Item 7a Memo

PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA                Item No.      7a 
Date of Meeting   February 10, 2009 
DATE:    January 22, 2009 
TO:     Tay Yoshitani, Chief Executive Officer 
FROM:    Michael Burke, Director, Cargo and Container Operations 
Mark Longridge, Capital Project Manager 
SUBJECT:  Authorization for design and permitting of fender system improvements at
Terminal 18 South. 
ACTION REQUESTED
Request Port Commission approval for: 
1.  Authority for the Chief Executive Officer to execute the Second Amendment to the
Lease between Westway Feed Products and the Port of Seattle; 
2.  Funding for design and permitting of 800 feet of replacement fender system at
Terminal 18 South in the amount of $450,000, and 
3.  Authority to enter into or to amend service agreements for an estimated $250,000 to
accomplish design and permitting. 
SYNOPSIS 
Westway Feeds has been using the southerly berth at Terminal 18 (T18) for product
transfer since the mid 1990's. The fender system at that berth is now beyond its
estimated useful life and is in need of replacement. Preliminary estimate of total project
cost is $3,100,000. 
PROJECT DESCRIPTION AND JUSTIFICATION 
The southern 1200 feet of dock at T18 has been used for break bulk and barge traffic.
The timber fender system for that section is well beyond its estimated useful life and
needs to be replaced. Replacing the fender system with steel piling instead of timber will
be a more cost effective replacement in the long term. 
Westway Feeds has primary berthing rights for the most southerly 400 feet of berth at
T18, including maintenance responsibility. Westway also has secondary rights to 300

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 22, 2009 
Page 2 
feet of berth north of their primary berth. Replacement of the secondary berth is not a
Westway obligation. 
The proposed lease amendment to the Westway lease would obligate the Port to replace
the 300 feet of secondary berth fender system section plus the fender system within 
Westway's primary 400 foot berth. Westway has agreed to a minimum revenue
guarantee for dock charges in exchange for the Port constructing these improvements.
Staff is also requesting the Commission authorize an additional 100 feet of fender system
replacement in this area, making the entire fender project 800 feet. This would create
two full barge berths at Terminal 18 South. Staff is not proposing to replace the fender
system on the most northerly 400 foot section of the break bulk berths at this time. 
SSA Terminals, as part of the T18 lease, has 50 percent maintenance responsibility for
the fender systems in this area, but is not necessarily responsible for replacement of the
fender system as that appears to be beyond their maintenance obligation in this situation. 
MAJOR ELEMENTS OF THE PROPOSED SECOND AMENDMENT TO LEASE 
1.  The Port will replace the 400 foot fender system for Westway's primary berth and the
300 foot section of fender system for Westway's secondary berth.
2.  Westway and/or its agents will pay the Port each year a minimum annual guarantee 
for dock operations (Dockage, Wharfage, and Service and Facilities charges) of
$242,500, starting the first full calendar year following completion of the
improvements in item 1. 
PROJECT SCOPE OF WORK AND SCHEDULE 
Overall project scope would include the replacement of 800 linear feet of old and
deteriorated fender pile system along with the remaining bullrail and brow at the
south end of T18 with a new steel fender system to facilitate barge moorage for
existing lease tenants and transitory barge traffic. 
Design and permitting scope under this authorization to include preparation of plans,
specifications and estimates for completing this work, and submission of all
applicable permits required for in water work to repair these sites. 
Tentative Project Schedule: 
Permits Submitted                    April 22, 2009 
100% Design Complete               August 25, 2009 
Major Works Construction Advertisement     September 2, 2009 
In-Water Construction Begins            January 6, 2009 
Construction Complete                March 30, 2010

