Item Number:   7 a Exhibit A
12/13/2011
Date of Meeting:

SeaTac Concessions Policy and Principles Stakeholder
Process: lune-December 2011

Introduction
Between 2015 and 2017, nearly 90% of Sea-Tac's concessions leases will expire. This concentration of
lease expirations is a continuing biproduct of the end of the master concessionaire era in 2005 when
.
the majority of locations transitioned to new contracts. The renegotiation of these leases presents a
challenge and an opportunity to consider how to best serve the interests and needs of the traveling
public, the vendors who serve them, and the residents of King County

.  The Sea-Tac concessions program initiated a stakeholder outreach process in June 2011 to inform the
development of leasing policies and practices in anticipation of the upcoming lease expirations, as well
as ongoing development. The process has included the following steps:

9  Draft principles and practices  June

0  Research best practices in concessions ~June/July

0  Meetings with individual stakeholder groups  July-October

o  Traveler focus groups eptember_,.
V
6  Combined meetings With all stakeholder groups  November 2 and 3

0  Recommendations to Port Commission  December 13

The outreach process has engaged all concessions stakeholders, including small/ACDBE businesses,
prime concessionaires, independent businesses with direct leases, local businesses interested in
becoming tenants at Sea-Tac, airlines and union representatives. The process also included three focus
groups with travelers, one group of business travelers and two of leisure travelers, to ensure that
customer feedback was also considered in the development of concessions policies and principles. A
total of 53 individuals representing 36 companies and organizations participated in two phases of
stakeholder involvement.

Stakeholder Outreach, Round One
Round one of the stakeholder outreach process was structured around a set of Draft Principles that
could guide SeaTac as it develops principles and practices for future development of the program. The
draft principles were divided into four major categories: -

The Port held individual meetings with all stakehoider groups. These meetings were professionally
facilitated to allow participants to voice their opinion in an open, neutral setting. At the meetings,
participants were asked to provide input on the draft principles document. Despite their diversity,
stakeholders expressed consistent and general agreement with most of the draft principles. Stakeholder
perspectives were synthesized into a summary document that outlined areas of stakeholder agreement,
as well as areas of disagreement.

Stakeholder Outreach, Round Two
The second round of stakeholder outreach focused on the key issues that emerged from the individual
stakeholder meetings. To further understand the reasons behind divergent perspectives, the Port held
two, combined stakeholder meetings on November 2 and 3. Nearly 40 stakeholders representing current
and prospective tenants, labor, small/ACDBE operators, prime concessionaires, and airlines attended
the two meetings. Broad areas of agreement were summarized. The discussions focused on the areas of
"
greatest dissent among stakeholders.

Stakeholder opinions primarily diverged around issues that are rooted in what the appropriate role of
the Port of Seattle/Sea-Tac Airport should be as a landlord and lessor of concession locations. Should the
Port's role be limited to leasing space to independent businesses, or shouid the Port's role be expanded
to include a role in setting employment practice standards of these businesses?

Most airport stakeholders said they would like the Port to limit its role to managing the overall mix of
businesses at the airport, focusing on what it directly controls such as its own internal processes,
reducing high costs of operation and streamline processes. Beyond that, they feel businesses should be
allowed manage their businesses without interference. In contrast, organized iabor contends that, as a
public agency, the Port has a social responsibility to taxpayers to elevate the living standards of workers.

This basic disagreement about the Port's role manifested itself in the following five issue areas:

1.  Management model and leasing structure for the Sea-Tac concessions program
0 How should the Port balance opportunities for multiple unit leases with large, national
concessionaires and direct leases for smaller and/or local businesses?

2.  Possible Port requirements regarding concessionaires labor practices

0 Should the Port seek, within the limits of federal legal constraints, to influence the labor

or employment pOlicies/practices of its concessionaires?

3.  The landlord responsibilities of the Port relative to buildout and operations costs
0 How should the Port gain an understanding of the build-out costs' impact to tenant
profitability and risk?
0 How might the Port identify improvements to the tenant construction process to
increase efficiency and reduce costs?

