Article Summary:
Order of Business
10:30 a.m.
1. Call to Order
2. Executive Session – if necessary, pursuant to RCW 42.30.110 (executive sessions are not open to the public)
12:00 p.m. – Public Session
Reconvene or Call to Order and Pledge of Allegiance
3. Approval of the Agenda
4. Special Orders of the Day
5. Executive Director’s Report
6. Committee Reports
7. Public Comment
8. Consent Agenda
8a. Approval of the Regular and Special Meeting Minutes of August 11, 2026.
8b. Monthly Notification of Prior Executive Director Delegation Actions August 2026. – For Information Only.
8c. Authorization for the Executive Director or Designee to Execute an Airport Term License Agreement with Comcast Cable Communications Management LLC and Other Service Providers to Use the Meet Me Room Building and Related Infrastructure at Seattle-Tacoma International Airport on a Non-Exclusive Basis for a Proposed Ten-Year License Term.
8d. Authorization for the Executive Director to Execute a Contract for Security Services to Support Employee Parking Operations at the North Employee Parking Lot and Three New Leased Parking Lots Known as Lots A, C, and M for a Total Estimated Cost of $6,200,000.00 Over Five Years, and Request for $700,000 to Fund and Maintain Existing Security Coverage, for a Total Authorization Requested of $6,900,000.
8e. Authorization for the Executive Director to Authorize an Additional $400,000 to Complete the 3rd Floor Ground Transportation Booth Enhancements Project at Seattle-Tacoma International Airport, Increasing the Total Authorization Amount from $5,000,000 to $5,400,000. (CIP #C801128)
8f. Authorization for the Executive Director to Execute a New Collective Bargaining Agreement Between the Port of Seattle and the International Brotherhood of Teamsters, Local 117, Representing Non-Sworn Communication Supervisors at the Police Department Covering January 1, 2026, through December 31, 2028.
10. New Business
10a. Authorization for the Executive Director to Execute a Guaranteed Maximum Price Contract Amendment to the Alternative Public Works Progressive Design Build Contract for the T91/P66 Cruise Shore Power Extension Project to Complete Construction of the Pier 66 and Pier 91 East Shore Power Extension Systems, Bollards, and Limited Deck Panels Replacement and to Authorize Funding for a Validation Phase to Include the Rehabilitation of the Section of Pier 91 Delineated as Development Unit #9202; for a Total Requested Amount of $49,330,000, a Total Project Authorization of $69,980,000, and an Estimated Total Project Cost of $116,480,000. (CIP #C801983 and #C802116)
11. Presentations and Staff Reports
11a. Q2 2026 Financial Performance Briefing.
12. Questions on Referral to Committee and Closing Comments
13. Adjournment
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Call to Order and Housekeeping
Felleman: This is Commission Vice President Fred Felleman, convening the regular meeting of September 9th, 2026. The time now is 12:06.
We’re meeting in person today at the Port of Seattle headquarters building, commission chambers, and virtually on Microsoft Teams. Clerk Clark, please call the roll of all commissioners in attendance.
Clark: Thank you. Beginning with Commissioner Cho — present.
Felleman: Thank you.
Clark: Commissioner Felleman — present. Thank you. Commissioner Hasegawa — present.
Felleman: Thank you.
Clark: Commissioner Mohamed — present.
Felleman: Thank you.
Clark: And Commissioner Calkins will be joining us shortly. We do have a quorum established.
Felleman: Thank you, Clerk Clark. Moving on — I’d like to note that the executive session on our business meeting agenda will occur at the conclusion of today’s open session items, so we’ll recess to executive session at the end of this meeting. A motion isn’t needed to amend the agenda for that, but I’ll ask if there are any objections. Hearing none —
A few housekeeping items before we begin. For everyone in the meeting room, please turn your cell phones to silent, at least. For anyone participating on Microsoft Teams, please mute your speakers when not actively speaking or presenting, and please keep your cameras off unless you’re a commissioner or a staff member actively addressing the commission. Members of the public addressing the commission during public comment may turn their cameras on when their name is called and turn them back off at the conclusion of their remarks. For anyone at the dais, please turn off your computer speakers and silence your devices. Please also remember to address your request to speak through the chair, and wait to speak until you’ve been recognized — mics on and off as needed.
All the items noted here will ensure a smoother meeting, and thank you. All votes today will be taken by roll call or by general consent, so it’s clear for anyone participating virtually how votes are cast. Commissioners will say aye or nay when their names are called.
We’re meeting on the ancestral lands and waters of the Coast Salish people, with whom we share a commitment to steward these natural resources for future generations. This meeting is being digitally recorded and may be viewed or heard at any time on the Port’s website, and may be rebroadcast by King County TV. Please stand and join me for the Pledge of Allegiance.
[Pledge of Allegiance recited.]
Approval of the Agenda
Felleman: The first item on the business calendar is approval of the agenda. As a reminder — if a commissioner wishes to make a general comment for or against an item on the consent agenda, it’s not necessary to pull the item for separate discussion; a commissioner may offer general supporting or opposing comments later in the meeting once we reach that part of the agenda. However, if a commissioner wants to ask staff a question or have a dialogue on a consent agenda item, it’s appropriate to request that item be pulled for separate discussion now.
President — are there any items to be pulled from the consent agenda, or motions to rearrange the order of the day?
Mohamed: Chair, may I? I’d like to request to remove item 8D from the agenda. I have some concerns about it, and I’m happy to raise them later, or I can share now.
Felleman: Would you like a full discussion of it now, or just to raise it?
Mohamed: I want to pull it and request a delay on this item.
