Item 5e Memo

PORT OF SEATTLE 
MEMORANDUM 

COMMISSION AGENDA             Item No.      5e 
Date of Meeting     July 28, 2009 
DATE:    July 9, 2009 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:    James R. Schone, Director, Aviation Business Development 
R. Borgan Anderson, Manager, Aviation Finance and Budget 
Elizabeth Morrison, Sr. Manager, Corporate Finance 
SUBJECT:  Establish a 7.4% interest rate on a Port Investment to partially fund the costs
associated with the design and construction of the Consolidated Rental Car
Facility (CRCF) program. 

BACKGROUND
On May 12, 2009, the Commission was briefed on a funding plan for the CRCF which included
the use of Port funds (Port Investment) of up to $30,000,000. In ord er to reduce the opening day
Customer Facility Charge (CFC) and manage any increases to the CFC so as not to exceed the
forecasted revenue, the funding plan called for deferred repayment of the Port Investment and
any interest on that investment, a structure similar to Capital Appreciation Bonds (CABs).
Unlike CABs sold to outside investors, the Port Investment would provide flexibility to
accelerate or further defer repayment depending on how actual revenue results compared to the
forecast.
The funding plan also included the issuance of Port revenue bonds and the use of a line of credit.
On June 9, 2009, the Commission authorized both the issuance of revenue bonds and the line of
credit; the bonds were successfully sold on June 25, 2009. Based on the results of the bond sale,
the Port Investment is estimated to be approximately $20,000,000. Use of this funding source is
expected in late 2011.

APPROVAL OF AN INTEREST RATE ON THE PORT INVESTMENT 
RCW 14.08.120(7) authorizes the Port to impose a CFC on rental car customers for the purpose
of funding a CRCF. The statute provides for the use of the Port's own (non-CFC) funds which
can be repaid at a rate of interest not to exceed a rate the Port would otherwise pay to finance the
facility in the capital markets. The revenue bonds issued to fund most of the project costs
included $22,000,000 of CABs sold to investors bearing a rate of interest of 7.4%. This is the
comparable market rate that staff recommends applying to the Port Investment. The funds repaid
with interest from CFCs may be used for other Port purposes and their use is not limited to costs
associated with the CRCF.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
July 9, 2009 
Page 2 of 2 

The statute requires that the rate be established in consultation with rental car companies. On
April 22, 2009, the funding plan, including the use of a Port Investment was presented at the
rental car industry meeting. At that time, a projected rate of 8.5% for CABs was used for the
funding analysis. Based on further discussions with the industry and their financial advisors, 
staff recommended that the rate on any Port Investment be the rate on any bonds sold to fund the
facility. The applicable bonds would be those that most closely resembled the Port Investment  
CABs if any were sold, otherwise, long-term maturities. 
On June 30, 2009, the Commission approved Resolution No. 3624 (CFC Resolution) which
authorized the collection of CFCs and delegated to staff the setting of the CFC rate within certain
parameters. The CFC Resolution requires that the Commission establish the rate of interest
applied to the Port Investment if that rate exceeds the Port's rate of return on its investment pool 
("Temporarily Idle Port Funds"). The Port's investment pool as of July 2, 2009 is earning a rate
of 3.08% 

REQUESTED ACTION 
Establish a 7.4% interest rate on a Port Investment to partially fund the costs associated with the
design and construction of the Consolidated Rental Car Facility (CRCF) program.

Limitations of Translatable Documents

PDF files are created with text and images are placed at an exact position on a page of a fixed size.
Web pages are fluid in nature, and the exact positioning of PDF text creates presentation problems.
PDFs that are full page graphics, or scanned pages are generally unable to be made accessible, In these cases, viewing whatever plain text could be extracted is the only alternative.