PORT OF SEATTLE 
MEMORANDUM 

COMMISSION AGENDA             Item No.      6d 
Date of Meeting     May 4, 2010 
DATE:    April 28, 2010 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:    Michael Burke, Senior Manager, Container Leasing and Operations 
Steve Queen, Manager, Container Operations 
SUBJECT:  Term Lease with PCC Logistics at Terminal 104. 
Amount of This Request: $145,387          Source of Funds: Operating Revenues 
Est. Workers Employed: 90
ACTION REQUESTED: 
Request for authorization for the Chief Executive Officer to execute a ten-year lease with PCC
Logistics, a division of Pacific Coast Container, Inc. and provide funds for broker fees in the
amount of $145,387. 
BACKGROUND: 
In June of 2009, the prior tenant at Terminal 104 defaulted on its lease and was evicted. The
property has been vacant since then. 
Terminal 104 is an 8.5 acre site with a 36,840 square foot warehouse and 4,800 square feet of
office space. It is located between Ash Grove Cement and Spokane Street adjacent to the
Duwamish River. 
The Seaport Division issued an RFP on November 11, 2009 to solicit bids for the approximately
8.5 acre site. Bids were due on December 11, 2009. PCC Logistics, represented by commercial
real estate service group Neil Walter Company, was the lone bidder. The RFP was advertised via
the Seattle Journal of Commerce, via direct mail to known entities, as well as the Port's eBid
website. Port staff and PCC Logistics represented by their broker entered into negotiations. 
PCC Logistics was formed in 1988 as an Oakland, CA based warehouse and logistics operator.
They have operated in Seattle for over 15 years. They currently operate in sixteen locations in
Washington, California, Nevada as well as China providing transloading, warehousing, trucking,
USDA fumigation and third party logistics. PCC Logistics has been a long-term customer of the
Port on Harbor Island.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 28, 2010 
Page 2 of 5 
TERMS OF THE PROPOSED LEASE: 
The major elements of the proposed term lease are outlined below: 
Term:               Ten years, rent commencing June 1, 2010 through May 31, 2020. 
Renewal Options:        None. 
Use:                 Import and export transload facility via rail and truck. 
Premises:              Premises consists of approximately 382,447 square feet of yard
storage, with 41,280 square feet of storage/warehouse. 
Rent: 
June 1, 2010 to Feb. 28, 2011        Yard/Office/Warehouse Space       $5,250.00/mo.* 
Mar. 1, 2011 to Nov. 30, 2011       Yard/Office/Warehouse Space       $12,250.00/mo.* 
Dec. 1, 2011 to Aug. 31, 2012       Yard/Office/Warehouse Space       $20,250.00/mo.* 
Sept. 1, 2012 to May 31, 2013       Yard/Office/Warehouse Space       $25,250.00/mo.* 
June 1, 2013 to May 31, 2014       Yard/Office/Warehouse Space       $40,250.00/mo.* 
June 1, 2014 to May 31, 2015       Yard/Office/Warehouse Space       $41,458.00/mo.* 
June 1, 2015 to May 31, 2016       Yard/Office/Warehouse Space       $42,701.00/mo.* 
June 1, 2016 to May 31, 2017       Yard/Office/Warehouse Space       $43,982.00/mo.* 
June 1, 2017 to May 31, 2018       Yard/Office/Warehouse Space       $45,302.00/mo.* 
June 1, 2018 to May 31, 2019       Yard/Office/Warehouse Space       $46,661.00/mo.* 
June 1, 2019 to May 31, 2020       Yard/Office/Warehouse Space       $48,061.00/mo.* 
*Plus applicable taxes 
Rent Abatement:        None 
Port Improvements:       None definite although Port has the right to install oil/water
separators. Rail improvements associated with the adjacent East
Marginal Way overpass project will take place in 2011. 
Maintenance:           Lessee is responsible to pay for all repairs and maintenance related
to the premises including rail line. 
Utilities:                 Lessee shall be liable for and shall pay throughout the term of this
Lease, all charges for all utility services furnished to the Premises. 
Security:               Lessee shall provide a cash deposit, corporate surety company
bond, irrevocable stand-by letter of credit or other security in the
amount of $31,500, which is equal to the average of six month's

