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					    APPROVED                                                      DECEMBER 10, 2002

PROPOSED MINUTES OF THE REGULAR MEETING OF THE PORT
COMMISSION OF THE PORT OF SEATTLE

The Port of Seattle Commission met in a regular meeting at 12:00 p.m., Tuesday,
December 10, 2002 in the Commission Chambers, Pier 69, 2711 Alaskan Way, Seattle
WA. Commissioners Davis, Edwards, Miller, Molloy and *Nordquist were present.

         1.        CALL TO ORDER

The regular meeting was called to order at 12:00 p.m. by Bob Edwards, Chair and
President.

         2.        EXECUTIVE SESSION

The meeting was immediately recessed to an executive session for approximately one
hour and fifteen minutes to discuss real estate and p ublic contract matters.

         3.        APPROVAL OF MINUTES

Commissioner Nordquist moved approval of the minutes of the special meeting of
November 26, 2002, without reading into the record. Motion unanimously carried.

         4.        SPECIAL ORDER OF BUSINESS

    a.   SALMON DERBY BRIEFING FOR THE NORTHWEST BURN
FOUNDATION

Charles Starks and Greg Baruso, Firefighters, Port of Seattle Fire Department, thanked
the Port Commission for their support of the Fire Department's annual salmon derby to
benefit the Northwest Burn Foundation (Foundation). Firefighter Baruso advised the Port
of Seattle Fire Department sponsored its first salmon derby six years ago and noted the
first derby raised $8,800 for the Foundation. He reported there has been a steady increase
in the fundraising amount over the last six years and announced the sixth annual salmon
derby raised $42,000.

Connie Blumenthal, Board Member, Northwest Burn Foundation, expressed her thanks,
on behalf of the Foundation Board and staff, to the Port Commission and the Port Fire
Department for their fundraising efforts. Ms. Blumenthal presented a plaque expressing
thanks and appreciation to Commission Chair and President, Bob Edwards.

Charles Stark acknowledged former Port Commissioner, Jack Block, who was in
attendance at today's meeting, for his support of the derby since its beginning and
presented him a plaque expressing the Fire Department's thanks and appreciation. Jack
Block thanked the Port Commission and the Port Fire Department for their continued
support of the Northwest Burn Foundation and expressed his wishes for a long term
'stream' of funds to the Foundation. Commissioner Edwards noted that former
Commissioner Block is still active in his support of this annual event.


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         5.       UNANIMOUS CONSENT CALENDAR

       a.       Commissioner Davis moved approval of the Unanimous Consent Calendar
Item 5a, as follows:

Document for signature authorizing payment of outstanding obligations of salaries and
claims against the Port of Seattle for the period November 1 through November 30, 2002.

Commissioner Davis moved that the Port Auditor be authorized to pay the outstanding
obligations of salaries and claims against the Port of Seattle for the period as evidenced
by vouchers on the following funds:

CHECKS ISSUED DURING THE PERIOD NOVEMBER 1, 2002 THROUGH
NOVEMBER 30, 2002:

*GENERAL FUND TOTAL                                                          $65,018,131.95

              AP Checks:            606796 – 609069         $59,779,865.90
              Payroll Checks:    P-0103869 – P-0105020        5,238,266.05
                                & 105022
         *    Includes Promotional Hosting Expense of
              Commissioners in the amount of                                          724.95

and to cancel warrants outstanding one year or more to date of Commission meeting per
Resolution No. 2601:

        083623              300.55                       522307           6,000.00
        522107            7,263.00                       523102             193.87

Appropriate and effective internal controls are in place to ensure that the above–
numbered vouchers payable have been processed in accordance with Port
procurement/payment policies and delegation of authority.

Motion unanimously carried.

         6.       POLICY AND STAFF BRIEFING

     a.  CITY OF SEATTLE BRIEFING - MAGNOLIA BRIDGE
REPLACEMENT PROJEC STUDY

Presenter: Dakota Chamberlain, Manager Facility Planning and Project Management.

Presentation Documents: Mr. Chamberlain's Commission Agenda Memorandum dated
December 4, 2002; computer slide presentation entitled, "Magnolia Bridge Project,
Seattle Port Commission, December 10, 2002"; and documents entitled, "Magnolia
Bridge Project Area Streets, Seattle Department of Transportation" and "Magnolia Bridge


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Project Alternatives - Comments, Evaluations, Results, Seattle Department of
Transportation".

Mr. Chamberlain advised that today's briefing is the second briefing for Commissioners,
by the City, on this project. (The first briefing was on June 11, 2002). He introduced
Kirk Jones, City of Seattle; Lee Holloway, HNTB, and Brad Huff, Enviro Issues, who
were in attendance and would be briefing the Commission on this project.

As reported in the presentation document, the Magnolia Bridge is an 81-span structure
that connects 15th Avenue West to West Galer Street. It was originally constructed in the
early 1930’s as the West Garfield Street Bridge. It is one of three primary structures that
provide access to the Magnolia Neighborhood, the other two being the Dravus Street and
Emerson Street bridges.

In 1957, the bridge was widened and lengthened with the construction of the Magnolia
Bridge Extension, a 17-span structure that provides access over 15 th Avenue West.
Related structural improvements since the original construction have included: adding
ramps, structural reinforcing, resurfacing, slab stiffening, replacement of bridge railing,
recent replacement of structural members damaged in last year’s Nisqually Earthquake
and seismic retrofit of the Magnolia Bridge Extension over 15 th Avenue West. In 1999, a
retaining wall was constructed west of the bridge as a result of a significant landslide.

One of the outcomes of last year’s Nisqually Earthquake was the City’s decision to
undertake a Type, Size, and Location (TS&L) study for replacement o f the Magnolia
Bridge. The study will investigate various options, including repair of the existing
bridge, and make recommendations regarding a preferred alternative.

The bridge is located over Terminal 91 and railroad lines operated by Burlington
Northern Santa Fe. The Magnolia Bridge is not within a City Street right-of-way; rather
it is constructed within an easement granted by the Port of Seattle.

The City has secured $9 million in Federal funding to complete preliminary studies and
design. Construction costs have not been developed at this time; however a funding
package for construction of the bridge replacement will be developed, as cost estimates
are prepared during design.

As part of the TS&L study, the City has created the Magnolia Bridge Project Design
Advisory Group. The Design Advisory Group includes the Port and the following groups
and organizations:
        Ballard Interbay Northend Manufacturing and Industrial Center (BINMIC)
        Bicycle Alliance of America
        Friday Group
        Friends of Queen Anne
        Magnolia Community Club
        Magnolia and Queen Anne Chambers



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        Queen Anne/Magnolia District Council
        Seattle Marine Business Coalition
        Uptown Alliance
        Washington State Department of Transportation

The role of the Design Advisory Group is to advise and provide input to the Seattle
Department of Transportation and its consultant team during the project’s design
development. The Design Advisory Group will have considerable influence on final
decisions, but not ultimate decision- making authority, which is vested in the Mayor and
City Council. The Design Advisory Group’s role is to review, comment on, question,
affirm or reject information presented by the design team. While advising on the design
direction, the Design Advisory Group will alert the design team to ensure that all issues
have been considered and thoroughly evaluated. In addition to the individual expertise
brought to the table, each member of the Design Advisory Group represents an
organization or constituency which has had, and will continue to have, an influence on
developments occurring in the Magnolia, Queen Anne, and Interbay areas. Each member
is expected to bring to the table issues and concerns of their organization as well as
accurately communicate information back to their constituents.

The Design Advisory Group is scheduled to meet monthly from October 2002 through
July 2003. In addition the City has scheduled Open Houses with the broader public in
October, December, and February. During the December Open House the City will
present six to eight project alternatives from the initial list of twenty- five. These six to
eight alternatives will be reviewed and screened to a final list of three that will be
presented during the February Open House. The current schedule shows completion of
the TS&L study in July 2003.

