5b
PORT OF SEATTLE MEMORANDUM COMMISSION AGENDA Item No. 5b Date of Meeting May 10, 2011 DATE: April 29, 2011 TO: Tay Yoshitani, Chief Executive Officer FROM: Michael Ehl, Director, Airport Operations George England, Program Leader, Project Management Group SUBJECT: Rental Car Facility (RCF) Small Operator Area (SOA) Ready Return Area Buildout Project (CIP # C100266) No Funds Requested Source of Funds: Airport Development Funds (ADF) State and Local Taxes paid: $28,000 Jobs Creates: 12 Total Estimated Project Costs: $389,500 ACTION REQUESTED: Request authorization for the Chief Executive Officer to advertise for bids, execute, and award major construction contracts and perform contract administration for the SOA Ready Return Area Buildout Project (SOA project) as part of the RCF program at Seattle-Tacoma International Airport (Airport). The funding for this project was previously authorized under the May 13, 2008 Commission Authorization to proceed with construction of the RCF. SYNOPSIS: The RCF program provides a long-term solution for rental car company operations at the Airport by centralizing all rental car operations in a single facility located at the north end of the Airport. As defined in the Consolidated Rental Car Facility Lease Agreement: "'Small Operator' shall generally mean and refer to an Operator whose market share constitutes less than two percent (2%) of the overall market share for rental cars at the Airport and who operates from the Small Operator Area." All Small Operators will operate from shared space in the RCF that the Port agreed to buildout (other than tenant-specific finishes) under the Lease Agreement. The SOA project constructs the shared operational space within the RCF for up to three (3) small operator rental car companies. The project will employ sustainable "green" building practices consistent with the rest of the RCF. As previously authorized under the RCF construction, the project was initially scoped and estimated to be constructed as a small works project. At the 90% design stage the estimated cost of construction under the Port's Small Works provision is close to the project budget and staff is concerned that the project could possibly exceed the allowable State Small Works limits. Therefore, this memorandum requests the approval to advertise for construction bids and to construct the SOA project in the RCF as a major construction contract. This project will be under the 1999 Airport Modernization Project Labor Agreement (PLA) as part of the RCF program. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer April 29, 2011 Page 2 of 6 BACKGROUND & PROJECT SCOPE OF WORK: Completion of the SOA project at the RCF is required per the Consolidated Rental Car Facility Lease Agreement between the Port and the rental car companies operating at the Airport. The project is designed to accommodate three (3) Small Operators in the new RCF. During the design of the RCF, it was not known how many Small Operators or how large of an area would be required to accommodate the Small Operators. It was decided during the General Contractor/Construction Manager (GC/CM) negotiations with Turner Construction that certain portions of the SOA project integral to the construction of the building would be included in their contract. The remaining scope consisting of installing kiosks for the SOA staff, electrical/data communications infrastructure to support SOA operations, infrastructure for SOA signage, and other related infrastructure systems to support SOA operations, is the subject of this memorandum. This work was left to be designed and constructed by the Port to allow flexibility in accommodating up to three future Small Operators. Since construction has been underway on the RCF, the Port's Business Development Department now has a better understanding that there will be two Small Operators in the facility. The RCF design team is currently in the process of developing the final design of the SOA project in accordance with the RCF lease agreement for three (3) Small Operators. Since the build-out for the Small Operators represents costs that would typically be paid by the tenant, the Port will fund these costs with the ADF (rather than Customer Facility Charge revenues) and will establish and collect rent from the Small Operators to recover these costs. PROJECT STATEMENT/OBJECTIVES: Project Statement: Provide rental car operations space for up to three (3) Small Operators at the RCF. Project Objectives: Provide an effective and economical operational area for Small Operators. Provide for a sustainable environment for Small Operators to maintain competiveness and be successful. Provide a level playing field for new Small Operator entrants STRATEGIC OBJECTIVES: This project supports the Port's strategy to: "Ensure Airport Vitality" "Be a Catalyst for Regional Transportation Solutions," and to "Exhibit Environmental Stewardship Through Our Actions." The SOA project is part of the RCF program, which provides a long-term transportation solution for the region and supports the Port's Small Business initiatives by supporting a variety of rental car operators at the Airport. As part of the Aviation Division's demonstration project for sustainable design, the design team also considered the total cost of ownership as part of significant design decisions for the this project. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer April 29, 2011 Page 3 of 6 FINANCIAL IMPLICATIONS: The following is an estimated cost breakdown for the SOA Project. Project Cost Breakdown Construction Costs $294,100 Sales Tax $27,940 Outside Professional Services $35,300 Port Costs $32,200 Total $389,540 Budget/Authorization Summary The following budget and authorization summary is for the RCF program and includes RCF Design (CIP # C102167), RCF Construction (CIP # C100266), and Rental Car Buses (CIP # C800032). This summary does not include the RCF Property Acquisition (CIP # C101110). The SOA project elements associated with this request for authorization are included within the Consolidated Rental Car Facility budget noted below. Current Current Requested Total Revised Description Revised Budget Authorization Authorization Authorization Cons. Rental Car Facility $350,772,000 $350,772,000 $0 $350,772,000 Bus Maintenance. Facility $26,382,000 $28,282,000 $0 $28,282,000 Off-Site Road Imp. $16,313,000 $19,542,000 $0 $19,542,000 Main Terminal Imp. $3,383,000 $3,383,000 $0 $3,383,000 Rental Car Bus Purchase $12,415,731 $16,000,000 $0 $16,000,000 Program Sub-Total $409,265,731 $415,097,746 $0 $417,979,000 Unallocated Contingency $10,040,269 $0 $0 $0 Program Total $419,306,000 $415,097,746 $0 $417,979,000 Remaining Budget to be