PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6g 
ACTION ITEM 
Date of Meeting     April 14, 2015 
DATE:    March 20, 2015 
TO:      Ted Fick, Chief Executive Officer 
FROM:   James R. Schone, Director, Aviation Business Development 
Jolene Culler, Senior Property Manager, Aviation Properties 
SUBJECT:  ATZ Lease Amendment for Doug Fox Parking Lot 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to amend the lease with ATZ
Inc. (Exhibit A) for the operation of the Doug Fox Parking Lot located north of South 170th 
Street and east of the Northern Airport Expressway to extend the term nine months, defer
increases in the concession fee and Minimum Annual Guarantee, and provide other modest relief
for operational impacts and delays caused by construction of the Doug Fox Parking Lot Services
Upgrades Project. 
SYNOPSIS 
On July 9, 2013, the Commission approved the Doug Fox Parking Lot Services Upgrades Project
as well as a lease with ATZ for operation of the parking facility commonly known as the Doug
Fox Parking Lot. Port staff returned to Commission on October 8, 2013, for additional
authorization to construct this project based on a low bid that was more than 10% over the
engineer's estimate. Following Commission approval of that request, total project authorization
was $6,503,000. 
The lease with ATZ commenced on October 1, 2013. The lease specified that construction of the
project would be substantially complete by the end of summer 2014. When compared to later
years, the lease included a lower percentage rent (55%) and Minimum Annual Guarantee (MAG)
($1.5 million) for the first year to account for the impact of construction on the facility. Due to a
number of reasons, the major works construction contract was  substantially  completed
February 27, 2015, five months later than originally scheduled. The lease specifies that ATZ is
due relief for construction that materially deviates from the original schedule and negatively
impacts operations. 
ATZ submitted a claim in September, 2014 for the harm suffered from changes in the schedule. 
However, ATZ also failed to complete the divestiture of its ownership in another parking facility
located within three miles of the Airport or the leased premises within the timeframe granted to it
by the Port.  Therefore, the Port and ATZ negotiated revised terms during the past several
months that account for the negative impacts of the delayed construction and that reflect both

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 20, 2015 
Page 2 of 8 
parties' roles in these delays as well as the delayed divestiture by ATZ. With the additional costs
associated with the project as approved by the Commission on January 6, 2015, the adjustments
to the lease related to relief for ATZ as presented in this request to Commission, and using
updated transaction and revenue forecasts provided by ATZ, the Net Present Value (NPV) for
the Port's investment is approximately $1.26 million compared to a NPV of $3.46 million 
estimated when the Commission approved the additional project funding on October 8, 2013. 
BACKGROUND 
The Doug Fox Parking Lot is currently operated by ATZ as an off-site surface parking lot at
Seattle-Tacoma International Airport. The lot has been used primarily for automobile parking
since its development well over 20 years ago. 
Project 
In February 2012, the Port Commission authorized the design and construction of the Doug Fox
Site Improvements Project that included stormwater and pavement improvements. In May 2012,
the Commission authorized the design of the Doug Fox Parking Lot Service Upgrades Project
that included pavement restoration, lot lighting, improved signage, and potentially operations and
customer service facilities. At that time, the two projects were consolidated into one combined
project for a total project budget of $6,123,000. The project implementation was based on the
tenant remaining operational during construction. 
Lease 
Following Commission approval of design funds, staff initiated a public request for proposals
(RFP) process for a new operator in anticipation of the expiration of the then-current lease
agreement. At the conclusion of that RFP process, ATZ was selected and Port staff initiated
negotiations that concluded in early 2013. The Commission approved the new lease with ATZ in
July 2013, and the new agreement commenced on October 1, 2013. That agreement was for five
years with two, five-year options at the mutual consent of both parties. The lease included lower
percentage fees (55%) and MAG ($1.5 million) for the first year of the lease (October 1, 2013  
September 30, 2014) to account for impacts to operations during the construction of the project.
Starting in year two of the lease, October 1, 2014  September 30, 2015, the percentage fee was
scheduled to increase to 60% with a MAG of $2.5 million. 