The City has selected HNTB Architects Engineers and Planners as their design
consultant. In addition to HNTB the design team includes:
        Weinstein Copeland Architects
        EnviroIssues
        Shapiro and Associates
        KPFF Consulting Engineers
        Mirai Associates
        Seattle Department of Transportation

The first phase of the project is completion of a TS&L study. The TS&L study is being
conducted to identify a location for replacing the bridge and will include identification of
connections to the arterial street system. The design phase will follow the TS&L study.
Construction is anticipated to start mid to late 2005 and is dependent on securing funding.

The Port of Seattle has several major initiatives underway at Terminal 91. They include
an uplands development plan and reconstruction of various Terminal 91 assets and
facilities. The Port also has long-term agreements with several existing tenants, including



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City Ice and Trident Seafoods. The future location of the Magnolia Bridge will have
significant implications on how the Port might develop and use Terminal 91 in the future.

In addition to serving the needs of the surrounding communities, the bridge is also an
important access point to Terminal 91. Any future decisions regarding replacement of
the bridge will need to include consideration for current and future access to Terminal 91.
Replacement of the bridge provides an opportunity to consider transportation alternatives
in conjunction with the Port's Terminal 91 planning activities.

FINANCIAL IMPLICATIONS

The Port of Seattle has no financial obligations in relation to the TS&L study. However,
funding to actually construct a replacement structure has not been identified or secured.

There may be indirect financial implications to the Port re lated to the impacts a
replacement structure may have on our existing businesses and tenants, as well the way in
which we undertake future development at Terminal 91. It is quite likely that any
solution will include use of Port property.

Port staff will continue to support the City’s study and will provide resources as required.

FUTURE BRIEFINGS

It is anticipated that City staff will provide additional briefings to the Commission,
including a presentation of the preferred alternative at the conclusion of the Type, Size,
and Location Study.

PROJECT TIMELINE

The Type, Size and Location Study will be completed in July 2003. At the completion of
this study the City will begin environmental studies and development of design
documents. Construction of the new structure is expected to begin in mid to late 2005. A
more complete schedule will be developed during the initial study.

A summary of the topics reviewed by Messrs. Jones, Holloway and Buff and
Commission/presenters/staff discussion is as follows:

            MAGNOLIA BRIDGE HISTORY
            WHY DO THE PROJECT?
            WHAT WILL THIS COST?
            WHAT'S THE PROCESS?
            WHO HAVE WE TALKED TO?
            WHAT HAVE WE HEARD?
            COMMUNITY VALUES
            HOW DID WE USE THAT INFO?
            ALIGNMENT A


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            ALIGNMENT B

Commissioner Miller referenced the 1987 settlement agreement, that was mentioned by
Mr. Jones in his comments, among the City of Seattle, Department of Ecology, Shoreline
Hearings Board, and other parties with respect to 32 nd Street and West Galer Street. Ms.
Miller urged the study team to further explore what that agreement means to the proposed
alignment, suggesting there are consequences, particularly financial, given the other
goals.

Commissioner Davis noted the affects of this project on what the Port can do on the
Terminal 91 upland property, suggesting it would either maximize or limit uses, which in
turn impacts the City's tax base.

            ALIGNMENT C

Commissioner Molloy suggested his preference for a roadway at the base of the green
space and access for the public versus a four- lane highway through the flat interbay
property.

            ALIGNMENT D
            ALIGNMENT E
            ALIGNMENT F
            ALIGNMENT G
            ALIGNMENT H
            ALIGNMENT I
            MORE INFORMATION

Mr. Jones reported the design team will review the comments, evaluating and rating them
against the four criteria; i.e., urban design, environmental, transportation, and cost. He
noted an outcome of that work would be three preferred alignments to move into team
analysis of traffic modeling at the bridge and into the neighborhoods, environmental and
the permits that would be necessary, etc. Mr. Jones stated that by the end of February
2003 the team would be close to looking at which of the three alignments is rising to the
top. He advised they would then report back to the Commission. Mr. Jones stated the
analysis would eventually screen the alignments to one.

Commissioner Nordquist and Mr. Holloway discussed the seismic stability for a new
bridge.

Commissioner Molloy and Mr. Jones discussed the timing for having an estimated cost
and potential funding sources. In response to Commissioner Mollo y, Mr. Jones advised
that discussion with Metro regarding level of service is a part of the evaluation criteria.

Commissioner Davis expressed her view that with respect to the Port, areas of most
concern are Port customers on the waterfront, which, she noted, are valuable to the
economy and the Seattle waterfront. Ms. Davis also noted the Port's concern for this


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project as it relates to the planning effort for Terminal 91redevelopment, which is still
being discussed. She stated her preference that to the extent possible the City have
options despite of the 1987 settlement agreement, which, she suggested, could be
changed given current times and more access that might take a higher level of importance
with respect to how this planning goes forward.

Mr. Jones reported City staff have met with current tenant operations and advised
keeping those operations is also a high priority for the City.

         b.       SEATTLE ART MUSEUM SCULPTURE PARK PROJECT

Presenter: Tom Tierney, Deputy Chief Executive Officer.

Presentation Documents: Mr. Tierney's Commission Agenda Memorandum dated
December 4, 2002; computer slide document entitled, "Seattle Art Museum, Seattle
Asian Art Museum, Olympic Sculpture Park"; and Seattle Art Museum packet entitled,
"Art Needs Room to Breathe, Olympic Sculpture Park".

As reported in the presentation document, representatives from the Seattle Art Museum
(SAM) will present plans for their third and newest venue, the Olympic Sculpture Park.
The park will be an 8.5-acre green space for art and people in downtown Seattle, at a site
between Western Avenue and the waterfront, at Broad Street.

The Olympic Sculpture Park evolved out of a mutual commitment of the Seattle Art
Museum and the Trust for Public Land (TPL) to preserve Seattle's last undeveloped
waterfront property. In 1999, with the help of TPL, the museum purchased property on
Seattle's central waterfront from Union Oil of California (UNOCAL) with private and
public funding. To make the future park complete and accessible to the waterfront, SAM
later acquired an additional property (10 Broad St.) with the support of the City of Seattle
and King County.

The Port had a role in the inception of the Sculpture Park, in that it gave up an option to
purchase the UNOCAL property to allow for the purchase by SAM and TPL.

Mr. Tierney introduced Mimi Gates, Director, Chris Rogers, Director, Capital Projects,
and Cara Egan, Public Relations Manager, Seattle Art Museum; and, Marion Weiss and
Michael Manfredi, Weiss Manfredi Architects, who were in attendance at today's meeting
and who briefed the Commission on the Sculpture Park Project.

Seattle Art Museum and architect representatives reviewed aerial photographs of the site
as it is now and with architect model of the Sculpture Park and planning drawings of the
project.

Commissioner Davis and Ms. Gates and Mr. Rogers discussed proposed plantings,
vegetation. Ms. Davis referenced the work of Seaport Maintenance with respect to
landscaping and their use of drought resistant plantings and lack of pesticide use. She


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suggested Seaport Maintenance as a resource for the project team. Mr. Rogers advised
they intend to use native plantings.

In response to Commissioner Molloy, Mr. Rogers advised the planning effort is not yet at
the point of determining the specific art sculptures that would be in the park but will
include the pedestrian, bicycle, rail and vehicle flow in its planning.

Mr. Rogers advised that Sculpture Park project team representatives do attend the
meetings of the viaduct replacement project committee and have met with regulatory
agencies.