4.  Leasing opportunities for locally-owned businesses and/or small and Airport Concessions
Disadvantaged Business Enterprise (ACDBE) operators _
'o How should the Port maintain and/or increase participation in the concessions program
.
by locallyowned, small and/or ACDBE businesses?

5.  Street pricing requirements and other contractual terms for operators
0 Should the Port initiate a comprehensive analysis of the implications of the current
street pricing policy (both structure and implementation) for large and small
'
concessionaires, the traveling public and the Port?
0 Should this include current contractual requirements (investment, term, rent, pricing,
etc) with the goal of understanding more fully the financial picture for both small and
large concessionaire tenants?

Issue #1 - Management Model and/or Leasing Structure for the SeaTac
Concessions Program '

'
Statement of IssUe
,

_
Prior to 2005, like most US. airports, SeaTac operated for decades under a master concessionaire
concession model. Nearly all concessions, including restaurants, specialty retail, gift/neWs, duty free and
vending, were operated by one company under one contract. The Port replaced this model in 2005 with
a "hybrid" structure in which the Port holds many leases directly with tenants as wellas contracts with a
small number of national prime concessionaires operating multiple units.

Gross concessions sales have increased by 141% during the period 2001-2010 despite the introduction
of street pricing in 2004. Currently, 71% of all concession units are under contract with prime
concessionaires (including subtenants) and 29% are direct lease agreements with the Port. Direct leases
l
give the Port greater influence over cencession concepts (including local brands) and the ability to
recruit local and small businesses; however, it also is more staff-intensive.

'  All stakeholder groups, with the exception of airline representatives, were in agreement that Sea-Tao
should continue to develop and manage its own concessions program, rather than hiring a developer'or
fee manager. However, there is disagreement among the groups about the degree or balance that
should be struck between direct lease agreements and agreements with prime concessionaires.

General Summary of Individual Stakeholder Themes

memes":
Small business/ACDBE See direct leasing as their opportunity to run a business at the
airport. They believe locally-owned businesses benefit the
local economy.
Desire the opportunity to become direct lessees with the Port
due to a'perceived lack of benefit (in terms of business
support, purchasing, and operational support) from being a
subtenant to a prime concessionaire.

Advocates a limitation on direct leasing so that no more than
10% of employees are employed by direct lease tenants.
Believes that direct leasing dilutes the portability for
employees to move from one unit to another by increasing
the number of employers.     '
Prime concessionaires             Believe they can apply their knowledge of operating in an
airport and resources as an advantage in the program.
Concerned about placing limits on how many units one
concessionaire can operate, i.e. breaking up units into too
'
many or small packages and
Encouraged the Port to clarify if it wants multiple operators or
'
a mix of offerings or concepts (regardless of operator).

Airlines                          Suggest that the Port may want to consider hiring a fee
manager or similar entity to manage'its concession program,
"
as has been done in other airports, in order to eliminate
political pressures on business decision'making. Some airlines
may even wa nt to operate concessions.

Prospective tenants -              Feel strongiy that they would always want to have a direct
lease with the Portto maintain control over their business
and their brand.
Independent businesses with        Feel it is important to retain control over their business
direct leases                     decisions and would like direct leases with the Port.
Travelers (focus groups)            Indicate a preference for shopping with local businesses
which they believe keeps their money in the local economy


Policy Question
How should the Port balance opportunities for multiple unit leases with large, national concessionaires
'
and direct leases for smaller and/or local businesses?

