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January 23, 2012

The Honorable Frank Chopp, The Honorable Richard DeBolt, The Honorable
Mike Sells, The Honorable Cary Condotta, and The Honorable Dave Upthegrove

The Honorable Lisa Brown, The Honorable Mike Hewitt, The Honorable
Jeanne Kohl-Welles, and The Honorable Jana Holmquist Newbry

Subject: The Concessions Program at Seattle-Tacoma International Airport

Dear Colleagues,

On behalf of the Port of Seattle Commission, I am writing to provide you an update on the
status of the Port of Seattle's review of the Seattle-Tacoma International Airport's Concessions
Program. The CommissionIs fully engagedIn the"Issue and has been working with all stakeholders
to develop a program that addresses the interests of the airport, businesses, their employees and the
traveling public.

The airport will engage in bidding concessions leases before the current leases expire during
2015 to 2017. Today, there are more than 85 concession units employing more than 1,500 workers
at Sea-Tac. The typical length of employment for a concessions worker at the airport is two to five
years. These concessionaires and workers serve more than 30 million members of the traveling
public every year. They provide food, retail, services and a familiar face for the 14,000 people who
work every day at airport facilities. The concessions program generates operating revenues that
are
100 percent reinvested at the airport, and are vital to sustaining the airport in this era of economic
uncertainty.

In the coming years, as passenger traffic at Sea-Tac grows, new jobs will be created, and
there will be new opportunities for entrepreneurs and new business owners at the airport. The
concessions program is and will continue to be an economic engine and an engine of equal
opportunity for the South King County communities.

Commission Decision Schedule

The Port Commission recognizes the many compelling interests in the airport concessions
program and the future interests for over 1,500 airport workers. History proves the concessions
program has been one of the most impressivejobs generators for South King County's diverse
communities: since 2004, the number of concessions employees has grown from 732 to 1,508, more
than doubling the work opportunities and serving as a major employment bulwark through this terrible
recession. Our goal is to protect these jobs and to help concessionaires create newjobs in the
future.
'
The Commission must shape its policy around earlier litigation with our tenants which may
have an impact on the Port's ability to regulate certain lease terms with our airport concessionaires.
For that reason, the Commission has retained Mr. Mark Hutcheson as outside legal counsel to advise
us regarding policy-making in the concessions leasing arena. We anticipate having independent
legal analysis completed by the end ofJanuary 2012. At that point, the Commission plans first to

1

discuss its policy options in public session prior to taking any vote on this issue. Following
Commission direction, airport staff will be working with industry experts and concession program
stakeholders throughout 2012 and 2013 to create a "Concessions Master Plan" to guide the
successful redevelopment of the airport concessions program in 2015 through 2017.

In line with the Port's role as a major economic engine in Puget Sound and the State of
Washington, the Commission has embarked on a once-in-a-generation, multi-year effort to advance
our Century Agenda, an agenda with a vision to generate 100,000 new Port-related jobs for our
region in the coming 25 years. Some of those jobs will be in airport concessions, and we will continue
to stay true to our vision: to endeavor at all times to sustain and grow the concessions program in
ways that will create good jobs with fair wages for all concession employees.

Commission Principles

The Port Commission has been developing some principles that will constitute, when they are
adopted at a Commission meeting, the Commission's direction to Port staff regarding the
concessions program and all future selections of concessions leases. Additionally, these principles
have been provided to Mr. Hutcheson to inform his analysis and ensure that his recommendations
and legal advice are responsive to Commission preferences wherever legally practicable.

Concession Program Vision. The Port of Seattle's airport concessions program reflects our
commitment to the shared values of equal opportunity, economic security, and entrepreneurial
initiative. We strive to provide exceptional services to our traveling public and airport customers, and
to offer a variety of products and shopping experiences that reflect the Pacific Northwest character.
We expect our concessionaires to follow the "best practices" of their industry; adhere to the highest
standards of professional conduct; meet their contractual responsibilities to generate revenues for the
Port of Seattle; and treat their employees, competitors, and the public with dignity and respect.

Concession Program Values. The Commission seeks to balance diverse values in
implementing a policy governing current and future concession leases. These values include:
encouragement of small business opportunities, preservation and expansion of employment
opportunities for concessions employees, participation of disadvantaged business enterprises, job
security for concessions employees, growth in non-airline revenue, and strengthening the Seattle and
Pacic Northwest sense of place.

Preliminary Concessions Program Goals:

1. The Port of Seattle will identify and encourage participation from a mixture of local small
businesses and national concessions companies for the future concessions program.

2. Contingent upon legal advice from outside counsel, the Port of Seattle will endeavor to maximize
continued employment opportunities and job security for those qualified workers wishing to continue
working in the concessions program in the event their employer does not remain an airport lessee.
The Commission would like the airport concessions program to be equally attractive to large prime
concessionaires, Airport Concession Disadvantaged Business Enterprises (ACDBE), small
businesses and locally-themed businesses.

3. The Commission seeks to expand future ACDBE participation levels by creating more
opportunities for ACDBE lessees throughout the duration of the concessions leases.

4. The Commission directs Port staff to develop a program that encourages very small businesses,
for example those with average annual receipts of $750,000 or less, to open concession units with
kiosks or carts that require lower initial investment costs.

5. The concessions program will create more opportunities for local-themed businesses that reflect
the Pacific Northwest's character and sense of place, and will develop strategies that encourage both
national and local concessionaires to compete for these opportunities.

6. The concessions program will continue its policy of street pricing.

7. The Port will take several other steps to make it easier for concessionaires to build out their
concessions and be open for business more quickly and inexpensively. These steps include providing
all necessary utility infrastructure to the lease line of all concessions units, streamlining the
architectural review process to minimize the time and expense associated with concessions facility
development, and varying the lease terms of new tenants to minimize disruption in the concessions
program and to better balance the demand for and supply of construction companies available to
perform concessions development work at the airport.

The Port Commission appreciates the Legislature's interest in Sea-Tao Airport and our
concession program, and would ask you to defer any further action on HB 1832. We are moving to
develop the program and create new opportunities in a comprehensive and deliberate manner,
recognizing the complex business, economic and legal issues involved. We are condent that the
Commission will develop solutions that will continue to generate revenues to support airport
operations as well as vital economic activity and newjobs for the region.

Sincerely,
illMm
Gael Tarleton
President
Port of Seattle Commission