PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      4c 
ACTION ITEM 
Date of Meeting     March 24, 2015 
DATE:    March 17, 2015 
TO:      Ted Fick, Chief Executive Officer 
FROM:   Dave Soike, Director, Aviation Facilities and Capital Program 
Wayne Grotheer, Director, Aviation Project Management Group 
SUBJECT:  North Satellite Renovation & North Satellite Transit Station Lobbies Project (CIP
#C800556) Seattle-Tacoma International Airport 
Amount of This Request:         $200,000   Source of Funds:   Airport Development
Fund 
Est. Total Project Cost:        $421,682,944 
Est. State and Local Taxes:      $28,951,600 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to take the following actions
related to the North Satellite Renovation & North Satellite Transit Station (STS) Lobbies
(NSAT) Project at the Seattle-Tacoma International Airport: 
(1) Increase project scope to include the construction of underground natural gas
infrastructure to support the Airport Dining and Retail businesses planned for the
NSAT project with no increase in budget; 
(2) Execute a developer agreement with Puget Sound Energy (PSE) to extend the existing
underground natural gas line located along the west side of Air Cargo road; 
(3) Grant and transfer a utility easement, if necessary, to PSE on Port property located
along the west side of Air Cargo road and across the north apron to the North
Satellite; and 
(4) Authorize $200,000 to reimburse PSE, subject to the developer agreement, for
underground natural gas line design and construction. 
SYNOPSIS 
A key factor in renovating and expanding the satellite is to meet the Port's and Alaska Air
Group's (AAG) vision, project objectives, and specific requirements. The Port and AAG share
goals for the North Satellite including: compliance with applicable codes to ensure life safety,
improved passenger experience, increased level of service and passenger comfort. There is also
the need to provide high quality restaurant and retail offerings within the renovated satellite to
meet the customer experience and level of service goals for the NorthSTAR program and
specifically the NSAT project. Staff is recommending that the Port provide restaurant operators

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 17, 2014 
Page 2 of 9 
with the ability to use natural gas as the preferred method of cooking rather than electricity. The
use of natural gas in cooking provides restaurants with a broader range of menu options for
passengers and enhanced quality of food. 
If available, most restaurants also will choose natural gas for cooking to increase their own
efficiencies. Natural gas availability at the North Satellite will benefit future tenants and
ultimately elevate the customer experience. 
The requested action item number (4) for $200,000 is identified as public expense that originates
from the approved project budget. The funds are classified as expense due to the nature of the
developer agreement and the fact that PSE will own the infrastructure that results from the
agreement. The remaining construction cost of $150,000 for natural gas piping infrastructure
within the renovated building is not included in this request, is being absorbed within the project
budget and will be including in the authorization for construction of the NSAT. 
The availability of natural gas will decrease the NSAT's electricity usage which is in the Port's
economic interest. The reduced electricity usage at NSAT will help to control the airport's total
electricity consumption. This will help to keep the Port from needing to purchase power under
the Bonneville Power Administration (BPA) Tier 2 rate schedule which is 30% more expensive
than the Tier 1 rates the Port currently pays. 
BACKGROUND 
The Airport-wide dining and retail program has provided natural gas for food service tenants at
most other locations in the Airport. However, the original North Satellite was built without
natural gas infrastructure and instead electricity has been used for restaurant cooking. The NSAT 
is now being renovated and expanded. The current space devoted to dining and retail will expand
from approximately 19,000 square feet to approximately 46,000 square feet. The increase in
square footage will allow the Port and its future restaurant operators to provide a vastly improved
variety and quality of dining options than exists today. The high caliber of full-service restaurant
dining offered today in the Central Terminal will be a part of the new NSAT along with quick
service options. Most of these restaurant concepts require natural gas for cooking. 
PROJECT JUSTIFICATION AND DETAILS 
The NorthSTAR program and NSAT project goals include providing a world class environment
and improved passenger experience. Providing natural gas to NSAT creates another opportunity
to achieve these goals and is supported by the Port's  Airport Dining and Retail  (ADR) 
department and AAG. 