Commissioner Edwards referenced the need for the relocation of the trolley barn facility
that is currently at the north end of the trolley service, which is a part of this project. Mr.
Edwards suggested that Sculpture Park project team discussions with the trolley service
include the potential for extending the trolley south to the South Downtown Area, noting
the larger system would better serve the public. He expressed his view the proposed park
would make the surrounding area more desirable, better defined, and congratulated the
team for their work towards building the Seattle Art Museum Olympic Sculpture Park.

         c.       LONG TERM AIRPORT PARKING STRATEGY

Presenters: Rod Hilden, General Manager, Landside Line of Business; Kottayam
Natarajan, General Manager, and John Faulkner, Business Analyst, Aviation Business
Development.

Presentation Documents: Messrs. Hilden and Natarajan's Commission Agenda
Memorandum dated November 20, 2002 and computer slide presentation packet entitled,
"Long-Term Auto Parking Review, Findings and Recommendation Summary, Aviation
Business Development and Management and Landside Line of Business, December 10,
2002".

As reported in the presentation document, revenue at the Seattle-Tacoma International
Airport (Airport) parking garage has dropped substantially since September 11, 2001.
This decrease is having an impact on the net income of the Airport. Staff has been
analyzing options for increasing garage revenues, but reasons for the decrease are fairly
complicated and require some detailed analysis. The purpose of the briefing is to review
the current state of long-term parking at the Airport. Staff will update the Commission
on market factors affecting supply and demand for spaces in the Airport garage and in
private sector parking facilities. Staff will also share information on the typical customer
of the Airport garage. There are many options for changing pricing policies and staff
wants to ensure that any changes have the desired effect of increasing revenue while
maintaining high levels of customer service. To this end staff will be updating the
Commission on current thinking at this briefing and then incorporate Commission input
into our further analysis.




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A summary of the topics reviewed by staff and Commission/staff discussion is as
follows:

            OUTLINE
            TOTAL PORT PARKING REVENUE HAS RETURNED TO 1998 LEVELS
            2002 HAS LOWEST REVENUE PER ENPLANEMENT IN SIX YEARS
            TRANSACTIONS AND REVENUE DETERIORATION MUCH STEEPER
             THAN ENPLANEMENTS SINCE 2000
            TOTAL PARKING TRANSACTIONS HAVE DECLINED
             SIGNIFICANTLY AS PERCENTAGE OF ENPLANEMENTS SINCE 1993
            CURRENT SITUATION

Mr. Hilden, in response to Commissioner Nordquist, discussed the focus on long term
rate adjustments, etc. to address lost revenue.

            ENPLANEMENTS ARE DOWN
            LONG TERM PARKING TRANSACTIONS PER ENPLANEMENT
            REVENUE PER TRANSACTION FOR LONG TERM PARKERS
            CHANGING LOCAL MARKET CHARACTERISTICS
            PARKING MARKET HAS CHANGED
            PRIVATE MARKET IS DYNAMIC

Commissioner Molloy and Mr. Hilden discussed private market discounts, specials, etc.

            CONCLUSIONS
            RECOMMENDED NEXT STEPS

                 Conduct passenger survey to identify point-of-decision for marketing
                  efforts, market perception and price sensitivity

In response to Commissioner Davis, Mr. Hilden advised the passenger survey would
include both personal and business passengers, though the primary focus will be business
customers as they arrive at the Airport.

Commissioner Davis suggested that a part of the reason for declining parking revenues is
because businesses are cutting back; i.e., parking no longer being paid for, discretionary
costs being cut from budgets, etc. Ms. Davis expressed her view she is unsure what the
Port does with respect to parking rates can change that. She suggested also s urveying
large businesses.

Commissioner Nordquist suggested that it is the past customer that has a known change
of behavior and that interviewing and getting trends may be beneficial. Mark Reis,
Deputy Managing Director, Aviation Division, advised that the Aviation Marketing
Department could augment this part of the work.



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Commissioner Nordquist referenced the lack of success of the short-term parking
program that Denver Airport is using. Mr. Nordquist suggested the current strategy
needs to find a way for getting meeters/greeters to use the garage; i.e., easy for them to
know where go to park, easy way for them to find their party, etc.

Responding to Commissioner Molloy, Mr. Hilden advised it is difficult to replicate the
incentives that private companies offer. He noted that one idea is a weekly special rate,
as opposed to a daily rate special, with the hope of earning back that market share once
that number is known. He advised analysis of the data needs to be done before any
decision is made. Mr. Hilden also reported staff is looking at rate structure or schedule
and time intervals.

         7.       MARINE ITEMS

         a.       None.

Aviation Ite m 8g was advanced on the agenda as follows:

         8.       AVIATION ITEMS

        g.      Request for authorization to award American Building Ma intenance
Company the contract for janitorial service delivery to Seattle- Tacoma International
Airport, effective January 1, 2003 through December 31, 2005, for a contract amount of
$16,001,725.

Presenter: Michael Ehl, General Manager, Aeronautical Line of Business.

Request Document: Commission Agenda Memorandum dated December 3, 2002 from
Mr. Ehl and Arthur Harness, Manager, Aeronautical Line of Business.

As reported in the request document, the current Seattle-Tacoma International Airport
(Airport) janitorial contract expires on December 31, 2002. Due to timing of the current
contract expiration, consideration was given to extend the current contract for a period of
two or three years in order to fully understand the impact of housekeeping costs for
capital assets currently under construction, namely, the South Terminal Expansion
Program (STEP) and the Central Terminal Expansion (CTE). After examining current
costs for housekeeping services and weighing the potential risks, the decision was made
to solicit bids for a new three-year term with two one-year extensions.

On October 1, 2002, the Port officially advertised for bids/proposals for housekeeping
services at the Airport. On November 7, 2002, the bid/proposal closing date, five
contractors presented bids/proposals. Evaluators from Aviation Maintenance, Landside
Line of Business, Engineering, Aeronautical Line of Business and the Seattle-Tacoma
Airline Managers Association participated in the evaluation process. The grading criteria
for contract award included: company qualifications/personnel experience, contractor’s



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motorized floor care equipment, contractor’s recycling and waste reduction plans, cost,
and financial capability

SCOPE OF WORK

The furnishing of all labor, equipment, supplies and materials required to provide
complete janitorial services for the Main Terminal, North and South Satellites and
associated facilities with a total area of over 2,000,000 square feet at present, increasing
to approximately 3,000,000 square feet by 2005.

FINANCIAL IMPLICATIONS

Since the last award of this contract, increased customer demand, introduction of capital
improvements, and enhanced customer service initiatives spurred a rise in housekeeping
service delivery. This service delivery was reduced after the events of September 11,
2001 and the resultant decrease in demand for air travel. This reduced service delivery
proved unsustainable; hence a graduated increase in service delivery was approved for
the Airport in 2003.

The proposal/bid pricing submitted by American Building Maintenance Company for
2003–2005 is $16,001,725. This pricing is in full acknowledgement of the contract
specifications requirement for increased frequencies in restroom cleaning, terrazzo/carpet
care, seating area cleaning, and window washing expectations exceeding those achieved
in 2001.

PROJECT SCHEDULE

The new janitorial services contract will take effect on January 1, 2003 for a period of
three years. There is provision for two one-year extensions.

Prior to staff presentation of Item 8g, Mr. Ehl advised that staff has received a bid protest
from A.M.E. Facility Services, Inc., one of the bid proposers. He requested the
Commission defer action on this item until the protest is reviewed. Mr. Ehl advised staff
would return to the Commission with appropriate recommendation at a later meeting.

Public testimony on Item 8g was received from the following individuals:

1. Kenneth Sheppard, Simburg, Ketter, Sheppard and Purdy, LLP. Mr. Sheppard
distributed to Commissioners a copy of a letter dated December 10, 2002 from A.M.E.
Facility Services, Inc. to the Port of Seattle Commission. A copy of this letter is, by
reference, made a part of these minutes; is marked Exhibit "A"; and is on file in Port
offices.

