COMMISSION 
AGENDA MEMORANDUM                        Item No.          10c 
ACTION ITEM                            Date of Meeting     December 14, 2021 
DATE:     December 3, 2021 
TO:        Stephen P. Metruck, Executive Director 
FROM:    Jeff Moken, Interim Director AV Business & Properties 
Wayne Grotheer, Director Aviation Project Management 
SUBJECT:  Concourse A Building Expansion for Lounges (CIP #C801205) 
Amount of this request:              $72,200,000 
Total estimated project cost:         $78,500,000 

ACTION REQUESTED 
Request Commission authorization for the Executive Director to (1) authorize construction of the
Concourse A Building Expansion for the Lounges project at Seattle-Tacoma International Airport
by Delta Air Lines, Inc; (2) authorize reimbursements to Delta for construction under the Tenant
Reimbursement Agreement previously authorized by the Commission on April 27, 2021; and (3)
utilize Port crews for construction and support. The total cost of this request is $72,200,000 of
an estimated total project cost of $78,500,000. 
EXECUTIVE SUMMARY 
This project constructs a building expansion towards the end of Concourse A, to predominately
house a new passenger lounge for Delta Air Lines, Inc. (Delta) and provide additional space for
the Port of Seattle common use lounge: The Club at SEA. This project is expected to meet existing
(pre-COVID-19) passenger demand for Delta, as they have vacated their existing lounge at the
South Satellite. This project also supports Century Agenda Goal #2 to advance this region as a
leading tourism destination and business gateway. 
To achieve this, Delta has designed and desires to construct an approximately 52,000 square foot
(SF) building expansion at the east side of Concourse A, across from Gate A11 and directly south
of the International Arrivals Facility (IAF), using a Tenant Reimbursement Agreement (TRA) with
the Port. Approximately 36,000 SF of the new space will be leasable, including the space that will
be directly leased by Delta for their lounge. 


Template revised January 10, 2019.

COMMISSION AGENDA  Action Item No. __10c__                             Page 2 of 7 
Meeting Date: December 14, 2021 
JUSTIFICATION 
Delta has requested to construct a new lounge on Concourse A. The purpose is to accommodate 
existing passenger demand that is anticipated to shift from the South Satellite to Concourse A
due to the opening of the IAF. The Port currently does not have sufficient space to meet this
demand. Thus, to satisfy this request for additional leased space, the Port would either (i) need
to build the shell space itself, and then have Delta subsequently design and construct their own
tenant improvements, or (ii) allow Delta to design and construct the building addition under a
TRA. In addition, this proposed expansion will create additional space for future expansion of the
Port's common-use lounge on Concourse A, which would provide needed capacity to support
pre-COVID passenger levels, as well as anticipated capacity that will shift from South Satellite to
Concourse A as a result of the completion of the IAF project. Proceeding with having Delta design
and construct the improvements is likely to be both less expensive and faster, than the two-step
process  of  the  Port  constructing  the  shell,  and  then  Delta  constructing  their  tenant
improvements. In April 2021, Commission authorized the design of this project using a TRA with
Delta. Today's request is the next step in completing this project and continuing the use of the
TRA with Delta. 
Diversity in Contracting 
The Port collaborated with Delta and has included in the TRA a WMBE goal of 10%, an apprentice
hiring goal of 15%, a women apprentice hiring sub-goal of 12%, a minority apprentice hiring subgoal
of 21%, and a priority worker goal of 20% for the construction contractor. Delta has stated
that they will strive to exceed these goals. 
DETAILS 
The budget is based on the construction costs provided by Delta for tenant reimbursable shell
and core construction costs, plus  sales tax, Port soft costs, Delta's design,  and project
management costs for the TRA, art, and project contingency.  The budget contingency for
construction risks is included in Delta's construction costs and Delta will be responsible for any
construction costs that exceed the established contingency. The Port has included contingency
for  any  potential  owner  scope  changes.  The  Port  and  Delta  entered  into  the  Tenant 
Reimbursement Agreement authorized by Commission on April 27, 2021 in August 2021 for
design phase costs only. If this Commission request is authorized, the Port will issue an updated
reimbursement letter that includes the construction costs and a new total of $62.6M. The Port
prepared an independent estimate to compare against the Delta estimate, reconciled differences
found, and confirmed its reasonableness. The Port will review invoices submitted by Delta for
reimbursement on a monthly basis. 
The project has been identified as a Tier two project under the Port's Sustainable Evaluation 
Framework. The project team analyzed concepts to reduce energy and carbon emissions, along
with other initiatives to reduce solid waste, promote public transportation,  and support
employees. The team also calculated the total cost of ownership for the different sustainability 
concepts. The project will implement (1) triple-glazed electrochromic faade ("smart glass"); (2)
all electric appliances (no natural gas); (3) low-flow water fixtures in the Delta lounge; (4) signage