The use of natural gas for cooking will reduce the amount of electricity the Port is required to
purchase for reimbursement by the tenants. This will help reduce the airport's electricity
consumption which will help prevent the Port from purchasing electricity under the much more
expensive Bonneville Power Administration Tier 2 rate schedule.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 17, 2014 
Page 3 of 9 
Based on the lifecycle cost analysis (see below), the improved tenant customer service, and the
reduction in electricity usage staff recommends utilizing PSE to install and maintain a natural gas
line to NSAT. This recommendation requires the Port to enter into a utility developer agreement
with PSE to extend natural gas service from an existing natural gas main on the west side of Air
Cargo road to a meter room located within the NSAT. The Port will then design and install
natural gas piping in the NSAT as part of the NSAT renovation & expansion project to distribute
natural gas from the PSE owned tenant meters to the individual tenant spaces. 
Project Objectives 
The addition of natural gas infrastructure to the North Satellite will provide for high quality 
restaurant dining experiences and increased passenger satisfaction. 
Decreased electricity usage will help control the airport's overall electricity usage and will
help prevent the Port from purchasing electricity under the BPA Tier 2 rate schedules. 
Scope of Work 
PSE to extend natural gas pipe from Air Cargo Road to North Satellite 
Port to install natural gas distribution infrastructure to tenant spaces. 
Schedule 
Q2 2015  Enter into developer agreement with PSE 
Q4 2015  PSE completes design 
Q2 2016  NSAT Phase 1 construction begins 
Q1 2018  Natural gas infrastructure installed - phase 1 
Q3 2018  Phase 1 completed 
Q1 2020 Natural Gas infrastructure installed - phase 2 
Q3 2020  NSAT Phase 2 substantial completion
FINANCIAL IMPLICATIONS 
Budget/Authorization Summary              Capital     Expense   Total Project 
Original Budget                     $194,300,000    $5,000,000   $199,300,000 
Previous budget increase               $207,182,944     $800,000   $207,982,944 
Concurrent proposed budget increase        $14,400,000          0   $14,400,000 
Revised budget                     $415,882,944    $5,800,000   $421,682,000 
Previous Authorizations                $55,464,800     $200,000   $55,664,800 
Current request for authorization                  $0      $200,000      $200,000 
Total Authorizations, including this request    $55,464,800      $400,000    $55,864,800 
Remaining budget to be authorized        $360,418,144    $5,400,000   $365,818,144 
Total Estimated Project Cost            $415,882,944    $5,800,000   $421,682,944

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 17, 2014 
Page 4 of 9 
Project Cost Breakdown                     This Request  Total Project Budget 
Construction Phase                            $200,000       $334,344,600 
Design Phase                                   $0       $58,386,744 
State & Local Taxes (estimated)                         $0        $28,951,600 
Total                                       $200,000       $421,682,944 
Budget Status and Source of Funds 
This project is included in the 2015  2019 capital budget and plan of finance with a budget of
$401.5 million. The Airport Development Fund (augmented as needed with the issuance of
commercial paper) continues to be the initial source of funds for this project but funding for the
entire project will include Passenger Facility Charge revenues (PFCs) and future bond issues.
The Port anticipates issuing revenue bonds in 2015. 
The terms under which AAG will participate in the Port's NorthSTAR Program costs have been
established via an April 5, 2012, Letter of Agreement between the Port and AAG. The airlines
were briefed on December 18, 2013, with regard to the decision to expand the NSAT and the
resultant increase in budget. The formal Majority-In-Interest (MII) project approval process
outlined in Signatory Lease and Operating Agreement (SLOA) was followed with the airlines
voting in favor of this expansion and the project in July 2014. 
The funds for this $200,000 request will be classified as public expense and come from the
approved project budget. The funds are expense due to the nature of the developer agreement and
the fact that PSE will own the infrastructure that is built per the agreement. The remaining
construction cost for natural gas that is not included in this request will be capitol funds from the
already approved project budget. 
Financial Analysis and Summary 
CIP Category             Renewal and Replacement 
Project Type              Terminal Infrastructure 
Risk adjusted discount rate      7.0% 
Key risk factors                Date of installation 
Quantity of natural gas actually used by tenants 
Project cost for analysis        $350,000 
Business Unit (BU)          Terminal 
Effect on business performance  NOI after depreciation will increase 
IRR/NPV             13%/$500,000 (based on avoiding BPA tier 2 electrical
rates. NPV at tier 1 rate is still positive). 