Prevalent View:

9  The Port has a good mix and should maintain a mix of prime contracts with direct leasing

0  There should be no artificial or prescriptive constraints  all types of concessionaires want the
opportunities to compete
'
o  SeaTac should manage ACDBEs as direct lessees rather than as subtenants to primes
.
both
primes and ACDBE subtenants voice support for this approach

a  Sea-Tac should assure only that packages intended for primes have enough units to support the
scale they need (minimum 0f4-6 units)

Divergent View:

4"   ACDBE participation should occur as subtenant opportunities to prime concessionaires to
maintain portability for workers across units (with same wages and benefits). The Port should
direct primes to sublease specific units to ACDBEs

a  Direct leasing should be limited as it dilutes the system of pertability for workers by increasing
the number of separate employers

Issue #2  Requirements for Concessionaires Regarding their Labor Practices

Statement of Issue
About 70% of the SeaTac concession workforce is represented under union contracts between prime
concessionaire businesses and Hotel Employees Restaurant Employees (HERE) Local 8 or United Food
and Commercial Workers (UFCW) Local 21. In addition, some major prime concessionaires have labor
agreements that include "card check agreements" and "recognition agreements," where
concessionaires agree to support unionization activity (iie. card check) or recognize the labor agreement
of a predecessor concessionaire, when awarded new contracts. The remaining share of non
represented employees are employed by small and/or ACDBEs (most typically as subtenants to primes)
and independent nonunion businesses with locations outside the airport (e.g. Fireworks, Body Shop,
ExOfficio, Qdoba Mexican Grill).

There is disagreement among stakeholders regarding the degree to which the Port can or should impose
requirements on prospective tenants to negotiate with labor unions for labor harmony and/or retention
of a predecessor concessionaire's employees for a specific period of time. Among the issues discussed
as part of the stakeholder process, this issue generated the most differing perspectives regarding the
extent to which the Portshould place requirements on concessionaire tenant labor practices (i.e. hiring
and firing).

The question of the Port's role in labor policy carries potential legal implications for the Port,
concessionaire's, labor and employees. The issue also has a significant documented history with the
Port, which is summarized here.

In 2000, by order of the Hon. Barbara Rothstein, United States District Judge, the Port was permanently
enjoined from "any action . . . interfer[ing], either by its actions or inactions, with the exercise of
federally protected rights of third parties using Port facilities to assign work to their own employees"
(Citylce Cold Storage Company. Port of Seattle, No. 399164R. ("Citylce"), pp. 15; 1920). Judge
Rothstein was not focused solely on future agreements the Port might enter into with any unions, but
'
any action of any nature, including policies.

Despite-the terms ofthe permanent injunction, the Port entered into a Memorandum of Understanding
(MOU) in 2002 with organized labor, including UFCW and HERE, where thePort agreed to recruit new
_
concessions operators by issuing Requests for Proposals for prime concessionaires that required
respondents to submit a "labor harmony plan" and required the successful respondent to retain the
workers ofthe previous master concessionaire. For concessions other than prime concessions, the
understanding with organized la bar was that the Port would recruit small and local businesses ("direct
lessees") to meet specific customer needs and to provide a Pacific Northwest flavor at Sea-Tap.

Following the implementation of the 2002 lVlOU, however, the Port, the former master concessionaire,
and HERE were sued in federal court by a subtenant concessionaire that objected to requirements that
the Port was allegedly trying to impose as a COndition of renewal of its concession-agreement. In the
September 2005 order on summary judgment in the case, Judge Marsha Pechman indicated she found
the MOU objectionable. Judge Pechman's order was significant in that it not only allowed plaintiff's
claims against the Port of civil" conspiracy, violation of 42 U.S.C. Sec. 1983, and tortuous interference to
move forward to trial, it also revealed the court's view thatthere was strong legal and evidentiary basis
for the plaintiff's claims.

The Pechman order also rejected the defense that the union and Port were simply seeking "work
preservation." in addition, with regard to the plaintiff's claim that the Port was in contempt ofJudge
Rothstein's permanentinjunction, Judge Pechman's order referred the civil contempt cause of action to
Judge Rothstein for determination. The effect of the order was to highlight the Port's great legal
exposure if the case proceeded to trial. Ultimately, the Port and the former master concessionaire
settled with the subtenant and paid monetary damages.

