PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      4e 
ACTION ITEM 
Date of Meeting      May 26, 2015 
DATE:    May 18, 2015 
TO:      Ted Fick, Chief Executive Officer 
FROM:   Mark C. Griffin, Director, Real Estate Development 
SUBJECT:  Des Moines Creek Business Park  Revised Ground Lease and Option Agreement 
ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to execute a modified ground
lease and an option agreement amendment with Panattoni Development substantially in the
attached form to support development of the FAA's new regional offices. 
SYNOPSIS 
On June 10, 2014, the Commission approved an option agreement and related form of ground
lease with Panattoni Development to develop the Des Moines Creek Business Park (DMCBP).
The federal General Services Administration (GSA) recently awarded Panattoni the right to
construct the Federal Aviation Administration's (FAA) new regional offices at the south end of
the DMCBP site. The approved ground lease has provisions related to condemnation, insurance
and indemnification that federal government tenants cannot comply with due to federal law.
This action authorizes a modified ground lease with Panattoni to permit a sublease between
Panattoni and the GSA and an amendment to the option agreement to substitute phase three of
the DMCBP project for phase two of the project to enable construction of the FAA facility. 
BACKGROUND 
The Commission authorized execution of an Option to Ground Lease Agreement (Option
Agreement) with Panattoni Development at the June 10, 2014, meeting to develop the DMCBP.
This action included approval of a form of ground lease that Panattoni would execute for each
phase of the DMCBP project. 
In April 2015, the GSA awarded Panattoni the right to construct the FAA's new regional offices 
at the south end of the DMCBP site as phase three of the project (See Attachment 1  Master
Plan for a depiction the project's three phases). The GSA chose Panattoni from a competitive
process that included consideration of several other sites in the region. Panattoni will build an
approximately 300,000 square foot office building and associated parking to house about 1,600
FAA employees. Panattoni will enter into a 20-year sublease with the GSA and must complete
delivery and full occupancy of the FAA facility by August 1, 2017. 
The current approved form of ground lease states that any sublease is "subject to all of the
covenants, conditions, agreements and terms of this agreement." This is a typical provision found in

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
May 18, 2015 
Page 2 of 4 
most ground leases, including the Port's agreements. In reviewing the approved form of ground
lease, however, GSA identified a number of provisions that conflict with its required form of
sublease with Panattoni given the federal laws, regulations and policies to which federal
government tenants are subject. The ground lease provisions to which GSA cannot comply are
generally those related to insurance, indemnification, condemnation, environmental liability, and
binding mediation and arbitration.
Staff proposes to enter into a modified ground lease with Panattoni that addresses the GSA's
concerns. The modified ground lease provides the Port's consent to Panattoni's sublease with
the GSA as a permitted sublease. In return for the Port's consent to the GSA sublease, Panattoni
will agree to remain responsible for any deficiencies stemming from the variances from the
original form of ground lease required by the GSA. The proposed modified form of ground lease
is included as Attachment 2. 
Staff also proposes to enter into an amendment to the Option Agreement. The FAA facility will
be constructed on the area currently designated as phase three of the master plan (see Attachment
1). The phase three acreage will now be under lease sooner than the area designated as phase
two. The proposed amendment allows for substitution of the acreage, rental rate and required
lease-up dates between the two phases such that the FAA facility will now be considered phase
two and the remaining area currently designated as phase two will be deemed phase three. The
proposed option agreement amendment is included as Attachment 3. 
FINANCIAL IMPLICATIONS 
The proposed action accelerates Panattoni's lease-up of the DMCBP project and the revenue the
Port will receive from both land rent and reimbursement of the frontage improvement in lieu fees
that the Port advanced to the City to complete the street improvements to 24th Avenue S. and S.
216th Street required for the project.
STRATEGIES AND OBJECTIVES 
This action supports the Airport's objective to "maximize non-aeronautical net operating income
consistent with current contracts, appropriate use of airport properties and market demand." 
TRIPLE BOTTOM LINE 
Economic Development 
The FAA facility will create a few hundred construction jobs and will house approximately
1,600 FAA staff upon completion. 
Environmental Responsibility 
The GSA requires the FAA facility to be Leadership in Energy & Environmental Design (LEED) 
Gold certified which will help ensure a quality and environmentally friendly facility.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
May 18, 2015 
Page 3 of 4 
Community Benefits 
The City of Des Moines (City) has worked closely with Panattoni and the Port in supporting
Panattoni's pursuit of the FAA facility and enthusiastically supports location of the facility in the
City. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Do not modify the ground lease and option agreement. The FAA facility would
be located elsewhere in the region. This would slow the receipt of additional non-airline revenue
from the DMCBP project.
There is no upside to maintaining the current approved form of ground lease as it relates to the
GSA sublease for the FAA facility. Panattoni agrees to cure any deficiencies arising from the
variances needed by the GSA from the current approved form of ground lease. This effectively
keeps the Port in the same position as it would have been under the current approved form of
ground lease in the event of any disputes. This is not the recommended alternative. 
Alternative 2)  Modify the ground lease and option agreement. The modified ground lease
agreement will enable Panattoni's development of the FAA facility and generate additional nonairline
revenue from the DMCBP project sooner than currently projected. Given these benefits,
there is no downside to modifying the ground lease to allow for the GSA sublease for the FAA
facility, particularly given Panattoni's agreement to satisfy any deficiencies that may result from
the variances needed by the GSA from the current approved form of ground lease. This is the
recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Attachment 1  DMCBP Master Plan 
Attachment 2  Revised Form of Ground Lease 
Attachment 3  Proposed First Amendment to Option to Ground Lease Agreement 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
October 28, 2014  Commission authorized execution of a First Addendum to the Amended
and Restated Second Development Agreement with the City. 
June 10, 2014  Commission authorized execution of an option agreement and related ground
lease agreements with Panattoni Development Company, Inc. or an affiliated entity; and (2)
an Amended and Restated Second Development Agreement with the City. 
June 5, 2012  Commission authorized the execution of the second development agreement
with the City and a ground lease with Puget Sound Energy. 
November 9, 2010  Commission passed Resolution No. 3646 at second reading, surplusing 
right of way needed by the City.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
May 18, 2015 
Page 4 of 4 

November 2, 2010  Commission authorized acquisition of the abandoned streets within the
DMCBP site and passed Resolution No. 3646 at first reading, surplusing right of way needed
by the City. 
July 22, 2008  Commission authorized execution of the first addendum to the first
development agreement with the City. 
February 27, 2007  Staff briefing on progress on the business park project. 
June 8, 2006  Staff briefing on the completed conceptual master plan. 
August 23, 2005  Commission authorized preparation of the conceptual master plan. 
June 28, 2005  Commission authorized the execution of the first development agreement
with the City.