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 22, 2009 
Page 3 
STRATEGIC OBJECTIVES: 
This project supports the Port's strategies to "Ensure Airport and Seaport Vitality" and
"Exhibit Environmental Stewardship through our Actions", by: 
Replacing the fender system at the subject Terminal so that the Terminal can return to
service for berthing.
Improving water quality by removing creosote treated timber piles from the marine
environment.
Replacement of the fender system in this area is basically a renewal and replacement
project for the Seaport. It will help protect dock revenue the Port currently gets and
may allow for some additional barge business in the future. 
Meet Environmental Obligations 
The project will meet environmental obligations by removing creosote timber fenders. In
addition the project will: 
Acquire all necessary and required permits from appropriate agencies prior to start of
construction; and 
Comply with all conditions stipulated by permit authorizations. 
Develop and Maintain Community Support 
This project will develop and maintain community support by retaining a longstanding
tenant in our harbor, with its related employment and the necessary purchase of goods
and services to service, maintain, repair and upgrade the vessel while at port.
In addition, the permit process requires notification of neighboring communities,
agencies of interest and appropriate environmental groups. Comment is expected and
welcome. Finally, the waters near Harbor Island are Treaty-protected "usual and
accustomed" fishing areas. The Muckleshoot and Suquamish Tribes will be consulted
during the permitting process. 
BUSINESS PLAN OBJECTIVES: 
Replacement of this essential protective system will allow continued operation of break
bulk and barge activity in this lease area. The full replacement of 800' of the fender
system will also allow secondary and tertiary use as an available barge layberth facility,
as planned under the Industrial Moorage Initiative.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 22, 2009 
Page 4 
Budget/Authorization Summary
Previous Authorizations (prior CEO authorization)                        $50,000 
Current request for authorization                                 $400,000 
Total Authorizations, including this request                          $450,000 
Remaining budget to be authorized (to be determined during design & permitting)               TBD 
Project Cost Breakdown 
Design Services                                        $ 250,000 
Permitting                                             $ 65,000 
Project Management                                   $ 135,000 
Total                                                  $ 450,000 
Source of Funds 
This project was included in the 2009 Plan of Finance under Committed CIP#C800121 in
the amount of $3,000,000. The initial $450,000 is requested in order to proceed with
design and permitting.
This project will be funded from the general fund... 
Financial Analysis Summary 
CIP Category      Revenue/Capacity Growth 
Project Type       Business Expansion 
Risk adjusted      7.5% for Westway lease revenue 
Discount rate       9.0% for barge layberth revenue 
Key risk factors      Key risk factors include permitting delays and potential cost
overruns due to project complexity/timeframe. 
The proposed 2nd Amendment to the Westway lease would
provide minimum annual guaranteed revenue from dock
operations in the amount of $242,500/yr for the duration of the
current lease (9/30/2018), and would continue to apply for any
renewal options or extensions. 
The preliminary financial analysis includes estimated revenue
from barge layberth. Financial performance could be lower, if
usage demand or market rates are lower than anticipated in the
analysis. 
Project cost for     $3,100,000 (preliminary financial analysis) 
analysis 
Business Unit (BU)   Container Support Properties

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 22, 2009 
Page 5 

Effect on business   Fender replacement at the south end of Terminal 18 will allow
performance       continued operation of break bulk and barge activity for another 30
years.
The estimated impact on Net Operating Income (NOI) and NOI after
Depreciation in Year 1 through Year 5 is shown below. 
NOI (in $000's)         2009    2010    2011    2012    2013
NOI              $2   $164   $245   $245   $245
Depreciation            $0    ($69)   ($103)   ($103)   ($103)
NOI After Depreciation      $2    $95    $141    $141    $141
IRR/NPV       Based on preliminary financial analysis. 
NPV    IRR   Payback
(in $000's)            (in years)
($285)    6.3%      14
SUSTAINABILITY AND LIFE CYCLE COSTS 
In considering the replacement of the existing timber fender system several alternatives
materials and systems were considered. Replacement of the timber system in kind, or
with a steel, plastic or concrete fender system was evaluated for their performance at this
site. The evaluation considered not only life cycle costs, but also structural performance,
maintenance frequency, environmental feasibility and constructability issues. While steel
fender systems do have higher initial costs, the overall life cycle cost proved lower than
the comparable timber, concrete or plastic systems. This paired with increased protection
performance of the steel system made it the recommended choice of material. 
What plans have been made to reduce maintenance costs? If not, why? 
This project replaces an essential part of the protective system for T18S (fender
piling). The project will by definition reduce maintenance costs to the Terminal by
preventing damage from barges and vessels impacting on the apron structure. Also,
the proposed steel fender system has the lowest expected maintenance effort of the
materials considered for this system 
What is the design life span of this project? 
Thirty (30) Years 
What plans have been made to reduce chemical and pollutant source control (low
volatile organic compounds) in the construction of this project to improve air
quality? If not, why? 
This project will remove creosote treated piles and replace them with steel fender
piles.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 22, 2009 
Page 6 
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS: 
Do Nothing: Doing nothing at this time would mean a Port tenant is not able to
utilize 300 feet of secondary berth with sufficient fender system protection to the
dock. 
Replace only 300 foot secondary berth: Replacing only 300 feet of fender system
would leave significant gaps in the fender system at the south end of Terminal 18 and
put at risk the revenue the Port gets from Westway's dock operations today. 
Construct 700 feet of fender system: Constructing 700 feet of berth at the south
would create only a 300 foot berth area the Port could use for other barge business. A
700 foot replacement does not allow for the full use by the Port of the secondary berth
for other barge activities. 
Replace 800 feet of fender system: Proceeding with the design and permitting for
the full 800 foot section of the south Terminal 18 berths keeps the project on schedule
around the in-water construction windows and combined with the anticipated
minimum revenue stream from Westway gives the Port a reasonable return on the
investment. This is the recommended option. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS: 
Policy and Staff Briefing  Industrial Moorage Initiative, June 3, 2008

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