Independent of any historic or future labor-related requirements, the Port recognizes the right of any
employee to organize and engage in concerted activity. As the Port has twice been sued and penalized
for interfering with the labor relations of third party employers and is subject to a permanent injunction
enjoining the Port from interfering with the right of lessees to assign work to their own employees,
implementing labor harmony and/or worker retention requirements could expose the Port to '
considerable legal risk.

All stakeholder groups, with the exCeption of labor, reject the suggestion that the Port should be
involved with employee recruiting, training or-retention initiatives or that the Port should require or set
specific targets for retention of employees. Most felt that it is the employers' responsibility to earn the
retention of their own employees.'
General Summary of Individual Stakeholder Themes

Small business/ACDBE            Emphasize that worker retention means, in practicality, a
requirement to retain union labor of a previous
concessionaire and that a requirement to use a unionized
workforce would put them out of business.

Concerned about the employment security of concessions
employees in the event'that new concessionaire companies
are chosen to operate at the airport. Benefits and seniority
would not be guaranteed to stay the same when
concessionaire companies change.
Advocates the adoption of a Port policy requiring new
concessionaire employers to retain employees for a minimum
of 180 days, and offer permanent employment to all
employees who perfOrrn satisfactorily. incumbent workers
must be hired from a worker pool until it is exhausted or all
positions are filled.
Prefers to see most workers employed by a small number (no
more than three) of prime concessionaire employers, with no

more than 10% with unrepresented employers. (See issue #1)
Believes that labor harmony/worker retention means that
unions will refrain from any type of economic interference
with concession operations; maximizing revenue.

Prime concessionaires             Requirements to maintain a union workforce mean increased
costs that should be taken into account by the Port in its rent
expectations.

Airlines                         Market forces should be allowed to shape concession
businesses and employment at the airporbwithout
intervention by the Port or other body.

Prospective tenants               Businesses that operate locations outside of the airport were
concerned that union labor requirements also would apply to
.their other locations. This concern was enough in some cases
to deter a business from the airport environment.

Independent businesses with        Independent businesses at the airport were concerned that
direct leases                     they would not be able to have their own employees from
other locations come to work in their airport operations.
Contend that there has never been a loss ofjobs as the result
of a change in concessionaire, for example, Borders
employees who wished to stay at the airport were able to find
newjobs. Job opportunities have grown since the new
.
concessions program began in 2005.

Policy Question
.
Should the Port seek, within the limits of federal legal constraints, to influence the labor or employment
policies/practices of its concessionaires?

Prevalent View:
a  The Port should not place mandates on the employment practices of concessionaires ~
businesses want control over their P&Ls and their own ability to succeed or fail
c  There are enough jobs at the airport that employees have a choice where they want to work.
Entrepreneurs will go elsewhere
0  Employers have difficulty finding good employees and want to hire from the airport employee
base, but they do not want a requirement
.

o  The employees that a business chooses to hire come to reflect their brand and philosophies and
'
it is important to be able to choose these employees freely

Divergent View:

0-   Labor Harmony agreements do not mandate unionization. They establish a code of ethics and

assure that labor laws are followed

Issue #3  Landlord Responsibilities'to Provide a Facility for Operations at a
Reasonable Cost

Statement of issue
With the end of the master concessionaire contract, a new group of tenants came into the airport and
began building out locations. This initial experience was more costly fer tenants than anticipated, which
led to a Port relief package granted in 2005. Tenants were reimbursed for certain construction and
materials costs, provided rent reductions and received a twoyear term extension on 10year leases"

Build-out costs at Sea~Tac, according to some concessionaires, are about 100% more costly than a street
location. Sea~Tac is not unique for airports with its high build-out costs. Some of these costs may be
justifiable or unavoidable as a consequence of the unique airport environment; however, most believe
there is significant room for improvement.