CPE Impact             The CPE impact is less than $.01 
Lifecycle Cost and Savings 
An Energy Life Cycle Cost Analysis was performed to determine whether natural gas should be
pursued or if electricity should remain as the preferred cooking method. Based on the expected

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 17, 2014 
Page 5 of 9 
cost to provide natural gas to NSAT and from the anticipated electrical savings assuming the tier
2 rates, it was found that the payback period would be 7 years under conditions similar to
alternative 4 below. However, this represents a worst case scenario as the cost analysis assumes
no cost share with PSE per the terms of the developer agreement. The life cycle analysis was 
performed according to the guidelines issued by the Washington State Department of Enterprise
Services. The project costs used for analysis were programmatic costs that include construction
costs and applicable Port soft costs. The discount rate used was 7.0% and after consultation with
the Airport Facilities and Infrastructure department it was assumed that electricity rates would
increase at 2.8% and natural gas rates would increase at 2% over the next 15 years. 
The Aviation Maintenance department does not anticipate a significant increase in maintenance
costs for this project based on the information available at this time. As design development
proceeds, any cost impacts will be further evaluated. 
STRATEGIES AND OBJECTIVES 
This project supports the Port's Century Agenda objective of meeting the region's air
transportation needs at Sea-Tac Airport for the next 25 years. This project also supports the
Aviation Division's strategy of anticipating and meeting the needs of our tenants, passengers,
and the region's economy. 
This is one of a number of projects that are directly tied to the One-Time Reallocation (Airline
Realignment) program, that are in alignment with AAG's plan to consolidate its gate operations
onto the NSAT and Concourses C and D. The NSAT expansion is also in alignment with Airport
master plan development objectives that identify the NSAT as the most logical location for nearterm
expansion of airport capacity. 
TRIPLE BOTTOM LINE 
Economic Development 
This project will increase the long-term ability of the Airport to serve AAG's future growth. This
project cost effectively meets AAG and Port needs by allowing for a world class concessions
program where tenants can operate as efficiently as possible. 
Environmental Responsibility 
This project represents a tradeoff between financial opportunities, customer service, and
environmental impacts.  The electricity purchased by the Port is 98% carbon-free whereas
natural gas has a higher carbon footprint. Adding natural gas for NSAT restaurant operators will
increase airport tenant carbon footprint by approximately 20%.  However, the restaurant
operators switching to natural gas will free up more clean electricity, benefiting the airport and
our entire region.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 17, 2014 
Page 6 of 9 
Community Benefits 
Long-term vitality of the Airport benefits the regional economy, the local environment and
nearby communities. The Office of Social Responsibility (OSR) will provide support in
determining small business participation with PSE. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Retain the Status Quo. Restaurant spaces will be provided electricity for 
cooking. As part of the already approved expansion, electrical infrastructure will be designed to
support electric cooking appliances. This is not a recommended alternative. 
PROS: 
No additional cost to the project 
Minimal increase in carbon footprint 
CONS: 
Would not meet Port or AAG project goals. High quality restaurants prefer cooking with
natural gas. 
The Port, as the tenants' electrical utility, would be required to buy additional electricity
to meet cooking needs which moves the Port closer to buying electricity at the BPA Tier
2 rate schedule. 
Alternative 2) - Under a developer agreement with the Port, PSE designs, constructs, and
maintains an underground extension of the natural gas main to a single meter within NSAT from
a point of connection next to Air Cargo Road. This requires the Port to grant an easement to PSE
for the natural gas line extension up to the PSE meter. However, beyond the PSE meter at NSAT, 
the Port will be responsible for building and maintaining the natural gas infrastructure that
delivers the natural gas to the individual tenants, including the tenant meters. As a result the Port
pays PSE for tenant natural gas service and the Port bills tenants for reimbursement. This is not
a recommended alternative. 
PROS: 
Provides natural gas service for restaurant operators 
Upgrades available infrastructure so that the North Satellite is similar to other areas of the
airport. 
Potential to recover some of the cost of construction from PSE per the terms of the
developer agreement. 
Decreased electricity usage will help control the airport's overall electricity usage and
will help prevent the Port from purchasing electricity under the BPA Tier 2 rate
schedules.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 17, 2014 
Page 7 of 9 
CONS: 
Added scope and construction cost of $200,000 for PSE work and $100,000 for natural
gas infrastructure for a total of $300,000. 
PSE will require an easement over the airfield 
The Port will act as a utility manager in the natural gas billing arrangement. This
increases Port management costs and is not a part of the Port's line of business and the
Port gains no long term economic benefit. 
Increased carbon footprint. 
