COMMISSION 
AGENDA MEMORANDUM                Item No.       6a 
ACTION ITEM                   Date of Meeting    December 13, 2016 
DATE:    November 16, 2016 
TO:     Ted Fick, Chief Executive Officer 
FROM:   Elizabeth Morrison, Director, Corporate Finance 
SUBJECT:  Resolution No. 3729 authorizing the issuance and sale of limited tax general
obligation and refunding bonds of the Port in the aggregate principal amount of not
to exceed $150,000,000 
ACTION REQUESTED 
Request Second Reading and Final Passage of Resolution No. 3729: A Resolution of the Port
Commission of the Port of Seattle authorizing the sale and issuance of limited tax general
obligation bonds of the Port in the aggregate principal amount of not to exceed $150,000,000
for eligible Port purposes, including reimbursement to the Port for a portion of the Port's
contribution for the Alaskan Way viaduct replacement program; and authorizing a Designated
Port Representative to approve certain matters relating to the bonds. 
EXECUTIVE SUMMARY 
The 2017 General Obligation (G.O.) bonds will be used to provide long-term funding for the
Port's 2016 contribution to the Alaskan Way Viaduct Replacement Program ("Alaskan Way
Program") and to pay for the cost of issuance. The funding includes reimbursement to the Port
for $65 million paid on May 31, 2016 that was originally intended for permanent cash funding
and to reimburse the Port for the $82.7 million paid on October 31, 2016 that was intended to
be bond funded.
JUSTIFICATION 
The use of bond funding for the entire 2016 payment is an opportunity for the Port to reduce
its cost of capital. The bonds used for the Program are considered "governmental purpose" in
the tax code and enjoy the most preferential tax-exempt status; therefore interest rates are
lower compared to other types of bonds issued by the Port. By replenishing the cash funding
with debt, the Port can use cash for potential growth opportunities that would not quality for
governmental purpose bonds and would thereby require higher cost debt.
DETAILS 
On August 27, 2013, the Port entered into a funding agreement with the State of Washington
for the Port's contribution to the Alaskan Way Program. Under the fun ding agreement, the

Template revised September 22, 2016.

COMMISSION AGENDA  Action Item No. 6a                       Page 2 of 5 
Meeting Date: December 13, 2016 
Port was obligated to pay the State $120.0 million on May 1, 2015 and $147.7 million on May 1,
2016 for a total of $267.7 million. The agreement was amended on March 31, 2016 to
accommodate project delays and provide for a two-part fulfillment of the 2016 payment: $65.0 
million was paid on May 31, 2016 and the final $82.7 million was paid on October 31, 2016.
The 2015 payment was funded with the proceeds of G.O. bonds issued in 2015. In anticipation
of the 2016 payments, the Commission had set aside tax levy cash into a Transportation and
Infrastructure Fund that funded the $65.0 million payment. The remaining $ 82.7 million was 
expected to be funded with proceeds from the sale of G.O. bonds that would reimburse the
temporary use of Port cash. This original payment plan that relied on a significant portion of
cash was made at a time of lower growth at the Port. In view of potential growth opportunities
that may require G.O. bond funding, staff recommends that G.O. bonds be issued to repay the
entire 2016 contribution of $147.7 million.
Most of the bonds issued by the Port are "private activity" bonds that are exempt from regular
income tax, but subject to the Alternative Minimum Tax (AMT), e.g. bonds to modernize
Terminal 5. Other growth opportunities might not qualify for any tax exempt bond funding and 
interest earned by investors would be fully taxable. The bonds that fund the contribution to
the Alaskan Way Program are "governmental purpose" bonds and therefore, the interest
earned by investors is exempt from all federal income tax. The result is that governmental
bonds enjoy a lower interest rate compared to bonds with a less preferential tax status sold in
the same market conditions.  The Port can lower its cost of capital, by using its least expensive
debt for the Alaskan Way Program payments and retain cash to use for future projects that
would require higher cost debt. This approach does not make any assumptions about future
interest rates; it is based solely on estimated interest rate differentials due to tax status.
The G.O. Bonds are being issued pursuant to Resolution No. 3729. The Bonds will be
governmental purpose bonds, the interest on which will be exempt from all federal income tax. 
Resolution No. 3729 (the G.O. Bond Resolution) is similar in all material respects to other G.O.
Bond Resolutions. G.O. Bonds are backed by the full faith and credit of the Port and require
that the Port levy taxes sufficient, along with other funds, to pay scheduled principal of and
interest on the Port's outstanding G.O. Bond obligations.
The G.O. Bond Resolution delegates to the Designated Port Representative (the Port's Chief
Executive Officer or the Port's Chief Financial Officer) the authority to approve the manner and
date of the sale of the G.O. Bonds within parameters established by the Commission in the G.O.
Bond Resolution. Commission parameters that limit the delegation are a maximum principal
amount, maximum interest rate, and expiration date for the delegated authority. If the G.O. 
Bonds cannot be sold within these parameters, further Commission action would be required.