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 28, 2010 
Page 3 of 5 
base rent as security. This amount will be adjusted annually to
reflect rent increases. 
Guaranty:             Pacific Coast Container, Inc. 
Insurance/Liability:        $2 million General Liability/ $1 million Auto Liability. 
Assignment/Sublease:     Conditioned on the Port's prior written consent.
FINANCIAL ANALYSIS: 
Budget/Authorization Summary 
Previous Authorizations                                          $0 
Current Request for Authorization                                $145,387 
Total Authorizations, including this request                           $145,387 
Remaining Budget to be Authorized                                 $0 
Project Cost Breakdown 
Tenant Improvement Allowance                                  $0 
Leasing Broker Commission                                $145,387 
Other                                                      $0 
Total                                                       $145,387 
Source of Funds 
The broker lease commissions associated with this lease were not included in the 2010 Operating
Budget. The funding required in the amount of $145,387 will result in an unfavorable operating
expense variance. Seaport Division will seek ways to offset this incremental operating expense
with savings in other operating expenses. 
Broker lease commissions will be funded from the general fund. 
Financial Analysis Summary 
CIP Category       N/A 
Project Type        N/A 
Risk Adjusted      9.0% 
Discount Rate 
Key Risk Factors     Risk of Tenant default partially mitigated by the following
factors: 
Security deposit from PCC Logistics ("PCC") equal to six

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 28, 2010 
Page 4 of 5 
months of base rent. The amount is to be adjusted annually. 
Lease guarantee from Pacific Coast Container, Inc. 
PCC is a current tenant of the Port and in good standing. 
Project Cost for      $145,387 (Leasing Broker Commissions) 
Analysis 
Business Unit (BU)    Container Support Properties 
Effect on Business    Net Operating Income ("NOI") After Depreciation for Year 1
Performance        through Year 5 is shown below.
NOI (in $000's)        2010     2011     2012     2013     2014
Revenue          $42     $141    $263    $408    $491
Expenses(a)         ($132)     $0      $0      $0      $0
NOI            ($91)    $141    $263    $408    $491
Depreciation          $0       $0       $0       $0       $0
NOI After Depreciation   ($91)     $141     $263     $408     $491
a) Operating expenses in 2010 reflect payment of leasing
broker commissions, partially offset by savings of $13,000
for security costs at Terminal 104 in June 2010.
IRR/NPV 
NPV    IRR   Payback
(in $000's)    (%)      Years
$2,498     NA      2
NPV calculation does not factor in an opportunity cost for the
land or existing improvements at Terminal 104. 
ECONOMIC IMPACTS AND BUSINESS PLAN OBJECTIVES: 
Initially the rent looks very low for the first three years. It is. It reflects the quality of the building
and its environs. This aging facility has not seen any upgrade in 30+ years. Ingress and egress of
both truck and rail are hampered by the East Marginal Way Grade Separation project next door
until September 2011. The warehouse and yard lack working lights. The roof currently leaks and
the HVAC system is ten years past its useful life. The dock doors and levelers are in general
disrepair and the yard needs paving. Given these deficiencies, the lessee will be required to make
significant improvements and repairs to the premises. The Port will be making zero investment. 
STRATEGIC OBJECTIVES: 
Leasing Terminal 104 to PCC Logistics fully utilizes all characteristics of this property. The
lessee will take full advantage of the existing rail connection, handling approximately ten rail
cars per day. This transloading operation will result in an additional 72,000 TEUs of export
containers annually. This activity will require hiring 90 new full-time jobs.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 28, 2010 
Page 5 of 5 

ENVIRONMENTAL SUSTAINABILITY AND COMMUNITY BENEFITS: 
PCC Logistics will comply with all requirements of the City ordinance and Ecology regulations
and permits, including the preparation of and compliance with state industrial general stormwater
permits and/or the Phase I Municipal permits. 
DOCUMENTS ASSOCIATED WITH THIS REQUEST: 
Lease agreement. 
ALTERNATIVES CONSIDERED/RECOMMENDED ACTION: 
Not execute lease agreement: Not executing the proposed lease would mean the 382,447
square feet of yard storage, and 41,280 square feet of warehouse space would remain
vacant resulting in no new revenue opportunity to the Port. The Port could wait for a
market turnaround and hope for higher initial lease rates. According to CoStar, a
commercial real estate analysis company, the average time on market for Puget Sound
industrial properties is 13.8 months. 
Execute Proposed Lease: The proposed lease agreement will allow the Port to maximize
this unique asset while making no investments to an aged facility. This is the
recommended action. 
PREVIOUS COMMISSION ACTION: 
None.