PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      7b 
STAFF BRIEFING 
Date of Meeting     April 14, 2015 
DATE:    March 27, 2015 
TO:     Ted Fick, Chief Executive Officer 
FROM:    R. Borgan Anderson, Director, Aviation Finance & Budget 
SUBJECT:  International Arrivals Facility  Funding Plan Update 
SYNOPSIS 
The focus of this briefing is to: 
1)  Update the Commission with new information on future FIS rates at competing
airports and on the importance of the FIS rate for an airline contemplating new
international service at Sea-Tac 
2)  Present two new funding scenarios, and 
3)  Present a recommended funding plan and a set of principles to guide the ongoing
evolution of the funding plan as conditions change. 
BACKGROUND 
On January 27, 2015, staff provided the Commission with changes to the Aviation capital
program in order to accommodate the cost increase of the IAF. Staff communicated that
the total capital plan for 2015  2019 can be easily funded while maintaining airline cost
levels (as measured by cost per enplaned passenger, or CPE) and debt levels (as
measured by debt per enplaned passenger) well within the middle third of peer airports.
The importance of using Passenger Facility Charge revenues (PFCs) to manage costs
within cost centers was highlighted as an important policy decision. Use of PFCs helps 
maintain reasonable rates such as the Federal Inspection Services (FIS) rate paid by
airlines with international arrivals.
Since the January presentation, the Port contracted with consultants to better understand
future FIS rates at competing airports and to quantify the importance of FIS costs to an 
airline contemplating introducing new international service at Sea-Tac. Both of these
studies point to the importance of maintaining a future FIS rate that is within the range of
our competing airports (the "market" rate). If Sea-Tac has an FIS rate well above our
competitors, it would likely put Sea-Tac at a disadvantage for retaining and attracting
new international service.
Staff has incorporated analysis of two more scenarios to further demonstrate how funding
tools can be used to manage the ultimate FIS rate. One of these scenarios was suggested
by Alaska Airlines at the January 27 meeting. This scenario limits the amount of PFCs to
be used to fund the IAF to 10% of PFC collections each year, approximately the current
percentage of international passengers.  The other new scenario reflects a more

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 27, 2015 
Page 2 of 2 
significant Port contribution of its cash to reduce both the reliance on PFCs and to reduce
the amount of debt required. With this scenario, the Port would exclude the amortization
on this cash from the rate base (using the provision in Section 8.4.4 of the airline
agreement permitting the Port to use non-aeronautical revenues to offset FIS costs). This
scenario will be presented as the recommended funding plan as it achieves the goal of
maintaining the FIS rate within the market range.
Staff will also recommend agreement on a set of principles to guide adjustments to the
funding plan as conditions change: 1) maintaining market CPE and 2) maintaining market
rates across the Airport (landing fees, terminal rents and FIS rate). For the FIS rate, the
cost impact of the IAF will not be incorporated into the rate until the facility is completed
in 2019. There remain many uncertainties that could impact the future FIS rate. Those
include ultimate cost of IAF ($608 million is based on zero percent design), growth in
international passengers, maximum allowable PFC level, and market FIS rates at
competing airports. Basing the funding plan on these principles will guide periodic
updates to the funding plan as conditions change. The two new scenarios and the
recommended funding principles were presented to the airlines on March 19. 
Based on Commission input staff will refine the proposed funding principles and funding
plan for the IAF as needed. In May , the Port will seek airline approval for the IAF
project increased cost through a majority-in-interest vote (MII).  The agreed upon 
funding plan will be the basis for the financial impacts (airline rates and CPE) of the
project reflected in the MII proposal. The funding plan will also serve as the basis for the
financial forecast used in preparation for the upcoming revenue bond issue.
To use PFCs as a funding source for a project, an airport must receive approval from the
Federal Aviation Administration through an application process that includes
consultation with the airlines. The Port plans to develop and submit an application to use
PFCs for the IAF, the North Satellite Expansion project, and the Baggage Optimization
project in late 2015 or early 2016.

ATTACHMENTS TO THIS BRIEFING 
Computer slide presentation. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
January 27, 2015  IAF Funding Plan Update 
April 22, 2014  Airport capital program and funding update