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. __10c__                             Page 3 of 7 
Meeting Date: December 14, 2021 
for public transportation options; (5) an employee breakroom; and (6) three new electric vehicle
charging stations.  The sustainability work and recommendations  were reviewed by the
Commission Sustainability, Environment and Climate Committee on November 18, 2021. 
During design, several changes have impacted the project budget. The Port increased the size of
the mezzanine level of the proposed expansion by approximately 4,400 SF to match the footprint
of the Delta lounge space above, to optimize the placement and view opportunities of the Port
common use lounge. To minimize construction impacts, the project will move an existing Port
maintenance shop to a new remodeled location. A prime consideration has been the need to
keep the Port common use lounge open during construction. To that end, the project will provide
temporary amenities like restrooms to replace those areas of the existing lounge that will be
impacted by the construction of this project. These changes have increased the project budget
by $7.1 million. 
Delta will be responsible for the cost and construction of the interior buildout of their lounge 
within the new building shell. The Port's common use lounge interior buildout will be completed
by the Concourse A Port Shared Use Lounge project. 
Scope of Work 
o  Construct a building addition of approximately 52,000 SF that will provide shell space for 
two lounges and associated building systems. 
o  Reconfigure existing spaces to provide additional leasable office area, an entry foyer, a
replacement restroom, and vertical circulation. 
o  Renovate an airport building to house the relocated Aviation Maintenance Department
Passenger Loading Bridge shop that is being displaced by this project. The expense cost 
to move the shop is included in the budget. 
o  Provide temporary restrooms for the Port common use lounge to keep the lounge
operational during construction of the building expansion. 
Schedule 
Activity 
Commission design authorization           2021 Quarter 2 
Design start                                   2021 Quarter 2 
Construction start                            2022 Quarter 1 
In-use date                                   2023 Quarter 3 
Cost Breakdown                                     This Request           Total Project 
Design                                                           $0             $6,300,000 
Construction                                           $72,200,000            $72,200,000 
Total                                                        $72,200,000             $78,500,000 


Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. __10c__                             Page 4 of 7 
Meeting Date: December 14, 2021 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1  Do not construct the building expansion at the southeast side of Concourse A
using a TRA between Delta and the Port. 
Cost Implications: $6.3 million 
Pros: 
(1)   This is the lower cost alternative. 
Cons: 
(1)   Passenger lounge spaces will not be expanded to accommodate anticipated return of
pre-COVID demand. 
(2)   This alternative will not support Delta's new gates on Concourse A. 
(3)   The expanded lounges (Delta's and the Port's common use) will not provide passengers
an alternative to waiting for flights in crowded hold rooms. 
(4)   The expended cost to design this project would need to be expensed. 
This is not the recommended alternative. 
Alternative 2  Construct the building expansion on Concourse A, using a TRA between Delta and
the Port. 
Cost Implications: $78,500,000 
Pros: 
(1)   Passenger lounge spaces will be expanded to accommodate anticipated return of
demand. 
(2)   Location of the lounge on Concourse A will support Delta's new gates on Concourse A. 
(3)   The expanded lounges (Delta's and the Port's common use) will provide passengers an
alternative to waiting for flights in crowded hold rooms. 
Cons: 
(1)   This is the higher cost alternative. 
This is the recommended alternative. 
FINANCIAL IMPLICATIONS 
Cost Estimate/Authorization Summary              Capital        Expense           Total 
COST ESTIMATE 
Original estimate                               $60,000,000*               $0   $60,000,000* 
Previous changes  net                        $11,400,000*                0   $11,400,000* 
Current change                                $7,050,000*         $50,000     $7,100,000* 
Revised estimate                             $78,450,000*         $50,000   $78,500,000* 
AUTHORIZATION 
Previous authorizations                          $6,300,000               $0      $6,300,000 
Current request for authorization               $72,150,000         $50,000     $72,200,000 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. __10c__                             Page 5 of 7 
Meeting Date: December 14, 2021 
Total authorizations, including this request      $78,450,000         $50,000     $78,500,000 
Remaining amount to be authorized                    $0             $0             $0 
* Cost estimate is based on Delta Air Lines cost estimate, not a Port of Seattle estimate 
Annual Budget Status and Source of Funds 
This project, CIP C801205, was included in the 2022-2026 capital budget and plan of finance with
a budget of $71,400,000. A budget increase of $7,050,000 was transferred from the Aeronautical
Reserve CIP (C800753) resulting in zero net change to the Aviation capital budget. The funding
source will include the Airport Development Fund and future revenue bonds. This project was
submitted to the airlines for Majority-In-Interest approval due on December 7, 2021. 
Financial Analysis and Summary 
This project is an investment in additional terminal space that is intended to be used for both
aeronautical and non-aeronautical purposes. As a hybrid project, the financial analysis looks at
the projects as both a standalone non-aero investment and a terminal investment that flows
through airline rates and charges. 
Aeronautical Rate Base Impacts 
Airline Rates and Charges
2024
($000s)    Aero     Non-aero     Total
Rentable sqft without Conc A sqft                 76.78%     23.22%       100%
Rentable sqft WITH Conc A sqft                   76.89%     23.11%       100%
Project cost                                     $   60,317  $   18,133  $   78,450
Incremental Revenues WITHOUT Conc A sqft   $   4,973       $   1,504       $   6,477 
Terminal distribution                                6.82                     6.82
Incremental Revenues WITH Conc A sqft         4,980.94     1,503.89     6,484.82
Incremental Debt Service                       4,977.90     1,496.45     6,474.35
Incremental Amortization                          2.61        0.79        3.40
With the Concourse A expansion, the net terminal square footage distribution has a minor impact
on the analysis as the existing project space allocation is reasonably close to the existing
allocations. 
The table above shows that before Concourse A expansion, 76.78% of the terminal costs are
allocated to the aeronautical rate base, which equates to incremental revenue of $4,973,000.
After adding the incremental square footage of this project, the percentage of terminal costs
increases to 76.89%; this reflects a $7,000 increase to Aeronautical revenue. Thus, in 2024 the
net impact of the Concourse A expansion project is to contribute $4,978,000 in incremental
revenue to the aeronautical rate base. 


Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. __10c__                             Page 6 of 7 
Meeting Date: December 14, 2021 
Terminal rents are established based on the total cost center costs. The project would be
completed in Q3 2023. The full year of debt service and equity amortization begin in 2024. The
incremental terminal rent would be $3.45 and CPE of $0.20 in 2024. 
Non-aeronautical Investment Analysis 
The purpose of this section is to demonstrate that the Port has a compelling business case as a
non-aero investment. The non-aeronautical investment includes both the cost of new space
included in this authorization request and cost of the interior build-out and furnishings ($24.7
million) included in CIP C801207 
The table below shows the allocation of capital costs based on rentable square footage. For nonaero
purposes, 18.17% of the rentable square footage, equating to $14.2 million in capital cost,
establishes the basis of the non-aero portion of the project. The lower part of the table identifies
an incremental revenue increase of $4.2 million in 2027. This new revenue, attributed to the
airport lounge generates the positive Net Present Value of $4.1 million, which signifies a good
investment. Given that the existing space is currently generating revenues, the NPV is netted
against a base case (do nothing). 












Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. __10c__                             Page 7 of 7 
Meeting Date: December 14, 2021 
Future Revenues and Expenses (Total cost of ownership) 
The tenants would pay operating and maintenance annual costs in their space since maintenance
of exclusive premises is the responsibility of the lessee. Those costs are not included in the
amount shown below. This project provides 29,264 square feet of aeronautical rentable space,
as well as 6,499 square feet of rentable non-aeronautical space. 
Facility elements outside of or supporting the exclusive premises, such as custodial services,
domestic water, power,  and HVAC will generate some additional demand for Aviation
Maintenance services, and those annual operating and maintenance costs for the new space are 
estimated to be $340,000, according to the cost breakdown below: 
Custodial services        $275,000 
Facilities services            30,000 
Electrical systems           18,000 
Mechanical systems        17,000 

ATTACHMENTS TO THIS REQUEST 
(1)   Presentation 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
(1) April 27, 2021  The Commission authorized design and execution of a TRA for this project. 









Template revised June 27, 2019 (Diversity in Contracting).