2. Jerry Brooks, Service Employees International Union, Local 6. A copy of Mr. Brooks
statement is, by reference, made a part of these minutes; is marked Exhibit "B"; and is on
file in Port offices.


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An audiotape of the public testimony is on file in Port offices. (Audiotapes are retained
in Port files for a three- year retention period and are then transferred to the State
Archives.)

There was a consensus of the Commission to defer action on Item 8g to a future meeting.

General Business Item 9c was advanced on the agenda, as follows:

       c.     Commission Chair and President Report and Commission Action on Chief
Executive Officer's Annual Performance Review.

Commissioner Edwards advised it is the responsibility of the Port Commission to
annually evaluate the performance of the Chief Executive Officer (CEO) Mr. Edwards
reported the Commission has completed its review of M. R. Dinsmore's performance for
the period ending August 1, 2002. He referenced challenges the Port faced during the
last review period, including the slowing regional and national economy, as well as
airline and seaport customer setbacks. Commissioner Edwards reported that under Mr.
Dinsmore's leadership the Port responded to the challenges. Mr. Edwards stated in
evaluating Mr. Dinsmore, a review of the progress on the 2002 goals and objectives was
accomplished. He noted the goals included: leadership role in both airport and seaport
security, obtaining the Army Corps of Engineers 404 permit for construction of the third
runway, agreement on noise improvements in Highline School District schools near the
airport, emphasis on workforce diversity, new agreement with the Port's airline
customers, financial performance, and regional transportation.

Commissioner Edwards stated for the next year the Port will be building on many of the
same goals and also adding some new goals. Mr. Edwards advised these goals include:
second cruise terminal opening on time, continued leadership in safety and security,
efficient use of cargo facilities, implementing a new strategic plan, focus on financial
performance, support for high performance workforce focusing on diversity, expanding
Port outreach, and continued role as an environmental steward. Mr. Edwards suggested
many of the goals would take five years to accomp lish.

Commissioner Edwards noted this is Mr. Dinsmore's 10 th anniversary as the Port's Chief
Executive Officer and expressed his view that is a credit to Mr. Dinsmore and his
relationship with the Commission. Mr. Edwards advised the Commission and Mr.
Dinsmore have discussed extending his commitment at the Port and noted the existing
deferred compensation plan with the CEO runs through 2005. He reported that after
discussions with Mr. Dinsmore, the Commission is now proposing to extend the
arrangement for an additional two years to 2007.

Commissioner Nordquist then moved that, based on the Port's performance under Mr.
Dinsmore's management August 2001 to August 2002, Mr. Dinsmore's salary be
increased by three percent (3%), which is the same percenta ge increase as all other
salaried Port employees received this year, effective August 1, 2002, for a new annual


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salary of $251,597, and to extend the Port's deferred compensation contributions for Mr.
Dinsmore for two years through 2007 with mutually agreed goals and objectives to be
established in 2003 for that time period.

Commissioner Molloy, speaking to the motion, reflected that as a Port Commissioner
beginning his term in January 2001, the past year was, in his word, "fascinating" both in
terms of what the organization went through and in watching how the organization
responded to and worked through the various challenges. Mr. Molloy expressed his view
that the success in the ability for the Port to have responded to the challenges of the past
year came through staff and its leadership, which, he noted, Mr. Dinsmore put into place.
He noted that while he is comfortable with Mr. Dinsmore's performance, he could not
support the motion, primarily in the area of extending Mr. Dinsmore's contract to 15
years. Mr. Molloy advised his reason for not supporting the contract extension is because
of his personal belief that in governance and business the top executive should not be in
that position for 15 years. He noted his preference for moving people through an
institution to thrive and grow. Commissioner Molloy stated for that reason, he would
vote "no".

Commissioner Davis stated that she would vote "yes" on the motion for an increase in
salary and the two-year contract extension for the CEO. Ms. Davis advised that reasons
for her voting for extending the contract are based on the reality of the times, and not
philosophy. She referenced the challenges for the Port during the past year, including
uncertain worldwide conditions, the global economic downturn, and the difficult
decisions that were made in response. Commissioner Davis suggested that much of the
same uncertainty still remains. Ms. Davis expressed her view the reality of what the Port
is facing in the next five year period is total uncertainty with respect to its business base,
global conditions, security uncertainties, etc. She stated that stability at the top of the
Port organization would take it out beyond settling down or dealing with the various
uncertainties. Commissioner Davis stated her view that it is important to retain Mr.
Dinsmore's leadership and to develop all employees within the organization.

Commissioner Nordquist stated that establishing mutually agreed goals and objectives in
2003 is included in his motion, noting that process began two years ago. Mr. Nordquist
also referenced the work that has been done and is currently underway towards
developing a strategic plan and performance-based organization.

On call for the question, Commissioner Nordquist's motion carried; Commissione rs
Davis, Edwards, Miller and Nordquist voting, "yes"; Commissioner Molloy voting,
"no".

Mr. Dinsmore referenced the challenges the Port faced in 2001 including the February
Nisqually Earthquake, regional and national economic downturn, and the eve nts of
September 11. He referenced what was done with respect to redirecting Port focus and
strategic activities in response to the challenges. Mr. Dinsmore stated the decisions that
were made were both as a public institution and a public enterprise. He noted the



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commitment and capital investment that was made for the future of the region during this
time period.

Mr. Dinsmore noted that decisions made in 2001 were put into place in 2002. He
reflected on the organization's emphasis on treating employees with fairness and dignity
and referenced the difficult decisions that were made that translated into approximately
220 less employees now at the Port. Mr. Dinsmore advised the Port is still struggling
with challenges with respect to safety and security, a decrease in revenue, and decrease in
airport activities. He referenced the $20 million decrease in the Seaport budget and the
work that is underway towards reducing costs and looking for revenue enhancements.
Mr. Dinsmore stated that with the continued support of the Port Commission and
employees, the organization would work through future challenges towards a future that
is better than what the organization has gone through the past two years. He referenced
the Port's capital investment in infrastructure of approximately a half billion dollars that
was made during the difficult economic times, which, he noted, provided jobs and
contributed to the local and state economy. Mr. Dinsmore advised the investment of
capital in infrastructure would continue during this next year.

Mr. Dinsmore stated that with Commission direction and support, the Port is committed
to the traditional activities of the Seaport and Aviation Divisions. He advised, however,
that he has heard over the last few years to look at things differently and reshape the
focus and direction of where the Port is going; that is, real estate utilization, raising the
commitment and role the Port plays in regional transportation.

Mr. Dinsmore announced that effective today a third division to be named Economic
Development has been created that has equal status to the Seaport and Aviation Divisions
and would be led by Tom Tierney, Deputy Chief Executive Officer. He advised Mr.
Tierney would retain the responsibilities of his current position but would also now have
accountability for Economic and Trade Development, real estate portfolio, and a
leadership role, with staff and in concert with the Chief Executive Officer and the
Commission, on regional transportation. He stated that outside that role and the
correlation to the CEO, Mr. Tierney would retain accountability for the Labor Relations
and Police Departments.

Mr. Dinsmore also announced that concurrently the organization would now have a new
Chief Administrative Officer who will have accountability for Engineering Services,
People Programs, Government Relations, Public Affairs, Port Construction Services, and
Facilities Department. He introduced John Okamoto who was in attendance at today's
meeting and who will fill that position January 13, 2003. Mr. Dinsmore reported that Mr.
Okamoto is currently the Assistant Secretary of the Washington State Department of
Transportation. He further announced that also effective today, the Information
Technology Department would report to the Chief Financial Officer, Dan Thomas.

Mr. Dinsmore stated that the restructure directly correlates to what was discussed and
learned from both the Harbor Development Strategy 21 and the McKinsey and Associates
work.


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(*Commissioner Nordquist was not in attendance for the remainder of the meeting.)

