COMMISSION 
AGENDA MEMORANDUM                        Item No.          8h 
ACTION ITEM                            Date of Meeting      February 9, 2021 
DATE:     February 9, 2021 
TO:        Steve Metruck, Executive Director 
FROM:    David McFadden, Managing Director Economic Development 
Kyra Lise, Director of Real Estate Development 
SUBJECT:  SR509 Right-of-Way Surplus Acquisition 
Amount of this request:                    $3,150,000 
Total estimated project cost:                $3,150,000 
ACTION REQUESTED 
Request Commission authorization for the Executive Director to execute a purchase and sale
agreement to acquire SR509 Surplus property in Des Moines, WA for $2,900,000 plus associated
fees, including predevelopment costs, due diligence and feasibility studies. The property will
support development of an adjacent Port-owned property and add value to the overall
development of this site.
EXECUTIVE SUMMARY 
The Port of Seattle and Washington State Department of Transportation (WSDOT) have agreed
to terms to acquire a 14-acre WSDOT-owned parcel located on S. 216th Street in Des Moines,
WA. This parcel is identified as the SR509 Surplus Site and was designated as a right-of-way for
the former SR509 extension project. This section of the highway extension is now obsolete and
the Port is interested in buying this parcel in order to connect two other Port properties on both
adjacent sides of the subject parcel.
This Port acquisition will allow all parcels to be one contiguous parcel with a direct connection to
the Des Moines Creek Business Park. This new contiguous section will be called "Des Moines
Creek West" (DMCW) and be part of a long-term ground lease development strategy slated for
Q2 2021 Request for Proposals (RFP). 
Port staff has completed various due diligence activities on the property so the Port can issue this
RFP soon after the purchase in collaboration with the Aviation Division. The property is currently 
vacant forest land. 


Template revised September 22, 2016.

COMMISSION AGENDA  Action Item No. 8h                                  Page 2 of 5 
Meeting Date: February 9, 2021 

Sellers (WSDOT) of the SR509 Surplus Property have accepted the Port's offer of $2,900,000. This
price has been substantiated by our own appraisal, their appraisal and a final third appraisal that
both parties (buyer and seller) have agreed to. 
The investment made at Des Moines Creek-West will help fulfill the goals and economic benefits
of the Port of Seattle's Century Agenda in the following ways: 
Support SEA operations by generating income for the Aviation division and developing
property for aviation suppliers, logistics and support operations; 
Development of DMCW will create jobs and provide economic benefits to the City of
Des Moines and surrounding communities.
Will complement the nearby Des Moines Creek Business Park by adding additional
best-in-class industrial inventory that will continue to attract and retain growing firms,
keeping jobs within King County and the nearby region. 
The infill location of Des Moines Creek-West will help reduce sprawl by creating new
light industrial facilities adjacent to current road infrastructure, highways, and public
transportation. 
Land Summary 
The site is a 14.3-acre vacant land parcel with an irregular shape. Based on soil surveys and other
initial research, the site has reasonable level areas, but the northern portion is impacted by
moderate slopes. Based on the information available, the wetlands and buffers also impact 72%
of the site leaving four acres of usable land area. 
JUSTIFICATION 
Acquiring the WSDOT property enhances development of the Port's DMCW property, which
flanks this property on both sides of the subject. Assembling these parcels results in a larger and
more regularly shaped parcel, which is more conducive to development. The WSDOT property
favorably impacts overall development of DMCW by allowing developers to maximize overall use
of the properties, significantly provide more jobs and increase land rent revenues by 46%. 
The DMCW property was originally purchased to support development of the third runway at
Seattle Tacoma International Airport (SEA). Developing DMCW can further develop the aviation
supply chain and drive SEA efficiencies. The development also creates jobs for the City of Des
Moines and generates favorable economic impacts for the city and surrounding communities.
The property development can also generate income to support SEA operations and capital
projects. Additionally, the development can advance Port Diversity in Contracting and Workforce
Development goals. 

Template revised September 22, 2016; format updates October 19, 2016.