Authorized $1,327,000 COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer April 29, 2011 Page 4 of 6 The following budget and authorization summary is for the entire RCF program. Original Budget $412,320,000 Budget Increases $6,986,000 Revised Budget $419,306,000 Previous Authorizations $417,979,000 Current request for Authorization $0 Total Authorizations, including this request $417,979,000 Remaining Budget to be Authorized $1,327,000 Source of Funds The RCF construction project (CIP # C100266) is included in the 2011-2015 capital budget and plan of finance as a committed project. The source of funds for the RCF project, as identified in the plan of finance, includes CFC revenues, existing revenue bond proceeds, and the ADF. This current authorization request is for the SOA project elements that will be funded with the ADF. Financial Analysis Summary The SOA project supports the operations at the RCF. The requested action does not reflect an increase in the budget for the RCF project and therefore does not change the overall financial analysis for the RCF program as presented to the Commission on June 30, 2009 and as reported in monthly progress briefings to date. The following information is provided for reference purposes. The RCF program is categorized as a Revenue/Capacity Growth project. This project represents a business expansion of our existing rental car operations. CIP Category Revenue/Capacity Growth Project Type Business Expansion Risk adjusted Discount Rate See below Key risk factors See below Project cost for analysis $419,306,000 Business Unit (BU) Operations, Landside Rental Cars Effect on Business Performance See below IRR/NPV N/A, see below CPE Impact Less than $0.01 in 2012 COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer April 29, 2011 Page 5 of 6 As a cost recovery project, traditional financial analysis measures such as net present value (NPV) and internal rate of return (IRR) are not meaningful. The CFC is set and adjusted as needed to cover the costs paid by CFC's (including debt service). The current CFC is $5.00 per transaction day. As earlier briefed to the Commission, it is anticipated that the CFC will need to increase to accommodate the anticipated CFC funded costs (bond requirements and consolidated busing) by the startup of rental car operations in early 2012. Assuming the total project costs identified above, and current assumptions for rental car transaction days, the CFC will increase to $6.05 per transaction day at the startup of rental car operations. The costs for the improvements to the SOA are anticipated to be recovered through a rent surcharge to the Small Operators. SUSTAINABILITY AND LIFE CYCLE COSTS: The project is under the same conditions as the main RCF and has the same sustainability and lifecycle costs. The annual cost of maintaining this additional space will not have a significant budgetary impact. ECONOMIC IMPACTS: The RCF program provides a long-term solution for rental car company operations at the Airport enabling the region to continue to receive the economic benefit of the Airport rental car market. ENVIRONMENTAL SUSTAINABILITY/COMMUNITY BENEFITS: An environmental review effort was completed for the RCF program in 2004 that met State and Federal environmental review requirements. No adverse environmental or community impacts were identified and this project is part of the overall RCF program. TRIPLE BOTTOM LINE SUMMARY: The RCF SOA project, as part of the RCF program, will provide a long-term solution for Small Operators at the Airport enabling the region to continue to receive the economic benefit of the Airport rental car market. The RCF program will improve the level of customer service for rental car customers at the Airport, and the local community will benefit with transportation improvements included in the program. PROJECT SCHEDULE: The following is a list of key milestone dates for the SOA project. Bid Advertisement June, 2011 Construction Start October, 2011 Construction Complete December, 2011 COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer April 29, 2011 Page 6 of 6 ALTERNATIVES CONSIDERED/RECOMMENDED ACTION: Bid as a Major Contract Under this alternative, the SOA project will be bid as a major construction project and completed as part of the RCF program. The completion of this project will provide the necessary facilities and operations for Small Operators required as part of the business plan and which is essential to the overall success of the RCF operation. This is the recommended alternative. Do-Nothing Under this alternative, the project would not be completed as part of the RCF program and the Port would not meet its lease/concession obligations to the Small Operators. This will put at risk the successful operation of the RCF and significantly decrease customer service and the Port's ability to meet its strategic objectives. This is not the recommended alternative. Bid as a Small Works Under this alternative, this project will be bid and constructed under the small works program. Due to staff concerns that the current estimate is near the upper threshold of the small works requirements, the Port would be at risk for complying with State small works regulations and Port policies and procedures and put the RCF schedule at risk. This is not the recommended alternative. Turner Bids Project Under this alternative, the project will be bid out under the GC/CM contract with Turner Construction. Staff determined that given Turner's current workload and that construction is entering the critical phases of completion by the end of the 2011, the Port would be better served to bid this project. The concern was adding this work to Turner's scope might potentially add additional costs or schedule impacts to the project. This is not the recommended alternative. Small Operators Construct Area Under this alternative, the individual small operator companies would be responsible for building out the space allocated to them. Per the Port lease with the Rental Car industry, the Port is required to do the work and to be paid back through small operator improvement rent. This enables the Port to own the improvement and provide maximum flexibility as the small operators come and go. This is not the recommended alternative.
Limitations of Translatable Documents
PDF files are created with text and images are placed at an exact position on a page of a fixed size.
Web pages are fluid in nature, and the exact positioning of PDF text creates presentation problems.
PDFs that are full page graphics, or scanned pages are generally unable to be made accessible, In these cases, viewing whatever plain text could be extracted is the only alternative.