COMMISSION
AGENDA MEMORANDUM
Item No.
ACTION ITEM
Date of Meeting
DATE:
December 13, 2024
TO:
Stephen P. Metruck, Executive Director
FROM:
John Wellons, Chief Development Officer
Keri Stephens, Director Aviation Capital and Facilities
Paul Shen, Aviation Division Civil Engineering Manager
Keith Warner, Aviation Division Utilities Business Manager
Chris Leopold, Senior Port Counsel
8e
January 14, 2025
SUBJECT: Sewer Services Agreement with Midway Sewer District
Amount of this request:
Total estimated project cost:
$22,000,000
$22,000,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to execute a service agreement
renewal with Midway Sewer District.
EXECUTIVE SUMMARY
The existing 30-year service agreement with Midway Sewer district is set to expire and requires
renewal to continue sewer services to the airport. The updated service agreement has been
developed in close cooperation between the Port and Midway. The renewed agreement
continues with the existing fee structure as well as a one-time payment of $1,600,000 for facility
upgrades.
JUSTIFICATION
Midway Sewer District is a municipal services corporation providing sewer services to areas of
South King County including a portion of Seattle-Tacoma International Airport (SEA). Midway
began serving SEA in 1963. The current service agreement has been in place since 1995 and
expires February 8, 2025. The wastewater received by Midway is generated from four primary
sources: sanitary sewer uses from the main terminal; cooling tower washdown, surface water
runoff and industrial wastewater discharges downstream of SEA pre-treatment facility. SEA does
not have treatment facilities for these types of wastes and relies on Midway Sewer as well as
other local sewer districts to service airport properties.
Template revised January 10, 2019.
COMMISSION AGENDA - Action Item No. 8e
Meeting Date: Jan 14, 2025
Page 2 of 5
Diversity in Contracting
Midway Sewer District is a municipal services corporation, and these sewer services are governed
through their existing bylaws and the addition of this service agreement.
DETAILS
The current Midway sewer service agreement has been in place since 1995 and expires February
8, 2025. During the past year, Aviation Facilities and Infrastructure managers, along with Legal,
have worked closely with Midway leadership to develop the new service agreement which will
be in force for 10 years plus two 5-year extension options. The wastewater received by Midway
is generated from four primary sources: sanitary sewer uses from the main terminal; cooling
tower washdown, surface water runoff and industrial wastewater discharges downstream of SEA
pre-treatment facility.
The new service agreement increases flow volumes and includes new language associated with
Total Suspended Solids (TSS) and Biochemical Oxygen Demand (BOD) parameters for the sewer
outflow from SEA. These updates were regulatory driven by the Washington State Department
of Ecology permit with Midway. The new agreement also provides for the transfer of ownership
of a pipeline from Midway to SEA for the portion that now resides on the expanded Port property.
During recent years, the flow rates from SEA have exceeded the existing service agreement and
were adjusted from 2,500 to 3,200 gallons per minute units. To facilitate this increase, Midway
made a significant upgrade to their outfall capacity and the Port requires this upgraded capacity
for its future estimated discharge volumes. Midway requires a contribution from the Port
associated with this outfall upgrade. Midway and SEA have agreed to a $1,600,000 payment for
this improvement to be paid at the initialization of this new service agreement. This payment
has been planned and approved in the Aviation budget for 2025.
Scope of Work
This service agreement provides for treatment of sanitary sewer, surface water and industrial
wastewater generated from airport operations. The scope also provides for the transfer of
ownership of a pipeline from Midway to SEA for the portion that now resides on the expanded
Port property.
Schedule
The current 30-year contract expires on February 8, 2025. This new agreement is for a 10-year
term plus two 5-year extension options.
Template revised June 27, 2019 (Diversity in Contracting).
COMMISSION AGENDA - Action Item No. 8e
Meeting Date: Jan 14, 2025
Activity
Commission authorization
In-use date
Page 3 of 5
2025 Quarter 1
February 9, 2025
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 The airport was developed with their own wastewater treatment plant in the
1940's and removed in the 1960's through an agreement with Midway Sewer although is not
under any Sewer District jurisdiction. If SEA does not continue an agreement with Midway Sewer
District they would either need to rebuild a wastewater treatment plant or find another
wastewater treatment district which would require extensive capital costs for new conveyance
system. The Industrial Waste Plant would also need capital efforts to build a conveyance main
and outfall.
Cost Implications: Over $100 million
Pros:
(1)
Cons:
(1)
(2)
SEA would be self-sufficient.
Extensive capital costs
Possible public concerns building a wastewater treatment plant and Industrial Waste
outfall to the Puget Sound.
This is not the recommended alternative.
Alternative 2 Renew agreement with Midway Sewer District
Cost Implications: $22,000,000 over the course of the 10-year agreement
Pros:
(1)
(2)
(3)
Cons:
(1)
Service agreement details have been closely coordinated with Facilities, Legal and
Midway sewer
Continues normal operations without service interruption.
Rates for sewer services are known and managed through a public process
None
This is the recommended alternative.
Template revised June 27, 2019 (Diversity in Contracting).
COMMISSION AGENDA - Action Item No. 8e
Meeting Date: Jan 14, 2025
Page 4 of 5
FINANCIAL IMPLICATIONS
This sewer agreement will remain under the same fee structure currently in-place as adopted by
the Midway Sewer District with the addition of a monthly $4,000 charge for the Port's right to
discharge effluent from the Airport Industrial Waste Line into Midway's system tie-in at the
boundary of the Airport.
These sewer services are billed on a monthly and/or quarterly basis and are estimated at
$2,000,000 per year. The $1,600,000 one-time fee associated with Midway infrastructure
improvements is an approved line-item in the 2025 Aviation budget. This total request value
includes the 10-years of expenses plus the one-time charge.
Cost Estimate/Authorization Summary
Capital
Expense
Total
$0
$22,000,000
$22,000,000
COST ESTIMATE
Original estimate
Annual Budget Status and Source of Funds
The costs for these sewer services are part on the Facilities and Infrastructure department annual
operational expense costs. These sewer services are billed on a monthly and/or quarterly basis
and are estimated at $2,000,000 per year. The $1,600,000 one-time fee associated with Midway
infrastructure improvements is an approved line-item in the 2025 Aviation budget. This total
request value includes the 10-years of expenses plus the one-time charge.
Financial Analysis and Summary
Project cost for analysis
Business Unit (BU)
Effect on business performance
(NOI after depreciation)
IRR/NPV (if relevant)
CPE Impact
$22,000,000
Utilities Business Unit with Revenue Cost Recovery in the
Industrial Wastewater fee.
NOI after depreciation will decrease
N/A
N/A
Future Revenues and Expenses (Total cost of ownership)
The expenses for Midway sewer services are evaluated each annual budget cycle and integrated
into the Facilities and Infrastructure Utilities expense budget.
Template revised June 27, 2019 (Diversity in Contracting).
COMMISSION AGENDA - Action Item No. 8e
Meeting Date: Jan 14, 2025
ATTACHMENTS TO THIS REQUEST
(1)
Draft Service Agreement
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
None
Template revised June 27, 2019 (Diversity in Contracting).
Page 5 of 5