COMMISSION AGENDA  Action Item No. 8h                                  Page 3 of 5 
Meeting Date: February 9, 2021 

The new assemblage would have good visibility and access to I-5 and SR509. The larger industrial
market continues to have low vacancy rates along with rising rents. The demand fueling rent
growth and low vacancies over the past ten years has attracted a lot of new development. The
strong and positive absorption rates show new deliveries are quickly being absorbed. Current
vacancy of less than 5% is well below the historical average of 9.9%. In addition, rent growth has
averaged over 7% over the last five years (2016-2020), indicating demand remains strong in the
face of new supply. 
Given strong market demand for industrial property it is an excellent time to develop DMCW.
We are also well prepared to go to market. The City of Des Moines and the Port have worked
over the past couple years to widen adjacent roadways and improve overall access to this site
and general area. 
The larger property can support up to 300,000 square feet of light industrial warehouse facilities 
Tenants may include food processors, manufacturers, and logistics providers that support the
aviation and air cargo industries. 
DETAILS 
Upon Commission authorization staff would execute the purchase sale agreement (PSA) with
WSDOT. Staff will also work with the City of Des Moines to merge these parcels through a
boundary line adjustment process. On a parallel path, we will begin the RFP process which will
determine a development partner, who we will ultimately negotiate a long term ground lease
agreement with, and they would subsequently begin pre-development, entitlements and
permitting, build the facilities and finally, procure a final end user / tenant. 
Schedule 
Activity 
Commission purchase authorization            Q1 2021 
RFP Procurement and Land Assemblage         Q2 2021 
Execute Long Term Land Lease                  Q1 2022 
Begin Construction                              Q2 2023 
Certificate of Occupancy                         Q3 2024 

ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Option One: Do Nothing  Pass on Acquisition Opportunity 
Cost Implications: None 
Pros 
Retains Port capital for other priority projects and finance initiatives. 

Template revised September 22, 2016; format updates October 19, 2016.

COMMISSION AGENDA  Action Item No. 8h                                  Page 4 of 5 
Meeting Date: February 9, 2021 

The property could remain available for an unknown airport operational purpose and
expansion of adjacent property development at a later time. 
Cons 
Potential to lose this aviation supportive land to a non-compatible and non-aviation 
/Industrial use. 
Loss of ability to add additional light industrial space in the City of Des Moines. 
Missed opportunity to lead or help with wetland remediation and environmental
enhancement at this site. 
This is not the recommended option 
Option Two: Purchase the vacant surplus property 
Pros 
The purchase would protect and reserve future industrial land development and provide
needed space for local distribution and manufacturing companies related to the aviation
sector. 
The property assemblage is adjacent to the highly successful Des Moines Creek Business
Park.
The property would support new job creation. 1 new 300,000 square foot light
industrial facility typically supportive of 400 jobs. 
The property provides the Port a wetland remediation opportunity. 
Environmental liabilities and buffers are balanced by reduction in purchase price. 
Cons 
The acquisition and development use Port capital at a time when there are other competing
needs with limited long-term financial capacity. 
This is the recommended option 

Option Three: do not purchase, and develop only Port-owned parcel 
Cost Implications: Site Due Diligence and associated predevelopment costs of approx.. $250,000 
Pros 
Retains Port capital for other priority projects and finance initiatives. 
Develop adjacent 14 acre property, although limited, but still feasible. 
The property could remain available for an unknown airport operational purpose and
expansion of adjacent property development at a later time. 
Cons 
Potential to only create half as many jobs as the larger project can deliver. 
Loss of half of ground rent revenue that will be attained by larger project. 

Template revised September 22, 2016; format updates October 19, 2016.

COMMISSION AGENDA  Action Item No. 8h                                  Page 5 of 5 
Meeting Date: February 9, 2021 

Missed opportunity to satisfy the air cargo market with a larger light industrial building. 
This is not the recommended option 
FINANCIAL IMPLICATIONS 
Annual Budget Status and Source of Funds 
The purpose of purchasing, and the ultimate assemblage of Des Moines Creek-West is to put the
property back into productive use with an aviation supportive and compatible development. To
ensure a Fair Market purchase price for the land, the Port and the seller appraised the property
in its current condition and then both parties agreed to a third and final appraisal of $2.9m. This
ensures the Port starts off with a low land cost basis which will ensure healthy financial returns. 
We are confident that the future lease proposals on this land assemblage that the eventual RFP
will present, will exceed the financial expectations and addresses the aspirational goals set by
Commission for a property that has otherwise remained fallow and vacant for decades. 
Financial Analysis and Summary 
Initial project cost for analysis*      $3,150,000 
Business Unit (BU)                  Aviation - Airport Development Fund 
Effect on business performance     Revenue, Expense, and Depreciation is planned to
(NOI after depreciation)             stabilize at the end of year 3 with NOI after Depreciation
of approximately 21% 
IRR/NPV (if relevant)                IRR 7.8% 
CPE Impact                       N/A 
Future Revenues and Expenses (Total cost of ownership) 
ATTACHMENTS TO THIS REQUEST 
(1)   Appraisal Summary 
(2)   Purchase Sale Agreement 
(3)   DMCW Analysis and Conceptual Options 
(4)   Presentation slides 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
None 



Template revised September 22, 2016; format updates October 19, 2016.