The agenda was returned to Aviation Ite m 8a, as follows :

        a.      Resolution No. 3498, " A RESOLUTION of the Port Commission of the
Port of Seattle declaring certain residentially improved real property located in the
Transaction Assistance Area of the Noise Remedy Program surplus and no longer needed
for Port purposes and authorizing its sale (11839 Glendale Way South, Seattle,
Washington 98168)”, was introduced.

Request Document: Commission Agenda Memorandum dated October 28, 2002 from
Jazzi Richardson, Manager Noise Remedy.

Commissioner Davis moved second reading and final passage of Resolution No. 3498.
Motion carried. (Commissioner Nordquist was absent for the vote.) Thereupon
Resolution No. 3498 was declared passed and the same then duly authenticated in open
public session by the signatures of the Commissioners voting in favor thereof and the seal
of the Commission.

        b.      Request was presented for project-wide authorization for the Managing
Director, Aviation Division; Deputy Managing Director, Aviation Facilities; Director,
Aviation Capital Improvement Program; General Manager, Facilities and Infrastructure;
Director, Engineering Services; General Manager, Port Construction Services; Manager,
Procurement Services; and Aviation Project Manager to authorize work, including:
prepare drawings, specifications, schedules, cost estimates, and contract documents;
perform construction services; execute and award outside professional services
agreements and amendments; advertise and award major and small works contracts; pre-
purchase materials and equipment including contract award and execution; and perform
contract administration and execution for Seattle-Tacoma International Airport (Airport)
Electrical Infrastructure Program Projects for an estimated cost of $15,054,000.

Presenters: Mike Feldman, Deputy Managing Director, and Richard Ottele, General
Manager, Aviation Facilities and Infrastructure, Aviation Division.

Request Document: Commission Agenda Memorandum dated October 21, 2002 from
Mr. Ottele and Mike Evans, Program Leader, Aviation Project Management Group.

PROJECT DESCRIPTION/SCOPE OF WORK

As part of the ongoing effort to upgrade the Airport’s electrical systems to improve
capacity, and renew, replace and improve reliability; these projects start the capacity
enhancement and renewal and replacement of power centers, cables, low- voltage
equipment and installation of a power monitoring system. Replacement of the North
Satellite 400Hz power system is also part of the scope.




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Satellite and Concourse Emergency Transformer Replace ment

This project replaces the 30-year old transformers in the emergency system power
centers. This project is part of the on-going renewal and replacement program to replace
equipment as it reaches the end of its normal service life, before failures occur.

Schedule:         Design       1st Quarter 2003
                  Construction 4th Quarter 2003
                  Completion 3rd Quarter 2004
Budget:           $2,209,000
CIP:              102034

North Satellite 400Hz Powe r System Replace ment

The existing 400Hz aircraft power system at the North Satellite is obsolete and in
disrepair. Currently, only ten gates are served and there is insufficient power to
accommodate large airplanes on all gates. The system is currently owned and operated
by United Airlines. The North Satellite gates will become common- use gates with
United having preferential - but no longer exclusive -use which will allow for other
airline use. It is appropriate that the Port assume ownership for this system at this time.
This project will replace the existing system with a new system that will provide power
for all twelve gates at the North Satellite. A tariff will be developed to fully recover the
cost of this installation.

Schedule:         Design       1st Quarter 2003
                  Construction 4th Quarter 2003
                  Completion 3rd Quarter 2004
Budget:           $2,614,000
CIP:              102102
North Terminal No. 2 Powe r Center Capacity Upgrade

This project will increase the capacity of this power center and renew and replace old and
obsolete equipment before failures occur. The increased capacity will provide the ability
to add future loads to accommodate future facility needs. The new power center will
consist of two 2,500 kVA transformers, each feeding one end of a double-ended
switchboard with two main breakers and a tiebreaker. This will allow major components
to be taken out of service for maintenance without interrupting service to the tenants.

Schedule:         Design       1st Quarter 2003
                  Construction 4th Quarter 2003
                  Completion 3rd Quarter 2004
Budget:           $2,135,000
CIP:              102103

Electrical Power System Monitoring Phase 2



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This project will provide real-time monitoring of the power distribution system at a
central control station. This system allows for real-time management of the power system
and is an essential capability and tool for normal operations and during power failures.
The computer based system monitors voltages, currents, power consumption, system
configuration status, etc., in real time at various critical points throughout the system.
This information is provided to the System Manager for evaluating, monitoring and
controlling the system. The system configuration can change when isolating problems,
during maintenance and construction. Having a real-time display of the system
configuration is a necessity from a safety and operating perspective. Revenue quality
meters will be used for remote revenue metering. The system will also audit energy usage
billings. The system will also provide power factor, voltage drop, power quality and
demand monitoring as well as historical data logging.

Schedule:         Design       1st Quarter 2003
                  Construction 1st Quarter 2004
                  Completion 4th Quarter 2004
Budget:           $3,375,000
CIP:              102104

South Satellite Powe r Center Capacity Upgrade

This project will increase the capacity of this power center and renew and replace old and
obsolete equipment before failures occur. The increased capacity will provide the ability
to add future loads to accommodate future facility needs. The new power center will
consist of two 2,500 kVA transformers, each feeding one end of a double-ended
switchboard with two main breakers and a tiebreaker. This will allow major components
to be taken out of service for maintenance without interrupting service to the tenants.

Schedule:         Design       2nd Quarter 2003
                  Construction 2nd Quarter 2004
                  Completion 1st Quarter 2005
Budget:           $3,248,000
CIP:              102045

Concourse B Power Center Capacity Upgrade

The single-ended power center for Concourse B was recently upgraded with a new
transformer and switchboard, forming a double-ended configuration. The new
transformer and switchboard bus are of greater capacity than the original single-ended
transformer and switchboard bus. This project renews and replaces the existing original
single-ended transformer and switchboard bus and brings them to the same capacity as
the recently added transformer and switchboard.

Schedule:         Design       2nd Quarter 2003
                  Construction 2nd Quarter 2004
                  Completion 1st Quarter 2005



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Budget:           $1,473,000
CIP:              102106

Main Terminal Powe r System Upgrade

This project is the first stage of replacing the overloaded, damaged, underrated and
obsolete panels and motor control centers in the Main Terminal. A second future stage
will upgrade the Concourses and Satellites.

Schedule:         Design       2nd Quarter 2005
                  Construction 2nd Quarter 2006
                  Completion 1st Quarter 2007
Budget:           $6,434,000
CIP:              100662

Parking Terminal No. 3 Power Center Upgrade

This project replaces the 30-year old No. 3 power center in the Parking Terminal. This
project is part of the on-going renewal and replacement program to replace equipment as
it reaches the end of its normal service life, before failure occurs.

Schedule:         Design       2nd Quarter 2005
                  Construction 2nd Quarter 2006
                  Completion 1st Quarter 2007
Budget:           $2,185,000
CIP:              102105

FINANCIAL IMPLICATIONS

Budget/Authorization Summary

Description                                                          CIP            Budget
Satellite and Concourse Emergency Transformer Replacement           102034          $2,209,000
North Satellite 400Hz Power System Replacement                      102102           2,614,000
North Terminal No. 2 Power Center Capacity Upgrade                  102103           2,135,000
Electrical Power System Monitoring Phase 2                          102104           3,375,000
South Satellite Power Center Capacity Upgrade                       102045           3,248,000
Concourse B Power Center Capacity Upgrade                           102106           1,473,000
Total Budget:                                                                      $15,054,000

Previous Authorizations                                                                     $0
Authorizations transferred with Budget Transfers                                            $0
Net Previous Authorization                                                                  $0
Curre nt Request for Authorization                                                 $15,054,000
Remaining Budget to be Authorized:                                                          $0




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Project Cost Breakdown - Total
Project

Construction costs                                                                 $10,913,000
Sales tax                                                                              960,000
Outside professional services                                                        2,640,000
Other                                                                                  541,000
Total                                                                              $15,054,000

Source of Funds

These projects are included in the 2003-2007 Capital Budget and Plan of Finance under
the CIPs listed above. The projects will be funded by revenue bonds to be issued in
2003. Expenditures prior to the 2003 issue will be temporarily funded by commercial
paper.