A typical food and beverage investment might be $700800 a square foot or more, and somewhat less
for retail. Some of this Cost stems from the lengthy Port design review process (26 weeks on average)
where several departments and/or workgroups weigh in on tenant designs, which leads to many design
'
revisions. Other costs are driven by the Port's facility requirements, which tend to be more strenuous '
than for a street location. As an example, international building code requirements for sanitary waste
lines stipulate cast iron, whereas the Port requires stainless steel. The Port will typically require more
extensive venting and .fire suppression systems. '

Another source of increased cost is the Port's practice of not providing needed infrastructure to the
lease line. A tenant may be'required to bring electricity, gas, water and communication lines to the

space. If Port base building systems such as HVAC are not adequate, the tenant may be required to
install its own supplemental infrastructure.

The costs of operating in the airport are also much higher than on the street. The airport facility tends
to be more laborintensive due to extended hours of operation, security requirements and undersized

or antiquated infrastructure to support concession operations.

Current tenants agree that the Port can be more efficient and get things done quicker and more cost
effectively. Some current tenants feel the Port needs to provide better facility support, for example,
some say that there is not enough seating provided by the Port in the Central Terminal. All stakeholders
agreed that the process could be streamlined and should not be a barrier to someone's ability to
I
operate a business at the airport. '

General Summary of individual Stakeholder Themes

{St
Small busrness/ACDBE            Emphasme that burld-out costs are high, margins are slim and
'
costs to operate are high. With restrictions on pricing, it
becomes difficult to impact profitability.
Small businesses feel that Sea-Tac should improve the airport
infrastructure to support composting, waste separation, and
other processes.
Small businesses propose that a lease with an option to
extend would make it easier to get financing for an expensive
buildout.

Labor                      Proposes that the Port lend money to small businesses for
their buildout costs.
g

o   Emphasized the need for better facility planning.


Prospective tenants            0  The high cost of buildout has deterred some businesses from
pursuing space at Sea-Tao.
independent businesses with      o  Emphasized the need for better facility planning.
.

Policy Questions
How should the Port gain an understanding of the build"out costs' impact to tenant profitability and
risk?

How might the Port identify improvements to the tenant construction process to increase efficiency and
reduce costs?

Prevalent View:
>

'
9  The Port needs to change its design approval process. it is excessively long and excessively
costly due to administrative inefficiency and requirements to build "above code."
a  Tenants should not be building infrastructure for the Port. Needed base infrastructure should
be provided by the Port and brought to the lease line.
,
\

e  The Port could promote more competition for tenant builders at the airport. There are too few
construction companies willing to build at the airport, and concessionaires are at their mercy to
'
pay whatever they charge
o  Stagger lease expirations to avoid spikes in construction activity, which exacerbates the high
construction cost problem by creating too much demand at one time

Divergent View:
6  The Port should consider providing low-interest loans to small businesses to help with the high
investment costs


Issue #4- - Leasing Opportunities for Locally-OWned Businesses and/or Small
and ACDBE Operators

Statement of Issue
Prior to 2005, opportunities for locallyowned and small/ACDBE operators were mostly limited to
subtenant agreements under the master concessionaire. Today, the majority of opportunities still have
been provided as ACDBE subtenant opportunities within prime concessionaire contracts, which have
required primes to sublet units in order to achieve 25% of sales from ACDBEs. Among the current prime
concessionaires which use subleasing as a means to meet their-ACDBE requirement, one fully meets the
25% goal. However, operators that demonstrate "good faith efforts" to achieve this goal are considered
to be in compliance. The annual overall Sea-Tac ACDBE participation goal is 19.56% of gross sales.

The opportunities for local and small businesses (including ACDBEs) have grown with the introduction of
direct leasing. There are currently a number of locally-owned businesses under direct lease contracts,
including some ACDBEs. As the local business community has come to understand that the former
master concessionaire is no longer the gateWay to opportunities at Sea-Tac, interestIn direct leasing
opportunities at the airport has grown. '

At the same time, the airport is not a realistic venue for most small/local businesses. It is a challenging
environment to succeed in  financially and operationally. Most small businesses will not have the
capital necessary for the levelof required investment at the airport. Typical bank financing is a challenge
due to the high costs. However, there is untapped potential and interest among many already
established streetside local businesses, which have economies of scale outside the airport. Airport~only
small business tenants without operational scale face the greatest obstacles and risk.

