PORT OF SEATTLE
MEMORANDUM

COMMISSION AGENDA            Item No.     5b

Date of Meeting   November 8, 2011

DATE:   October 27, 2011

TO:     Tay Yoshitani, Chief Executive Ofcer

FROM: "0'Mike Campagnaro, Manager, Leasing and Asset Management
Paul Meyer, Manager, Environmental Programs M

SUBJECT: Terminal 10 Stormwater Outfall Easement Agreement

Amount of This Request: $45,750          Source of Funds: Operating Revenues

Est. State and Local Taxes: N/A           Est. Construction Jobs Generated: N/A

Total Project Cost: N/A

ACTION REQUESTED:

Request Commission authorization for the Chief Executive Ofcer (CEO) to execute an
easement agreement with the Washington State Department ofNatural Resources (DNR) for an
initial term of 10 years and the potential for two additional 10-year terms for the use of State-
owned aquatic land at Terminal 10 to install a connection to a new stormwater conveyance
system, improve an existing upland cap, and install an outfall structure.

SYNOPSIS:

The construction ofTerminal 10 utility improvement project was previously authorized by the
Commission on June 22, 2010. The Port desires to use State-owned aquatic lands for the
purpose of installing a connection to a new stormwater conveyance system, improving an
existing upland cap and installing an outfall structure. The State is willing to grant an easement
for these purposes for a term of 10 years, with potential to renew the easement for two additional
terms of 10 years each. The Port would agree, among other things, to construct and operate the
stormwater conveyance system and outfall in compliance with all laws and permits and in the
manner as described in all regulatory authorizations. The cost for the 10-year easement is
$45,750. The cost was set by DNR in accordance with RCW 79.110.240.

COMMISSION AGENDA
Tay Yoshitani, Chief Executive Ofcer
October 27, 2011
Page 2 of 4

EASEMENT AGREEMENT:

The agreement is made by and between the State of Washington, acting through the Department
of Natural Resources ("State"), and Port of Seattle, a municipal corporation ("Port").

The Port desires to use approximately 0.09 acres (4,039 square feet) of these State-owned aquatic
lands for the purpose of installing a connection to a new stormwater conveyance system,
improving an existing upland cap installed under a separate consent decree and installing an
outfall structure.

The Port coordinated its plans with Lockheed Martin Corporation ("Lockheed") and the US.
Environmental Protection Agency (EPA) and has obtained Lockheed's waiver for any claims
against the State for granting an easement to the Port for this outfall.

The State is willing to grant an easement for a term of 10 years, with potential for two 10-year
renewal terms, to the Port in reliance upon Lockheed's waiver and the Port's promises to
construct and operate the stormwater conveyance system and outfall in compliance with all laws
and permits and in the manner as described in all regulatory authorizations.

Future grants of easement rights will depend on the Port's satisfactory progress toward
implementation of reasonably practical disposal alternatives, if any.

JUSTIFICATION:

Access to the State-owned parcel is necessary to complete and operate the Terminal 10 utility
improvement project previously approved by Commission.

FINANCIAL IMPLICATIONS:
Budget/Authorization Summary:
Previous Authorizations                              _m 
Current re . uest for authonzatlon                                   $45,750
Total Authorizations, including this re uest                           $45,750
Remaining budget to be authorized                     -m

Project Cost Breakdown:

Easement Fee                                        $44,520
$1,230
$45,750

COMMISSION AGENDA
Tay Yoshitani, Chief Executive Ofcer
October 27, 2011
Page 3 of 4

Budget Status and Source of Funds:

The funding associated with this easement was not included in the 2011 Operating Budget. The
proposed mding required of $45,750 will result in an unfavorable operating expense variance as
noted below. However, this amount will be offset by savings in other areas.

The easement cost will be funded from operating revenues.

Financial Anal sis and Summa

cu" Cam

Risk adjusted    N/A
Discount rate
0  Renewal of easement conditioned upon DNR's approval and Port's
Key risk factors
ability to conduct stormwater management alternatives investigation
and analysis.
Upon expiration of the easement the Port13 required to remove
im - rovements.

anal sis
Seaport Industrial Properties
BU)
Effect on business  Upon execution of the easement the Port will pay DNR $45,750. The
performance     easement fee ($44,520) will be amortized throughout the 10-year term of the
easement. The impact to Net Operating Income (N01) and N01 Aer
Depreciation resulting from the initial ve-year term of the easement is shown
below.

4min000's   M  M  m  M  2m
NOI             ($2)     ($4)     ($4)     ($4)     ($4)
Depreciation          $0       $0       $0       $0       $0
NOI After Depreciation    ($2)      ($4)      ($4)      ($4)      ($4)


LEGAL REVIEW AND APPROVAL:

The easement agreement has been reviewed and approved as to form by Port legal counsel.

COMMISSION AGENDA
Tay Yoshitani, Chief Executive Ofcer
October 27, 2011
Page 4 of 4

OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST:

- Aquatic Lands Outfall Easement Terminal 10 Stormwater Outfall between the State of
Washington and Port of Seattle, with Exhibits A, B and C.

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS:

0   May 20, 2010  The Commission approved an additional $180,000 to continue work
necessary for nal approvals essential to the Terminal 10 utility improvement project due
to the need for extended review and response by federal, state, and local government
agencies.
0   April 14, 2009  The Commission approved an additional $270,000 to include a new
stormwater outfall in the permit and design and to accommodate increased costs associated
with EPA and City of Seattle coordination on construction issues.
0   September 2, 2008  The Commission was advised by staff that design and permitting cost
may exceed the authorized amount of $530,000 by up to several hundred thousand dollars.

0   March 25, 2008  The Commission approved $530,000 for staff to complete 100% design
and permitting for the redevelopment ofTerminal 10 uplands into truck parking.