Commissioner Molloy moved approval of Item 8b. Motion carried. (Commissioner
Nordquist was absent for the vote.)

        c.      Request was presented for project-wide authorization for the Managing
Director, Aviation Division; Director, Deputy Managing Director, Aviation Facilities;
Director, Aviation Capital Improvement Program; General Manager, Facilities and
Infrastructure; Director, Engineering Services; General Manager, Port Construction
Services; Manager, Procurement Services; and Aviation Project Manager to authorize
work including perform environmental evaluations; prepare drawings, specifications,
schedules, cost estimates and contract documents; execute and award outside professional
services agreements and amendments; advertise and award major and small works
contracts; pre-purchase materials and equipment including contract award and execution;
perform construction services and perform contract administration for Seattle-Tacoma
International Airport (Airport) Elevator and Escalator Modernization Program Stage II
for an additional authorization of $5,081,000 bringing the total authorization to
$6,876,000.

Presenters: Mike Feldman, Deputy Managing Director, and Richard Ottele, General
Manager, Aviation Facilities and Infrastructure, Aviation Division.

Request Document: Commission Agenda Memorandum dated October 14, 2002 from
Mr. Ottele and Mike Evans, Program Leader, Aviation Project Management Group.




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PROJECT DESCRIPTION/SCOPE OF WORK

Stage II of the Elevator and Escalator Modernization Program will construct a central
monitoring system that will eventually monitor the status of all elevators and escalators,
refurbish (replace controls and provide code upgrades) six (6) escalators in the Parking
Garage; and upgrade elevators NSA and NSBF (freight) in the North Satellite. This
scope of work is included in CIP 101804.

FINANCIAL IMPLICATIONS

The cost estimate, source of funds, and financial analysis for this request are presented as
follows. The anticipated design and construction costs for the total Elevator/Escalator
Modernization Program is between $23 -$28 million dollars.

Budget/Authorization Summary
Original Budget Estimate                          $23,765,000
Budget Increase (decrease)                            $54,000
Revised Budget                                    $23,819,000

Previous authorizations                            $1,795,000
 Curre nt request for authorization                $5,081,000
 Remaining budget to be authorized                $16,943,000

                                            Curre nt Request
Project Cost Breakdown
Construction costs                                 $3,634,000
Sales tax                                            $320,000
Outside professional services                      $1,127,000
Other                                              ________0
Total                                              $5,081,000

Source of Funds

Stage I of this program was funded under CIP 101038 which was approved by the
Commission on November 13, 2001. Stage II of this program is included in the 2003-
2007 Capital Budget and Plan of Finance under CIP 101804. The efforts identified and
funded under CIP 101804 will be incorporated into CIP 101038 and all work will be
reported and tracked under CIP 101038 in the future. This current request will be funded
by a future revenue bond issue, planned for mid-2003. Commercial Paper will be used as
an interim- funding source.

PROJECT SCHEDULE

Complete Design                    1st Quarter– 2003
Start Construction                 3rd Quarter - 2003
Project Completion                 4th Quarter – 2004



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Commissioner Davis moved approval of Item 8c. Motion carried. (Commissioner
Nordquist was absent for the vote.)

       d.       Request was presented for project-wide authorization for the Managing
Director, Aviation Division; Deputy Managing Director, Aviation Facilities; Director,
Aviation Capital Improvement Program; General Manager, Facilities and Infrastructure;
Director, Engineering Services; General Manager, Port Construction Services; Manager,
Purchasing; and Aviation Project Manager to authorize work including perform
environmental evaluations; prepare drawings, specifications, schedules and cost
estimates; execute outside professional services agreements and amendments; advertise
and award major and small works contracts; perform construction services and perform
contract administration to construct a new biffy dump facility, pump station and
connection to King County Sewer District at Seattle-Tacoma International Airport
(Airport) for an additional authorization amount of $2,711,000 bringing the total
authorization to $6,658,466.

Presenters: Mike Feldman, Deputy Managing Director, and Richard Ottele, General
Manager, Aviation Facilities and Infrastructure, Aviation Division.

Request Document: Commission Agenda Memorandum dated October 14, 2002 from
Mr. Ottele and Mike Evans, Program Leader, Aviation Project Management Group.

PROJECT DESCRIPTION/SCOPE OF WORK

This project will construct a modern biffy transfer facility and pump station located just
north of Gate E-100 that consists of a dual bay facility for the biffy trucks to unload their
contents using hosed connections to reduce odor potential. The biffy waste will pass
through a grinder and into a pump station that will also accept sanitary sewage from the
northeast area of the Airport, including the North Satellite. The pump station will have
two pumps and will be served by stand-by power.

The pump station will pump the combined sewage through a combination of pressure and
gravity pipelines to a ValVue Sewer District manhole located on International Boulevard
near South 170th Street. There will be approximately 2,000 feet of pipeline needed to
make the connection to the ValVue sewer system. The Port has worked closely with the
City of SeaTac on pipeline routing, design and installation within the International
Boulevard right-of-way.

FINANCIAL IMPLICATIONS

Budget/Authorization Summary
Original Budget                                                                    $8,800,000
Budget Transfers                                                                  (2,141,534)
Revised Budget                                                                     $6,658,466



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Previous Authorizations                                                     $ 3,580,000
Authorizations Transferred with Budget Transfers                                367,466
Net Previous Authorizations                                                 $ 3,947,466

Curre nt Request for Authorization                                           $2,711,000
Total Authorization                                                            6,658,466
Remaining Amount to be Authorized                                            $         0

Project Cost Breakdown
Studies & Preliminary Design – STIA Sewer Systems                              $654,000
Pump Station Discharge Conversion in Main Terminal                              100,000
Initial Non-transferrable Biffy Design - Expensed                               110,000
Demolition of Old Biffy Facility                                                145,000
Temporary Biffy Facility                                                        220,000
Sewer Connection Fees                                                         1,001,300
Design and Construction of Permanent Biffy                                    4,428,166
Total                                                                        $6,658,466

                                         Curre nt Request                 Total Project
Construction                                   $1,150,000                   $3,821,000
Sales Tax                                         101,600                       336,000
Outside Professional Services                     100,000                    1,055,000
Sewer Connection Fee                            1,001,300                    1,001,300
Other (Port Staff, Admin)                         358,100                       445,166
Total                                          $2,711,000                   $6,658,466

Source of Funds

This project was included in the 2003-2007 Capital Budget and Plan of Finance under
CIP 100528. This project is funded by 1999 revenue bond funds.

Commissioner Molloy advised that he would abstain from the vote on Item 8d, stating
that his employer, EBARA Corporation, does provide systems tha t could be utilized or
included in a bid for this work.

Commissioner Davis moved approval of Item 8d. Motion carried; Commissione r
Molloy, "abstain". (Commissioner Nordquist was absent for the vote.)

        e.     Request was presented for project-wide authorization for the Managing
Director, Aviation Division; Deputy Managing Director, Aviation Facilities; Director,
Aviation Capital Improvement Program; Director, Engineering Services; General
Manager, Aviation Facilities and Infrastructure; General Manager, Port Construction
Services; Manager, Purchasing; and Aviation Project Manager to authorize work
including: prepare drawings, specifications, schedules, cost estimates and contract
documents; perform construction services; execute and award outside professional
services agreements and amendments; advertise and award major and small works



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contracts; pre-purchase materials and equipment including contract award and execution;
and perform contract administration and execution for construction of Facilities
Monitoring System for the Seattle-Tacoma International Airport (Airport) for an
estimated additional cost of $1,800,000 for a current project total of $2,300,000.