General Summary of individual Stakeholder Themes

Small busmess/ACDBE            Describe the typical RFP process as very arduous. Small
companies say that they don't have the infrastructure to be
able to prepare a response thatis competitive with
the large
concessionaire companies.
_
ACDBE tenants claim that prime concessionaires sublet only
the less~desirable locations.
ACDBEs need more opportunities for operational scale.

o  Believes the airport should attract strong operators that are
able to finance capital improvements needed and can meet or
exceed Sea-Tac's wage and benefit standards.
a  Suggests the Port should offset small businesses' higher costs
with reduced rent and create a fund for low interest loans so
that small businesses have the margins they need to meet
wage and benefit standards.
0  Supports partnerships between large and small businesses
(i.e. prime/subtenant contracting) and believe that primes
offer the small/ACDBE operator operational support and
financial benefit due to their ecOnomies of scale.

Prime concessionaires             Emphasize that an operator does not need to be local in order
to operate a local concept. Primes can operate local concepts
by way of license agreements or similar arrangements.
0  Typically use both joint venture agreements and subleasing as

a means of meeting ACDBE participation. Some primes feel
that subleasing gives the ACDBE the best opportunities to
learn and exposure to risk and reward. Others have had
positive experiences with joint ventures.
Airlines Support outreach to local and small businesses for
,
concessions opportunities and feel that the Port should do
what it can to reduce barriers to entry (Le. high build-out
costs).
.
0  Suggest that SeaTac make a better attempt to understand

. travelers' needs and bring in concepts that appeal to those
needs and desires. They urge Sea-Tac to make no
assumptions about the popularity of national brands versus
local businesses.

Prospective tenants               Would like the opportunity to represent a community
presence at the airport, and the chance to advance their local
brand.

independent businesses with        Would like more opportunity to lease space at the'airport and 
direct leases                     longer-lease terms or certainty about lease renewal.


Policy Question
.
How should the Port maintain and/0r increase participation in the concessions program by locally
owned, small and/0r ACDBE businesses? '

Prevalent View:

0  The Port has got it rightthere are good opportunities for local, small and ACDBE businesses .

9  Reduce the barriers to entry for small business: excessive process (RFPs) and high costs of
investment

Divergent View:

a  small business/ACDBE participation should not be increased, and possibly reduced, if these
operators believe they cannot afford "living wage''standards and provided family health care
for workers. The system is broken if thisIS the case.


Issue #5 Sea-Tac Concessions           Policies and Other
Program Pricing
Contractual Terms

Statement of Issue
The industry~typicai means of selecting concessionaires for multiple unit contracts is the Request for
Proposals/Qualifications (RFP/RFQ). In these processes, airports usually stipulate a desired use for a
specific space(s), and may set minimum guarantee '(iVlAG) requirements, maximum ranges for rent,
minimum dollar per square foot investment requirements and pricing restrictions. There may be
additional Common Area Maintenance (.CAiVI) fees, marketing fees, taxes, utility and storage charges
which must be added to the proforma.

The competition between operators is fierce due to the relative scarcity of airport opportunities. Once
beyond the phase of securing the business, the realities of airport operations begin. Capital investments
may be higher than anticipated. Negotiated wages and benefits for employees may be higher than
planned. Enpianement forecasts may not materialize. Operators also may discover that they overbid a
contract in the zeal of competition.

Concession agreements are rigid legal contracts, with littie room for adjustment for changing conditions.
It is not uncommon in the industry for concessionaires  large and small to make an appeal to an
airport authority for reductions in rent, MAG or increases in price, citing any number of reasons.