The lease also included a provision requiring the owner of ATZ to divest of his interest in
another parking facility located in the City of Tukwila. This was a requirement of the RFP that
stipulated that any  respondent  chosen to operate  the lot could not have a financial or
management interest in any other parking facility located within three miles of the leased
premises. ATZ did not complete this divestiture within the originally agreed timeframe.  The
divestiture was completed on December 1, 2014.
In July 2013, the Port Commission also authorized the construction of the project that included
stormwater management facilities, pavement restoration, lot lighting, improved signage, a new
operations building, a new covered entrance and exiting facility, demolition of the existing

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 20, 2015 
Page 3 of 8 
building, and supporting utilities. In September 2013, the bids were opened for the project, and
since the lowest responsive bid exceeded the engineer's estimate by more than ten percent,
additional authorization by the Commission was required. In October 2013, the Commission
authorized the additional budget to support the bid, for a total project budget of $6,503,000, and
the contract was executed with the successful bidder on October 29, 2013. 
Project Completion Delay 
The lease and the project specifications envisioned that construction of improvements tothe lot 
would begin in the fall of 2013 and be completed by the end of summer 2014. There were a
number of issues encountered during construction that delayed substantial completion of the
major construction contract five months, until February 27, 2015.  In January 2015, the
Commission authorized the additional budget to complete the construction of the project given
the five-month delay described above for a total project budget of $6,930,000. At that time staff
also notified the Commission that construction claims had been received, reviewed, and rejected, 
but that if validated, would exceed the remaining construction contingency for the project. These
claims remain unresolved; however since completing the project, staff has determined sufficient
project contingency remains to cover their resolution at staff level. 
The lease states that in the event that the Port materially deviates from the project schedule and,
despite its commercially reasonable efforts, the lessee's operations are substantially and
negatively impacted, the Port agrees to negotiate a further equitable adjustment in the Minimum
Annual Guarantee or to bear reasonable costs of any modifications to the premises reasonably
necessary to permit the lessee to continue to operate its business. The lease also states: "the Port
generally intends to follow the phasing plan set forth in the design documents, with construction
continuing, as weather permits, through the summer of 2014." 
Tenant Request for Relief 
This delay in completion of the project has negatively impacted ATZ's operations. Therefore,
ATZ requested relief for not only the delay in completion of the project but also for the delay
associated with the completion of specific project elements. At the time the lease was signed, the
project bid documents included five phases for project completion within which key project
elements, specifically signage (Phase 1), a new operations building (Phase 2) and a new entrance 
and exiting facility (Phase 3) were designated for completion. Having these elements completed 
early in the project was critical for ATZ's plan to build the business in anticipation of the
increased percentage fees and higher MAG effective at the start of year two of the lease, or 
October 1, 2014. ATZ had planned to launch a marketing campaign once the new entrance and
exiting facility and signage work were completed. However, the signage was not installed until
early November 2014, the operations building was not completed until mid-November 2014, and
the new entrance/exit facility was not completed until February 27, 2015  all well after the
project was originally understood by all parties to be completed. 
The project was completed five months late and the Port agrees that the phasing plan for
completion of key project elements was essentially inverted, resulting in these elements (the

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 20, 2015 
Page 4 of 8 
signage, operations building, and entrance and exiting facility) being completed much later than
expected. Port staff evaluated ATZ's claim for MAG and concession fee relief including both
the Port's and the tenant's role in causing the delays to completion of key project elements and
then tried to quantify the appropriate compensation due ATZ for the delay. To do so, staff used 
the contractor's initial project schedule as the basis for the analysis. While this schedule was
submitted after lease negotiations were completed, it is the best tool available to assist in
quantifying the amount of relief to be considered. 
Deliverable             Phasing Plan           Actual          Difference 
Signage              Mid March 2014     Early November 2014     7 months 
Operations Building       Mid April 2014      Mid November 2014      7 months 
Entrance/Exiting Facility    Mid July 2014       February 27, 2015       7 months 
KEY AMENDMENT TERMS 
Based on the Port's delay in completing the overall project as well as several key elements of the
project and ATZ's delay in completing the divestiture of its ownership in another parking facility
located within three miles of the Airport or the premises as called for in its lease with the Port,
the parties have mutually agreed on the proposed terms for relief as summarized below: 
Nine-month extension of the lease term and an equivalent deferral of the increases in the
MAG and percentage fee. With this change, the new MAG and percentage fee would
begin July 1, 2015 (rather than October 1, 2014) and would increase every 12 months
thereafter. This provides relief for the late completion of key project elements and gives
ATZ time to launch a marketing campaign and build the business before the MAG and
percentage fee go up. 