Presenters: Mike Feldman, Deputy Managing Director, and Richard Ottele, General
Manager, Aviation Facilities and Infrastructure, Aviation Division.

Request Document: Commission Agenda Memorandum dated November 8, 2002 from
Mr. Ottele and Mike Evans, Program Leader, Aviation Project Management Group.

SCOPE OF WORK

This project will replace the existing, obsolete SCADA system with a new, state-of-the-
art Facilities Monitoring System for $2,300,000 by the end of 2003. The specific project
elements are as follows:

1.       Provide new headend hardware and software to monitor and control the existing
         input points connected to the SCADA system and certain new points for elevator
         and escalator monitoring.
2.       Provide field wiring and connections to the communications infrastructure
         backbone system.
3.       Provide such field modifications to the existing points of connection as are
         necessary for those points to communicate with the new system.
4.       Establishment of cut-over requirements to allow for the continuous monitoring of
         critical points during the implementation of the new system.
5.       Provide a new local area network.
6.       Provide training and documentation for Port personnel in the operation and
         maintenance of the new system.

FINANCIAL IMPLICATIONS

Budget/Authorization Summary
Original Budget                                                   $2,300,000
Budget transfers                                                          $0
Revised Budget                                                    $2,300,000

Previous authorizations                                             $500,000
Curre nt request for authorization                                $1,800,000
Remaining budget to be authorized                                         $0




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Project Cost Breakdown                   Curre nt Request         Total Project
Construction costs                              $1,300,000           $1,300,000
Sales tax                                          114,400              114,400
Outside professional services                      100,000              400,000
Other                                              285,600              485,600
Total                                           $1,800,000           $2,300,000

Source of Funds

This project was included in the 2003-2007 Capital Budget and Plan of Finance, as part
of the Phase II Program under CIP 101118. The initial $500,000 funding was provided by
2001 Revenue Bonds. Funding for the remaining $1,800,000 will come from a future
revenue bond issue planned for 2003. Interim funding will be provided by Commercial
Paper.

PROJECT SCHEDULE

The scheduled work is to be completed by the end of December 2003.

Commissioner Molloy moved approval of Item 8e. Motion carried. (Commissioner
Nordquist was absent for the vote.)

        f.     Request was presented for project-wide authorization for the Managing
Director, Aviation Division; Director, Aviation Capital Improvement Program; Director,
Engineering Services; General Manager, Port Construction Services; Manager,
Procurement Services; and Aviation Project Manager to authorize work including:
prepare contract documents; perform construction services; execute and award outside
professional services agreements; advertise and award major and small works contacts;
pre-purchase materials and equipment including contract award and execution; and
perform contract administration and execution for the Seattle-Tacoma International
Airport Phase I Electrical Infrastructure Program, for an additional authorization of
$259,966 bringing the total authorization to $78,286,557.

Presenters: Bob Riley, Interim Director, Aviation Capital Improvement Program
Ray Rawe, Director of Engineering Services

Request Document: Messrs. Riley and Rawe's Commission Agenda Memorandum dated
November 5, 2002.

PROJECT DESCRIPTION/SCOPE OF WORK

This project includes cleaning and removal of the oil/water separator baffle and vaults,
along with removal and disposal of contaminated materials found in the pathway of
Feeder 101.




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As reported in the request document, excavation for the Feeder 101 Replacement
encountered an abandoned oil/water separator located below the vegetated slope between
the south end of the United Fuel Farm and the north entry to the service tunnel. The
facility appears to have been constructed by United Airlines to manage wastewater and/or
surface water impacted by industrial activities, presumably aircraft-washing waste
waters, from an undetermined time of construction (1958-1959) through the early 1960s.
Airport 1966 Detailed Record Maps show the facility as removed .

The facility was large, with two deep vaults, separated by a constructed baffle array. The
baffle area was filled with soil. The sludge within the oil/water separator vaults was
determined by chemical analysis to be hazardous/dangerous waste, due to the presence of
chlorinated solvents and lead. The soil removed from the shallow zone of the ba ffle area
was not hazardous/ dangerous waste, but still exceeded Model Toxic Control Act cleanup
levels for total petroleum hydrocarbons. Waste materials and contaminated soil were
removed. The oil/water separator was demolished, and the debris disposed offsite at an
appropriate facility. Additional contaminated soil was excavated and removed, although
some contaminated soil was left in place to prevent destabilizing the slope that overhangs
a roadway. Aviation Environmental Management is communicating with United Airlines
about cost recovery. The Commission was apprised of this situation in November 2001.

At the time the change order was issued, authorized funds from CIP 100525, Electrical
Infrastructure Upgrade, were used to pay for it. The extraordinary nature of the clean-up
and disposal make it appropriate to fund from CIP 100635, Unprogrammed Projects.

A prior budget transfer from the Electrical Infrastructure Upgrade, CIP 100525 to the Art
Program, CIP 101242 has left Electrical Infrastructure Upgrade program with
authorization in excess of the available budget. This action will transfer $757,312 from
Unprogrammed Projects (CIP 100635) to cover the current Feeder 101 oil/water
separator issue while only requiring an additional authorization o f $259,966.

PROJECT DESCRIPTION/SCOPE OF WORK

This project included cleaning and removal of the oil/water separator baffle and vaults,
along with removal and disposal of contaminated materials found in the pathway of
Feeder 101.

FINANCIAL IMPLICATIONS

Budget/Authorization Summary
Original Budget;                                                      $73,000,000
   Budget transfers                                                    $4,529,245
   Pending budget transfer from Unprogrammed                             $757,312
   Projects (CIP 100635)
Revised Budget:                                                       $78,286,557

Previous Authorizations (CIP 100525)                                  $73,297,050


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Authorizations transferred with Budget Transfers                         $4,729,541
Net Previous Authorization                                              $78,026,591

Curre nt Request for Authorization                                         $259,966

Project Cost Breakdown
Construction (including disposal                                           $209,100
Sales Tax (8.8%)                                                            $18,400
Other (Permit Fees, Admin., Wage Support, Contingency, etc.)                $32,466
Total                                                                      $259,966

Source of Funds
This project was included in the 2002 – 2006 Capital Budget and Plan of Finance under
CIP 100525. The budget to cover the increased cost of $757,312 will come from Phase I
Program Unprogrammed Projects, CIP 100635.

Commissioners and staff discussed the need for oversight of tenant work, potential for
cost recovery from United Airlines and their bankruptcy filing, and shared costs among
all airlines at Seattle-Tacoma International Airport.

Commissioner Davis moved approval of Item 8f. Motion carried. (Commissioner
Nordquist was absent for the vote.)

         9.       GENERAL BUSINESS

        a.      Resolution No. 3499, "A RESOLUTION of the Port Commission of the
Port of Seattle adopting a policy for payment of claims or other obligations of the Port of
Seattle by check from solvent funds, designating the qualified public depository upon
which checks are to be drawn, and designating, by title, the Port of Seattle employees
authorized to sign checks", was introduced.

Presenter: Craig Kerr, Treasury Manager.

Request Document: Commission Agenda Memorandum dated November 27, 2002 from
Dan Thomas, Chief Financial Officer.

As reported in the request document, the State Legislature, during the last session, passed
legislation, effective June 13, 2002, which authorizes a port district to pay its obligations
by check. Checks are more efficient and less costly to issue than warrants. Other
municipalities in Washington State that have switched from warrants to checks are most
cities in Washington State including Seattle and Tacoma. Port districts issuing checks are
Bellingham and Bremerton. Prior to a port district implementing the legislation, the
statute requires the port district to adopt the pay by check legislation in the form of a
resolution.




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Resolution No. 3499 fulfills the statutory requirement for adopting the pay by check
process for payment of Port of Seattle obligations.

