exh A
Exhibit A ITEM NO: ______6a_Supp________ Port of Seattle Commission Regular Meeting April 23, 2013 DATE OF MEETING: _April 23, 2013_ Airline Rates and Charges Resolution First Reading April 23, 2013 History of Negotiation and Resolution Development, 2011-2013 12/11 5/12: Negotiations with airlines re new lease 6/12-8/12: At airlines' request, developed preliminary outline of Resolution and airline impacts 8/12-10/12: Pursued one-year or holdover lease agreement to facilitate continued full negotiations 10/12: Alaska Airlines asserted legal requirement that Port must set rates by Resolution, per federal policy guidelines 10/12-2/12: Port staff preparation of Resolution (with expectation of possible legal challenge) 2/12: Alaska Airlines indicates preference for lease 2/12-4/13: Continued discussion of possible lease terms FAA Rates & Charges Policy In the absence of a lease, airports must follow Federal Aviation Administration (FAA) policy in establishing rates for airline use of airport Rates must be "reasonable" and "not unjustly discriminatory" Port can charge fairly allocated costs of SEA facilities airlines use Port can retain all non-airline revenue Port can retain full control of capital program Port will bear vacancy and enterprise risk Key Provisions of Resolution Rates retroactive to January 1, 2013 Rates established for multiple cost centers to ensure that airlines appropriately pay for costs of facilities they use Instead of single airfield fee, will segregate movement, apron and commercial areas Instead of single terminal rate calculation, separate cost centers for ticketing, gates, FIS/AIF, bag makeup facilities, etc. Key Provisions of Resolution Airlines rates established to fully but only -- recover costs of aeronautical cost centers Operating costs associated with aeronautical facilities and services Debt service coverage of 1.30x debt service Amortization of Port cash investments since 1992 Port assumes risk of vacant aeronautical and non-aeronautical space Need for Current Commission Action Still hope negotiations will yield new lease However, lengthy lease execution process requires action soon to complete by year-end Legal drafting Space exhibit finalization Airline legal and management review Lease execution Holdover 2012 rates recover $30+ million less than 2013 costs Need for Current Commission Action Commission passage of Resolution (First and Second Reading) authorizes staff to: Calculate rates and charges in accordance with the Resolution. Take appropriate steps to implement provisions of Resolution If negotiations are unsuccessful, Commission adoption ensures Port's ability to be fully compensated for 2013 costs
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