Evidence supports that the costs of doing business in an airport are high, much higher than for a street
location. However, this fact is countered by the tremendous volume potential that exists in an airport.
.
Very few street-side venues can bring the number of potential customers to' a business that an airport
can. Travelers are considered a captive audience. Square footage sales can be two or three times that
of a comparable street location.

Among all stakeholders, with the exception of airlines, there was general consensus that SeaTac is a
very expensive place to build so the Port Should consider longer term leases to allow time for tenants to
'
recover their upfront costs. Several participants felt that Sea"Tac should do more analysis to project
beyond top-line sales and the Port needsto be more understanding ofthe big picture and show more
concern about what is going on for concessionaires. The area of disagreement lays in the respective
perceptions of the reasonable relationship between higher costs, risk, and profit potential.

General Summary of Stakeholder Themes

Sta'lgeriold                   .Corii'rneritiTlih'i'                             v
,,
Small business/ACDBE          6  Would like the flexibility to set prices at a level that works for
'

'                                 their business model.'

o  Advocates for the flexibility of up to street +15% in order to
provide margins operators need for aCCeptable wages and
benefits.
_
Encourage the Port to incentivize quality to allow for
premium pricing.

Prime concessionaires             Some cite studies that show that passengers are not primarily
concerned with price in an airport, and questioned whether
there is any evidence that lower prices boost sales.
Note that many other airportshare setting prices at street+
10%, and that a slight premium above street pricing is
imperceptible to the customer. They also urged the Port to
consider allowing tenants to set prices above street-pricing
levels because there is the potential for additional revenue to
the Port.
Supported emphasis on quality rather than price, citing that
travelers will pay for higher quality.


Airlines                   No comments specic to this issue

Prospective tenants              Potential tenants agree in principle with street pricing, but
emphasize that occupancy costs need to be kept in check in
order to be profitable. This is particularly important for small
businesses not used to paying malllike occupancy costs.

Independent businesses with        Concern'that the high costs of doing business at the airport
direct leases                     coupled with pricing limits makes it challenging. There should
' '
be a balance.               '
Businesses with. off-airport locations need to keep prices
consistent with street pricing.

Travelers (focus groups)             Believe that rents in airports are higher and mayiustify higher
prices, but most also would prefer not to pay higher prices.
Consistently, travelers believe that airport priceshave been
historically high, but some also have recognized the drop in
prices recently.

Policy Questions
.
Should the Port initiate a comprehensive analysis of the implications of the current street pricing poiicy
(both structure and implementation) for large and small concessionaires, the traveling public and the
Port?                          '
Should this include current contractual requirements (investment, term, rent, pricing, etc) with the goal
of understanding more fully the financial picture for both small and large concessionaire tenants?

Prevalent View:

0  The Port should not need to use pricing policies and iease terms to compensate for its internal
shortcomings that drive up costs
a  tocai operators with local streetside locations feel that they must maintain street pricing
because their customers compare between locations
9  Street pricing becomes factor with the high build out costs and high costs of operation and the
inability to use higher pricing to recoup those costs. The flexibility of street pricing plus 10% is
preferred by most .
0  Examine the structure and implementation of the street pricing lease language to provide some

more flexibility for different types of operators
.

_
o  The more competition the Port adds via direct leases, the less pricing will matter  customers
will vote with their feet. But this makes the high cost side'even more critical to address.
0  If the Port puts mandates in place that affect iabor costs, the Port needs to adjust its
expectations for financial return, i.e. rent
9  If the airport is going to have street pricing, it needs to be marketed more aggressively, for
example, signs in every unit

Divergent View:

0  The Port should allow for street pricing plus 10 or 15 percent. This margin must go to
supporting worker wages and benefits, not profit

Conclusions/Next Steps
Sea-Tac staff will summarize results of the stakeholder process and recommend principles and practices

to the Port Commission at a public meeting on December 13, 2011.

Appendices

Appendix A: Draft Principles and Practices Guidance Document

Appendix B: Discussion Summary for Combined Stakeholder Meetings

Appendix C: Meeting summaries from stakeholder meetings