In response to Commissioner Davis' inquiry, Linda Strout, General Counsel, advised that
while it would have been appropriate to have had this resolution before the Commission
at the same time the action on Port treasury was taken, it is her determination that there
has been no prejudice to anyone receiving Port checks for payment of outstanding
obligations of salaries and claims against the Port during the time between that action and
today's resolution.

Commissioner Davis moved first reading of Resolution No. 3499. Motion carried.
(Commissioner Nordquist was absent for the vote.)

Second Reading and Final Passage of Resolution No. 3499 will be an item on the
December 19, 2002 Commission special meeting agenda.

        b.      Request for authorization for authorization for a sole-source procurement
and award of a professional services agreement with Technology Partners International
for an evaluation of Information Technology sourcing options, for an amount not to
exceed $240,000.

Presenters: Tom Tierney, Deputy Chief Executive Officer, and Dan Thomas, Chief
Financial Officer.

Request Document: Messrs. Tierney and Thomas' Commission Agenda Memorandum
dated December 9, 2002.

As reported in the request document, over the past several years’ businesses,
governments, and other organizations across the country have adopted a variety of
different ways to manage information technology (IT) services. Some produce all of
their own services through an internal IT department; some contract for all of the
services; and others manage IT with a mix of internal and externally procured services.
Strategically, organizations are looking for cost savings, increased quality of services,
and/or enhanced resource management in making these decisions.

Decisions regarding the model for provision of these services can be very complex, and it
is our belief that they are best made with the assistance of an independent consultant who
is familiar with the issues but is not actually selling external services.

With this authorization, the Port would enter a contract with Technology Partners
International, Inc., (TPI) for an objective assessment of the Port of Seattle IT
organization, with the intention of improving current service-delivery and governance
capabilities, through internal improvements, third party sourcing, or other approaches.
The study would also identify the initiatives needed to go forward on any of the
recommended paths, detailing the costs, risks, and risk- mitigation measures associated
with each recommended path.


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TUESDAY, DECEMBER 10, 2002                                                            P. 28


The Port’s IT Department employs 80 full-time-equivalent (FTE) personnel. The
department spends approximately $10 to $12 million per year on a cash basis. IT’s key
responsibilities and services focus on effectively administering the Port’s information
technology systems and services.

The IT functions that would be included in the study are:

   Application development services
   Application maintenance services
   IT Help desk services
   Server support services
   Network services
   Desktop services

Staff believes it is timely to undertake this study now, so the selection of a ne w Chief
Technology Officer can be informed by this evaluation. The Port has advertised for and
received applications from approximately 80 candidates at this time. This timeliness is
the primary reason for sole-sourcing the contract to TPI. Additionally, however, TPI is a
recognized international leader in independent evaluations of IT functions and
organizational structure.

PROJECT DESCRIPTION/SCOPE OF WORK

This project is anticipated to require approximately eight (8) weeks of TPI effort, using
the equivalent of two full- time TPI advisors with part-time support from others. The
project would include generically the following steps:

   Develop Port IT services profiles, indicating IT roles and responsibilities
   Conduct interviews with IT leaders and staff
   Gather and validate data
   Build and validate financial model, including base case and 3-5 year forecasts
   Benchmark the Port IT functions with “best- in-class”
   Undertake sourcing impact analysis
   Develop “go- forward” options and implications
   Provide initial analysis and recommendations
   Conduct workshops and presentations to IT leadership and staff and Executive staff
   Provide “road map” for next steps, if any

FINANCIAL IMPLICATIONS

The TPI contract would be written to consume a maximum of $200,000 in TPI
professional services. In addition, it is expected there will be approximately $35,000 in
travel and other directly reimbursable costs, for a total value not to exceed $240,000.




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TUESDAY, DECEMBER 10, 2002                                                            P. 29

Source of funds

Out of this six to eight week project, the work done in 2002 will be covered by the 2002
Portwide Contingency. Funding in 2003 will come from that year’s contingency.

PROJECT TIMELINE

The project would begin upon authorization and would take approximately eight weeks,
ending in approximately mid-February 2003.

M. R. Dinsmore, Chief Executive Officer, noted the challenges to various components of
the organization, including the Information Technology Department. Mr. Dinsmore
advised that with the support of Tom Tierney, Deputy Chief Executive Officer, and Rudy
Caluza, Director, Accounting and Procurement Services, progress has been made towards
resolving some of those challenges within IT. He reported that to go forward with that
progress in an expeditious manner, it is necessary to look at the functions that are done
within IT and what options there may be available for doing them differently,
emphasizing the word 'if' the organization would choose to make any change. Mr.
Dinsmore stated this review is no reflection on the performance of IT employees.

Mr. Tierney advised that over the years other organizations have made decisions about
how information technology services are provided. He expressed his view that it is now
appropriate for the Port to take a systematic view as well. He referenced the current
contract for Help Desk services. Mr. Tierney noted the need to look at what other
services might be amenable to contract/outsource, what should be done within the
organization. He suggested that before a new Chief Technology Officer (CTO) is hired,
it is appropriate to complete this evaluation to better inform those individual applicants
for that position. Mr. Tierney discussed two extremes wherein one may be the
recommendation to contract out many of the services with a governance staff and a CTO
who is more industry/venture oriented. He noted a second view might be to have a large
existing staff to provide many of the services with a CTO whose qualities would lean
more to administrator and leader of people.

Mr. Tierney acknowledged the progress that has been made by IT staff in moving
forward under the changes that have already been implemented. Mr. Tierney advised the
proposed study would begin immediately and would have oversight from Dan Thomas,
Chief Financial Officer; Mr. Caluza; and Rosalee Walz, Director, People Programs, and
one or more IT management team members to make sure this effort is given the fullest
perspective as it rolls forward. He confirmed this study is not a decision to outsource all
IT services; it is intended to look at how systematically the Port does IT services.

In response to Commissioner Davis' inquiry regarding the sole-source procurement and
award of the agreement with TPI, Mr. Tierney advised the decision was based on the
timeliness for moving forward with this study and stated that TPI provides objective
evaluation and is renowned in the industry. He reconfirmed that TPI does not have its
own services that it markets.



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TUESDAY, DECEMBER 10, 2002                                                           P. 30


Mr. Thomas clarified in response to Commissioner Molloy's comment that this study
effort will not be reviewing the e-Business Department.

Commissioner Davis noted the project schedule and requested that the employees of IT
be made aware of this review effort and kept apprised of its progress. Ms. Davis
referenced the impact of uncertainty on employees and the co mments she has heard
during past reviews of organization components. She expressed her perspective with
respect to IT within the Port stating it should not turn into an IT company.
Commissioner Davis referenced the current employee talent within IT. Ms. Davis
suggested that it is a question of whether the new cost, which may be more than in- house,
is better or worse for the organization. She noted it may be better to bring change to the
organization as change happens, noting cost is not the only factor for consideration.

Mr. Tierney advised companies look at cost, service quality, strategic choices of how to
manage the resources. He noted that Commissioners have expressed concerns over time
how the Port moves forward in the management of IT services. He referenced the
number of IT employees and the IT budget, in- house services and services provided
externally. Mr. Tierney advised staff proposes to take those comments more as a
question with respect to a systematic way to evaluate the mix of services and identifying
which services the Port buys and which should be produced in- house.

Commissioner Molloy moved approval of Item 9b. Motion carried. (Commissioner
Nordquist was absent for the vote.)

         10.      NEW BUSINESS

         None.

         2.       EXECUTIVE SESSION

The meeting was then recessed to an executive session for approximately one hour and
thirty minutes to discuss real estate matters.

         11.      ADJOURNMENT

The meeting was reconvened and immediately adjourned at 4:30 p.m.




Dec10reg MINS.DOC - 11/13/2010

				
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