cost Breakdown: 
Tenant Improvement Allowance                              $282,900 
Leasing Broker Commission                                 $61,657 
Other                                                      $0 
Total                                                       $344,557 
Source of Funds: 
Funds for Real Estate Division tenant improvements are included in the 2010 Draft Plan of
Finance under Committed CIP 800126 Tenant Improvements. Since this is a Real Estate
Division project, the source of funds will be the tax levy. Broker commission payments were
included in the Real Estate Division's 2010 Operating Expense Budget.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
February 17, 2010 
Page 4 of 5 

Financial Analysis Summary: 
CIP Category       N/A 
Project Type        N/A 
Risk adjusted       9.0% 
Discount rate 
Key risk factors        Risk of Tenant default partially mitigated by the following
factors: 
- Security deposit from Arctic Management Group, LLC
("ASMG") in the amount of $125,258. 
- ASMG lease performance is guaranteed by Arctic
Storm, Inc. ("ASI") and Arctic Fjord, Inc. ("AFI"). 
- ASI and AFI are current tenants of the Port and are both
in good standing. 
- 
Project cost for       $344,557 (Tenant Improvement Allowance and Leasing
analysis            Broker Commissions) 
Business Unit (BU)    Portfolio Management, Real Estate Division 
Effect on business      Net Operating Income After Depreciation for Year 1 through
performance        Year 5 is shown below.
NOI (in $000's)        2010     2011     2011     2012     2013
Revenue          $48     $255    $261    $268    $275
Expenses         ($74)    ($12)    ($13)    ($13)    ($13)
NOI            ($25)    $242    $249    $255    $262
Depreciation          ($33)     ($57)     ($57)     ($57)     ($57)
NOI After Depreciation   ($132)    $173     $180     $186     $192
Negative Net Operating Income in Year 1 is due to lower
revenue associated with abated rent and payment of leasing
broker commissions. Depreciation expense is based on the
capitalized tenant improvements amount of $282,900,
depreciated over the term of the lease.
IRR/NPV 
NPV    IRR   Payback
(in $000's)    (%)      Years
$549     NA      3

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
February 17, 2010 
Page 5 of 5 

DOCUMENTS ASSOCIATED WITH THIS REQUEST: 

Lease is not available until it is signed, but the terms of this lease are provided in this
memo. 

ALTERNATIVES CONSIDERED/RECOMMENDED ACTION: 
Not execute lease agreement: Not executing the proposed lease would mean the 20,000 sf
office and storage/warehouse space would remain vacant resulting in no new revenue
opportunity to the Port. 
Execute Proposed Lease: Proceeding with the proposed lease agreement for a space that
has a relatively narrow market of water-dependent users. The proposed lease agreement 
will also allow the Port to utilize the existing space with limited alterations, keeping the
warehouse/storage as-is and modifying the office portion only. This is the recommended
action. 
PREVIOUS COMMISSION ACTION: 
None.