Rent and utility credits for the period April 1, 2014, through October 31, 2014, for a total
of approximately $25,000. This is due to the delay in providing the new operations
building, which is less square footage, and thus less rent ($1,500 per month compared to
$2,904 per month) than the existing operations building and lower utility charges as it
will be connected to the local sewer system. 
The Port releases ATZ from any claims related to its not having completed divestiture of
another parking facility within the originally agreed timeframe. 
ATZ releases the Port from any claims associated with the construction of the
improvements called for in the lease and the deviation from the schedule called for in the
lease. 
ATZ releases the Port from any claims related to the impacts to its operations from the
construction of the the nearby improvements described in the lease to the extent such
impact has occurred prior to the date of this amendment.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 20, 2015 
Page 5 of 8 
The amendment also includes an increase in the leased premises of 630 square feet to
accommodate storage displaced from the operations building as well as the addition of 24 square
feet to reflect the location of a monument sign. 
Lease Summary and Financial Analysis: 
Below is a comparison of the key business terms of the current lease and the amended lease. 

Current Lease       Amended Lease 
Term      Five (5) years      Five (5) years plus 9 months 
MAG     Year 1:   $1.5M  Month 1-21     $1.5M 
Year 2:     $2.5M   Month 22-33       $2.5M 
Year 3:     $2.6M   Month 34-45       $2.6M 
Year 4:     $2.7M   Month 46-57      $2.7M 
Year 5:     $2.8M   Month 58-69       $2.8M 
Percentage
Fee         Year 1:     55%    Month 1-21       55% 
Year 2:     60%    Month 22-33       60% 
Year 3:     61%    Month 34-45       61% 
Year 4:     62%    Month 46-57      62% 
Year 5:     63%    Month 58-69       63% 
Building
Rent         $1,500.00        $1,500.00 
Effective On
Occupancy        Effective On April 1, 2014 
The value of the proposed relief is largely the same as described in the December 2, 2014 memo,
with the exception that the request to install Variable Message Signage (VMS) at a cost of $25k
is no longer included. The proposed relief, inclusive of the 9 months of percentage fee and
MAG relief along with the rent and utility credits, results in a decrease of approximately $230k
in present value to the Port and shall be realized entirely within the first lease term. The impact
of removing the VMS installation in the relief package does not fundamentally change the
financial analysis shared with Commission on January 6, 2015.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 20, 2015 
Page 6 of 8 
CIP Category          Revenue/Capacity Growth 
Project Type           Business Expansion/New Business Development 
Risk adjusted Discount    8% 
rate 
Key risk factors           Financial risks: general economic conditions will impact
the parking market and if general economic declines
occur in the future, incremental revenues may fall short of
forecasts. 
Financial results were analyzed over two timeframes, 1) 
5-years and nine months and 2) 15-years and nine months,
accounting for the extension period associated with relief. 
There is risk associated with a potential future conversion
of the property to non-parking use, and lease terms
associated with future extensions. 
Project cost for analysis     $6.93 million 
Business Unit (BU)       Landside 
Effect on business        The financial analysis assumes that with construction of the
performance           project improvements at the facility, annual revenues to the
Port will increase.   Current revenues to the Port are
approximately $2 million per year.  Within five years of
implementation of the improvements, annual revenues are
anticipated to increase by approximately  $1.5  million. 
Within ten years, annual revenues are anticipated to exceed 
$5 million. 
IRR/NPV           NPV: $1.26 million 
IRR: 9% 
Payback: 10 years 
CPE Impact          None 
If the baseline revenues used for the above financial analysis are revised to reflect that the
facility was actually in such a state of deterioration in 2012 that without the investment in
improvements, a more realistic scenario was for the revenues from the facility to decrease by
20% per year through 2016 when the facility would have to be closed. If that baseline scenario
is used, the financial metrics for the new investment based on a 15 year analysis are:  NPV of
$20 million, an IRR of 18% and the Payback Period of 4 years. If based on just a 5 year
analysis, the financial metrics are: NPV of ($1 million), an IRR of 4.5% and a Payback of 4
years. 