Template revised September 22, 2016.

COMMISSION AGENDA  Action Item No. 6a                       Page 3 of 5 
Meeting Date: December 13, 2016 
The recommended delegation parameters are: 
Maximum size:                                    $150,000,000 
Maximum interest rate:                                      5.00% 
Expiration of Delegation of Authority:                          May 31, 2017 
Upon adoption, Resolution No. 3729 (the G. O. Bond Resolution) will authorize the Designated
Port Representative to select the manner and date of the sale, approve the final sale terms, pay
the cost of issuance, execute all documents, prepare and disseminate a preliminary official
statement and final official statement, provide for continuing disclosure and take other action
appropriate for the prompt execution and delivery of the G.O. Bonds.
Unlike most Port revenue bonds that are sold through a negotiated process with the Port's
underwriting team, the G.O. Bonds are expected to be sold through a competitive sale in which,
any banking firm can bid on the Bonds. The Port's debt management procedures allow for
competitive sales for appropriate transactions where, in consultation with the Port's Financial
Advisor, a competitive sale is likely to provide better financial results than a negotiated sale.
Competitive sales are well suited to transactions that have a relatively simple, high quality
credit like the Port's G.O. Bonds and sold in relatively stable market environments. Should
market conditions change, in consultation with the Port's Financial Advisor, the Designated Port
Representative may determine that a negotiated sale is a more effective approach.  A
negotiated sale would also need to be within the Commission established parameters. 
Piper Jaffray, Inc. is serving as Financial Advisor, K&L Gates LLP is serving as bond counsel and
Pacifica Law Group, LLP is serving as disclosure counsel on the transaction. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1  Do not issue any bonds 
Cost Implications: Assuming that the Port plans to fund future projects within the next three
years that do not qualify for governmental bonds, the additional interest cost due solely to a
less preferential tax status for the life of the bonds is estimated to be $0.4 million to $9.8 
million present value. 
Pros: 
(1)   Reduces interest costs in the near-term by postponing new bonds 
Cons: 
(1)   Increases costs in the long-term due to the need to fund other projects with 
potentially higher cost debt 
This is not the recommended alternative. 


Template revised September 22, 2016.

COMMISSION AGENDA  Action Item No. 6a                       Page 4 of 5 
Meeting Date: December 13, 2016 
Alternative 2  Issue bonds only to pay for the $82.7 million payment as originally intended 
Cost Implications: Assuming that the Port plans to fund future projects within the next three
years that do not qualify for governmental bonds, the additional interest cost due solely to a
less preferential tax status for the life of the bonds is estimated to be $0.2 million to $4.3 
million present value. 
Pros: 
(1)   Reduces costs in the short-term by postponing new bonds 
(2)   Uses levy cash originally designated for this purpose 
Cons: 
(1)   Increases costs in the long-term  due to the need to fund other projects with
potentially higher cost debt 
This is not the recommended alternative. 
Alternative 3  Issue up to $150 million to fund the entire 2016 contribution 
Cost Implications: 
Pros: 
(1)   Retains an additional $65 million of levy cash that can fund projects and reduce the
need to issue higher cost debt for those projects 
(2)   Likely results in a lower overall cost of capital to the Port 
Cons: 
(1)   Short-term higher costs associated with debt vs. cash 
This is the recommended alternative. 
Annual Budget Status and Source of Funds 
Debt service payments associated with the 2017 bonds were incorporated into the forecasted
uses of the tax levy and have been incorporated into the 2017 Budget. 
ADDITIONAL BACKGROUND 
Municipal bond issuers, like the Port, can issue bonds that are taxable or tax-exempt depending
on the use of the bond proceeds. The interest paid to investors in "governmental purpose"
bonds is exempt from all federal income tax because the bonds are used to fund capital
projects that benefit the general public, e.g. public roads and parking garages operated by the
Port. Most of the Port's facilities are leased to private companies and are therefore deemed
"private activity" bonds. The interest on these bonds is exempt from regular income tax, but
subject to the Alternative Minimum Tax. Facilities that do not qualify as Airport, Docks and
Wharves as defined by the tax code, do not qualify for any tax-exempt bond funding. Examples
include non-governmental office building and most retail, industrial or warehouse facilities.

Template revised September 22, 2016.

COMMISSION AGENDA  Action Item No. 6a                       Page 5 of 5 
Meeting Date: December 13, 2016 
ATTACHMENTS TO THIS REQUEST 
(1)   Resolution No. 3729 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
November 22, 2016  First Reading of Resolution No. 3729 authorizing the issuance and sale
of limited tax general obligation and refunding bonds of the Port in the aggregate
principal amount of not to exceed $150,000,000 
November 8, 2016  The Commission was briefed on the preliminary tax levy and draft plan
of finance including the 2017 G.O. bonds 
March 10, 2015  The Commission passed Resolution No. 3703, authorizing the sale and
issuance of G.O. bonds to fund the $120 million 2015 payment 













Template revised September 22, 2016.