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COMMISSION 
AGENDA MEMORANDUM                        Item No.          8c 
ACTION ITEM                            Date of Meeting      January 26, 2021 
DATE:     December 28, 2020 
TO:        Stephen P. Metruck, Executive Director 
FROM:    Fred Chou, Capital Program Leader, Seaport Project Management 
Melinda Miller, Director, Portfolio & Asset Management, Economic Development 
SUBJECT:  P66/Bell Harbor International Conference Center  Modernization  Project (CIP 
#C800889) Additional Funding Request 
Amount of this request:                 $390,000 
Total estimated project cost:         $11,950,000 
ACTION REQUESTED 
Request Commission authorization for the Executive Director to approve additional funding of 
$390,000 for a new estimated total project cost of $11,950,000 for the Pier 66 Interior
Modernization Project on the Bell Harbor International Conference Center (BHICC) to allow the
project to meet its forecasted contract adjustments. 
EXECUTIVE SUMMARY 
This request is for additional budget for the Pier 66 Interior Modernization Project on the Bell
Harbor International Conference Center (BHICC) to allow the project to meet its forecasted
contract adjustments to address unforeseen conditions discovered during construction. The Port
has issued substantial completion to the contractor on August 15th and the facility is in use. 
During construction, the contractor encountered many issues on this legacy facility that required
contract changes to resolve and rectify issues. On December 17, 2020, staff notified the
Commission of the execution of contract change orders exceeding 10% of the contract value as
required by Resolution No. 3605, paragraph 4.2.3.8. Remaining change orders and claim backup
documentations are being reviewed and the total change order costs are projected to 
potentially reach up to 24% of the contract value, which would result in a budget shortfall and
additional project budget is needed.
The funding request includes a reserve to address a $240,900 claim from a subcontractor. Port's
Construction Management staff is contesting the validity of the claim and has requested
additional back-up information. The claim negotiation is expected to take some time to resolve
and may end up in dispute resolution but with this possible future claim and other forecasted

Template revised January 10, 2019.

COMMISSION AGENDA  Action Item No. _8c_                                 Page 2 of 6 
Meeting Date: January 26, 2021 
charges to pay for overruns on time and materials change orders, staff is requesting the
additional funds now. 
BACKGROUND/JUSTIFICATION 
When BHICC opened in 1996, it was considered a state-of-the-art facility. BHICC was one of the
few stand-alone conference centers not attached to a hotel. Its location on the newly developed
central waterfront fulfilled a distinct and as yet unanswered need for a mid-sized event space
while enhancing the region's destination profile (smaller and more intimate than Washington
State Convention Center and Lumen Field Event Center yet larger than most hotel event
facilities). Subsequently, the conference and cruise spaces were successfully integrated to
provide expanded access to waterfront views and venues enhancing its competitive position and
overall marketability as an event destination. Today, the Pier 66 facility remains one of the few
cruise terminals in the country which operates as an event destination when the ships are not
calling, generating revenue and providing economic benefit to the Port year-round. 
However, the conference and event industry in Puget Sound and worldwide has matured and the
minimum facility standards required to host premier, high-quality conferences and events have
evolved dramatically. People convene quite differently today than 25 years ago; more flexible
and collaborative spaces along with state-of-the-art technology and impactful audio-visual
display to enhance experience creation are now mission-critical to successful events. 
The regional marketplace is rapidly evolving, and multiple new and compelling event spaces are
being introduced in Seattle, Bellevue and other nearby communities. Though our facility is iconic
and enjoys the distinct advantage of a showcase position on the central waterfront, it is showing
its age and a refresh of furniture, fixtures and finishes is required.
The modernization project increases rentable capacity; adds more flexible and customizable
spaces; incorporates new finishes; advances the technology and audio visual infrastructure;
incorporates sustainable and environmentally friendly features; links levels one through three of
the facility with a new interior open staircase and a new ADA-compliant ramp; installs interior
and exterior wayfinding signage; procures new furniture; and upgrades the kitchen equipment. 
DETAILS 
During construction to renovate this 25-year-old legacy facility, the contractor encountered many 
issues that required contract changes to resolve and rectify. For example, roof drains were
concealed in walls and column locations not shown in the as-built drawings and had to be
relocated; legacy electrical power, fire protection, audio visual, and communication wiring from
years of operations and changes over the years that needed additional investigations and tracing,
resulting in delays and relocations; differing thickness of floor slabs not shown on drawings; and
other unforeseen conditions plus design related challenges all attributed to the numerous
contract changes. On December 17, 2020, staff notified Commission of the execution of contract
Change Orders exceeding 10% of the contract value as required by Resolution 3605, paragraph

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. _8c_                                 Page 3 of 6 
Meeting Date: January 26, 2021 
4.2.3.8.  Remaining change orders and claim back-up documentations are being reviewed and
the total change order costs is projected to potentially reach up to 24% of the contract value,
which would result in a budget shortfall and more project budget is needed.
This $390,000 additional funding request includes a reserve to address a $240,900 claim from
the  electrical  subcontractor  for  disruption  related  issues  the  subcontractor  allegedly
encountered. Port's Construction Management staff is contesting the validity of the claim and
has been in discussion with the contractor multiple times. A dditional back-up information has
been requested for review. The claim negotiation is expected to be protracted and may end up
in dispute resolution. The remaining $149,100 portion of the request is to increase construction
contingency to pay for forecasted overruns in time and materials change orders to address
unforeseen conditions discovered during construction. Staff is requesting the additional funds
now to allow the Port to pay the contractor once the change orders are negotiated and executed
without delays. 
In all, the cost growth is a result of multiple issues with most of the larger issues due to varying
site conditions/inaccurate as-builts. There were some COVID-19 related costs but other changes
were equally impactful; the Commission has been notified of increased Interior Modernization
COVID-19 construction costs in the monthly reports required by Commission Motion 2020-09.
The interior modernization project's associated improvements were conducted within a legacy
facility with incomplete and inaccurate as-builts, and comprehensive invasive investigations were
difficult to performed during the design phase due to the way the facility was originally
constructed and challenges associated with ongoing scheduled events and related preparation
activities. With this important lesson learned, staff has been diligent to ensure accurate as-builts
are made and available for easy future retrieval. Staff is still reviewing root causes on some of
the change orders and other lessons learned and will document lessons learned to help future
projects. 
Schedule 
Construction is substantially complete and project closeout phase is being initiated. Change
order and claim negotiations are continuing and may be completed by the end of first quarter or
second quarter, 2021.

ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1  Defer this additional funding request until after the results of change order
negotiations and the subcontractor's claim settlement are known 
Cost Implications: Potentially up to $390,000 would still need to be authorized 
Pros: 
(1)   Amount of additional funding request would be based on the actual negotiated change
orders and claim settlement amounts. 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. _8c_                                 Page 4 of 6 
Meeting Date: January 26, 2021 
Cons: 
(1)   Additional funding request is still needed, just the timing is deferred.
(2)   Some change order(s) that could be executed early would need to be held until
Commission's additional funding approval. C ontractor payment(s) would be delayed 
and in turn impact contractor's payment(s) to the subcontractors. 
This is not the recommended alternative. 
Alternative 2  Assume a claim settlement amount now and use the projected total budget for
the Commission's additional funding authorization. Return to the Commission to seek additional
authorization as necessary pending results of claim negotiation. 
Cost  Implications:    Request  $280,000  additional  authorization  based  on  a  potential
settlement/allowance based on half of the contractor's claim, bringing total approved budget to
$11,840,000 
Pros: 
(1)   Staff would continue review and negotiate with the contractor on the remaining change
orders and subcontractor's claim and pay contractor as they are negotiated/settled. 
Cons: 
(1)   Assumption on the claim settlement amount is arbitrary and actual amount could be
lower or higher.  There still could be a chance that addition authorization would be
required, and if so, additional time would be necessary to obtain Commission funding
approval and some contractor change order payments would be delayed. 
This is not the recommended alternative. 
Alternative 3  Request additional funding based on contractor's full claim amount; continue
review and negotiate with the contractor on the remaining change orders and claim; and pay
contractor as the change orders are negotiated and claim amount settled 
Cost Implications: $390,000 additional funds would need to be authorized 
Pros: 
(1)   The amount of request represents the worst-case cost scenario and if Commission
approves the additional budget, some contractor payments could be paid promptly 
once the change orders are fully negotiated and executed. This would be important
since the  subcontractor's claim in question could end up in protracted dispute
resolution.
Cons: 
(1)   The $390,000 requested additional funding is based on the conservative, full claim
amount. Using this figure, more funds will be obligated and would result in decreased 
capital program's capital capacity. However, if Port is able to prevail on our position on
the claim, the amount of the additional funding request could be as low as $181,200. 
This is the recommended alternative. 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. _8c_                                 Page 5 of 6 
Meeting Date: January 26, 2021 
FINANCIAL IMPLICATIONS 
Cost Estimate/Authorization Summary              Capital        Expense           Total 
COST ESTIMATE 
Original estimate                                $10,860,000        $700,000     $11,560,000 
Current change                                   $390,000               0       $390,000 
Revised estimate                               $11,250,000        $700,000     $11,950,000 
AUTHORIZATION 
Previous authorizations                         $10,860,000        $700,000     $11,560,000 
Current request for authorization                  $390,000                0        $390,000 
Total authorizations, including this request      $11,250,000         700,000     $11,950,000 
Remaining amount to be authorized                    $0             $0             $0 
Annual Budget Status and Source of Funds 
This project was  included  in  the 2021  Plan  of  Finance under  C800889  BHICC  Interior
Modernization with a total project cost of $10,511,000. The current total project estimate is
$11,950,000.  The additional $1,439,000 in project costs will be covered by C800216 EDD
Reserve. 
This additional spending will be funded by the Tax Levy. 
Financial Analysis and Summary (Finance to Revise) 
Project cost for analysis              $11,950,000 
Business Unit (BU)                  Portfolio Management 
Effect on business performance     Please see the project's original construction
(NOI after depreciation)             authorization (June 2019) for a complete financial
forecast for this project. 
At this time, forecasts for future conference and event
activity are highly uncertain due to the COVID-19
pandemic and dependent on the effectiveness of the
vaccination program. On the supply side, the pandemic 
will continue to significantly impact event spaces
throughout in the region. Based on the most recent
forecast (Q3 2020), the project's payback period is
estimated to be approximately 11 years but does not
account for the potential of a post-pandemic (2022)
economic recession. 
ATTACHMENTS TO THIS REQUEST 
(1)   Presentation slides 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. _8c_                                 Page 6 of 6 
Meeting Date: January 26, 2021 

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
October 11, 2016  The Commission authorized $2,500,000 million design funding for the
modernization of the Bell Harbor International Conference Center and the faade of the
Paul Schell Center at Pier 66
June 11, 2019  The Commission authorized $10,350,000 funding for the construction
phase of the Bell Harbor International Conference Center Project for a total estimated
project cost of $11,560,000 















Template revised June 27, 2019 (Diversity in Contracting).