STRATEGIES AND OBJECTIVES 
This project aligns with the Port's Century Agenda strategy of advancing the region as a leading
tourism destination and business gateway.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 20, 2015 
Page 7 of 8 
ENVIRONMENTAL SUSTAINABILITY 
Environmental sustainability elements related to this project are described in associated Project
memos. 
BUSINESS PLAN OBJECTIVES 
Approval of this lease amendment authorization request will contribute to achievement of the
airport's business plan objective of "maximizing non-aeronautical net operating income" by
generating increased non-aeronautical revenues. 
TRIPLE BOTTOM LINE SUMMARY 
The project supports economic development by investing in an upgraded parking lot to serve the
public's parking needs at the Airport.  Environmental sustainability principles  have been 
employed consistent with Port policy.
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Do not amend the lease. This would likely result in legal action by the Lessee, 
and the Port's financial responsibility could increase beyond what is proposed. This is not the
recommended alternative. 
Alternative 2)  Negotiate a different lease settlement of less magnitude with ATZ. This may or
may not be successful, and would delay the prompt resolution sought by both parties.  It could
result in legal action by the Lessee and the Port's financial responsibility could increase beyond
what is proposed. Further the Lessee may find the terms untenable and could default on the
Lease thus putting the projected revenues at risk. This is not the recommended alternative. 
Alternative 3)  Authorize this lease amendment. This would enable both parties to proceed in
good faith and give assurance that the financial returns set forth in the business case are realized.
This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Exhibit A - Amendment to Lease and Concession Agreement. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
January 6, 2015, the Port of Seattle Commission authorized (1) an additional $427,000
to complete the construction of the Doug Fox Site Improvements project for a total
authorization of $6,930,000, and (2) the Chief Executive Officer to execute change
orders to extend the construction duration by up to 180 days to complete changed work
associated with the operations building. 
On December 9, 2014, the Port of Seattle Commission was presented but deferred taking
action to authorize the Chief Executive Officer to amend the lease with ATZ for the
operation of the Doug Fox Parking Lot to extend the term nine months, defer increases in

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 20, 2015 
Page 8 of 8 
the concession fee and Minimum Annual Guarantee, and provide other modest relief for
operational impacts and delays caused by construction of the Doug Fox Parking Lot
Services Upgrade Project. 
December 2, 2014, the Port of Seattle Commission was presented, but deferred taking
action to authorize (1) additional $427,000 to complete the construction of the Doug Fox
Site Improvements project for a total authorization of $6,930,000, and (2) the Chief
Executive Officer to execute change orders to extend the construction duration by up to
180 days to complete changed work associated with the operations building. 
October 8, 2013, the Port of Seattle Commission authorized the Chief Executive
Officer to execute a major public works construction contract with the low responsive
and responsible bidder for an additional $1,385,000 for a total authorization of
$6,503,000. 
July 9, 2013, the Port of Seattle Commission authorized the Chief Executive Officer to:
(1) advertise, award, and execute a major public works contract for the Doug Fox Site
Improvements project; and (2) execute a Developer Extension Agreement with the
Valley View Sewer District for an additional $3,322,000, for a total authorization of
$5,118,000. 
July 9, 2013, the Port of Seattle Commission authorized the Chief Executive Officer to
execute a lease with ATZ, Inc., for a term of 5 years with two 5-year extension options
upon mutual agreement. 
June 4, 2013, the Doug Fox Site Improvements project was presented to the Port
Commission but no final action was taken. 
March 5, 2013, the Port Commission postponed consideration of the Doug Fox Site
Improvements project. 
May 22, 2012, the Port Commission authorized the Chief Executive Officer to: (1)
increase the scope of the Doug Fox Site Improvements project to include resurfacing,
lighting, building, and road signage; (2) to execute utility agreements; and (3) to
complete the design of the project for an additional $768,000, for a total authorization
of $1,796,000. 
February 4, 2012, the Port Commission authorized the Chief Executive Officer to
complete the design and to utilize Port Construction Services crews for the construction
of the Doug Fox Site Improvements project in the amount of $1,028,000.