Alternative 3) - Same as Alternative 2 except that the PSE portion of the natural gas line ends
before the airport fence. The Port would then be responsible for design, construction, and
maintenance of an underground natural gas line under the north apron to NSAT as well as the
individual tenant meters. This is not a recommended alternative 
PROS: 
No airfield easement required 
Port owns the asset and has more control over installation of natural gas line across the
airfield. 
Decreased electricity usage will help control the airport's overall electricity usage and
will help prevent the Port from purchasing electricity under the BPA Tier 2 rate
schedules. 
CONS: 
Of the four options this has the largest construction cost to the Port ($320,000) in addition 
to the PSE cost. 
Minimized cost share with PSE. 
The Port will act as a middle man in the natural gas billing arrangement. This is not a part
of the Port's line of business and the Port gains no long term economic benefit. 
Increased long term maintenance and management costs for the Port. 
Increased carbon footprint 
Alternative 4)  Same as Alternative 2 except PSE will place individual tenant meters at the end
of the natural gas line at NSAT. The Port is still responsible for building the natural gas lines to
each tenant but the Port would not be responsible for metering the natural gas. As a result,
tenants are billed by PSE directly. This is the recommended alternative 
PROS: 
Provides natural gas service for restaurant operators 
Upgrades available infrastructure such that the North Satellite is similar to other
concourses. 
Under this alternative PSE will own most of the natural gas delivery infrastructure
minimizing Port maintenance and management costs and with a similar cost recovery to
Alternative 2 under the terms of the developer agreement with PSE 
The Port is removed from the billing relationship. Tenants are billed directly by PSE.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 17, 2014 
Page 8 of 9 
Decreased electricity usage will help control the airport's overall electricity usage and
will help prevent the Port from purchasing electricity under the BPA Tier 2 rate
schedules. 
CONS: 
Added scope and construction cost of $200,000 for PSE work and $150,000 for the
natural gas infrastructure for a total of $350,000. 
PSE will require an easement over the airfield 
Increased carbon footprint 
ATTACHMENTS TO THIS REQUEST 
Computer slide presentation. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
January 27, 2015  NorthSTAR Program Status Update 
January 6, 2015  The Commission authorized (1) $5,000,000 preconstruction services;
(2) execution of a General Contractor/Construction Manager (GC/CM) contract for
preconstruction services; and (3) transfer of scope, $1,750,000 budget and authorization
for STS station roof replacement to the North Satellite Renovation and Expansion
project. 
October 28, 2014  NorthSTAR Program Status Update 
August 5, 2014  Commission authorized an estimated $191,323,143 to expand the
NSAT by 8 additional gates, an additional $15,717,800 for design completion, and use of
the GC/CM alternative public works contracting procedure for NSAT expansion
construction procurement. 
July 22, 2014 - NSAT Expansion Briefing. 
April 16, 2014  Seattle-Tacoma International Airport Capital Program  Briefing. 
January 14, 2014  NorthSTAR Program status update and initial NSAT Expansion
briefing. 
September 24, 2013  NorthSTAR Program status update. 
September 24, 2013  The Commission authorized staff to: (1) advertise, award, and
execute a major public works contract for the construction of the NSAT Refurbish
Baggage System Project; and (2) authorize the use of Port crews. 
June 25, 2013 NorthSTAR Program status update. 
May 28, 2013, Commission authorized the execution of separate service agreements for
Construction Management Services and Commissioning Services, of approximate values
of $10 million and $1.5 million. 
April 9, 2013  The Commission authorized the Chief Executive Officer to enter into a
project labor agreement covering the NorthSTAR program's five major construction
projects. 
March 26, 2013 NorthSTAR Program status update.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 17, 2014 
Page 9 of 9 
December 11, 2012   The Commission was briefed on the Vertical Conveyance
Modernization Project Aero Phases 1 and 2 and the possibility of adding the specified
elevators and escalators to the NorthSTAR program. 
July 24, 2012 - Commission authorized $32,000,000 for the design of the NorthSTAR
NSAT Renovation and NSTS Lobbies project. 
June 26, 2012 - The Port Commission was briefed on the NorthSTAR program by Wayne
Grotheer, Director Aviation Project Management Group. 
April 10, 2012 - The Commission authorized the execution of consultant contracts for
design and construction support services; program management services; and the
completion of site surveys for regulated materials management, in the amount of
$1,200,000.