Felleman: Okay, very good — we’ll address that when we get to it. Commissioners, the question now is on approval of the agenda. Is there a motion to approve the agenda, other than item 8D, as amended?
[Unidentified]: So moved.
[Unidentified]: Second.
Felleman: The motion’s been moved and seconded. If there are any changes, please clarify now. Hearing none — the agenda has been approved as presented and amended.
Executive Director’s Report
Felleman: Next on the agenda is the Executive Director’s report. Chief Financial Officer Chris Whisenhunt — or, and here we are, joined — and I’d assume Commissioner Calkins will be joining shortly. Executive Director Metruck will provide the report. Steve, thank you.
Metruck: Thank you, Vice President — sorry about that. Commissioners, good afternoon. I’m providing this — we have multiple topics to highlight before today’s meeting, so I hope you’ll bear with me, as a lot has been going on at the Port.
First — this past weekend the Port celebrated its 115th anniversary. On September 5th, 1911, King County voters made a pretty consequential decision: they voted to create the Port of Seattle, one of the first public ports in the country. Why? The Seattle waterfront was booming, and the community wanted to make sure it was managed for the public good, not just private profit. Fast forward to today, and that mission has taken us a long way. The Port has grown into a major gateway for global trade, travel, and jobs. From our fishing fleet and container ships to cruise lines and SEA airport, our work connects the region to the world and creates opportunity here at home. So as we mark 115 years, it’s a good moment to recognize how far we’ve come — the generations of people who’ve worked here at the Port, benefited from the Port, and helped us get here. And of course, thanks to all of you carrying the mission forward and building the Port for the future.
We also hope everyone enjoyed the Labor Day weekend. Labor Day recognizes the social and economic achievements of American workers, which many of us benefit from even without being in a union. Unions have led the way in advocating for worker safety, wages, and conditions that improve standards for everyone. Labor Day is also the unofficial end of summer here in Seattle. Travel numbers are in — for the Thursday-to-Monday period over the holiday, about 850,000 passengers traveled through SEA, about the same as 2025, less than 1% difference. TSA screened about 327,000 passengers at the checkpoints over the holiday weekend. The actuals were in line with the forecast.
Commissioners, I’m also pleased to share updates on our work exploring methanol as a maritime fuel. This month we completed the Pacific Northwest to Alaska Green Methanol Feasibility Study report, marking a major milestone for our green corridor work. The Mayor’s McKenna Mohler Center for Zero-Carbon Shipping [confirm: center name] led the study, collaborating with the Port of Seattle, Port of Vancouver, Fraser Port Authority, CLEA [confirm: acronym], and Hyundai [confirm: “Highu Jen”]. We’ll share the final report with our first-movers partners and post it on the center’s website this fall. And on September 23rd and 24th, the Port of Seattle and the NWSA will host a methanol bunkering readiness workshop in Seattle. The workshop convenes regional, maritime, and community stakeholders for a desktop exercise evaluating methanol bunkering scenarios and identifying safety, regulatory, and emergency response needs. This work is funded through our EPA Clean Ports grant. We’re excited for this event, and it will strengthen our region’s readiness for this alternative maritime fuel.
On the operations side, we also started piloting two food trucks at Shilshole Bay Marina over the weekend, an extension of the Pier 69 food truck program. We’ll keep you informed at the end of the season how the pilot performed, both in terms of employee and visitor satisfaction and as an economic development effort.
Shifting to more solemn news — you’re all aware there have been tragic gun violence incidents in downtown Seattle, including three separate shootings over the Labor Day weekend. While the incidents weren’t related to Port operations and no Port personnel were involved, one shooting incident partially occurred on our Bell Harbor property, which was temporarily closed to pedestrian traffic. Our Port of Seattle Police Department was called in and helped support the initial response, and will support the ongoing investigation, which is being led by Seattle Police. We’ve been in touch with the cruise lines and other tenants to ensure we continue safe and efficient operations at Bell Harbor.
Moving to national and local issues — commissioners, I want the public to be aware that late last month we sent a letter, from all of you and myself, to the Washington state federal delegation sharing our concerns regarding immigration enforcement activity involving travelers at Seattle-Tacoma International Airport, including reports of federal immigration authorities detaining individuals arriving at SEA who have no criminal history. While airline passengers have long been subject to screening by the Transportation Security Administration and U.S. Customs and Border Protection, the federal government has generally refrained from immigration enforcement activities at airports, given the significant potential impact to airport security, the creation of public safety issues, longer passenger wait times, and the general erosion of traveler confidence in flying. In our letter, we asked that federal immigration enforcement agencies be required to notify the Port in advance of planned enforcement activity when operationally and legally feasible, including anticipated timing and general operational impacts. When advance notification isn’t possible, we asked for prompt notification afterward and an opportunity for appropriate debriefing, and for clear protocols to minimize unnecessary impacts on passenger flow, airport security, and airport operations. We continue to work closely with community representatives and leaders to ensure we maintain a safe, secure, efficient, welcoming, and accessible airport.
Commissioners, turning to today’s agenda — I’d like to highlight a few items. On our consent agenda we have a request to add security to support employee parking operations at the airport, an agreement to provide communications infrastructure for tenant use, additional funds for our ground transportation enhancement project, and a collective bargaining agreement for communications supervisors at the Port of Seattle Police Department. For new business, we’ll seek your authorization to advance key projects moving us closer to our goal of having all homeport cruise ships connect to shore power, and finally we’ll close out our second-quarter financial performance results.
So commissioners — lastly, I’d like to note, solemnly, that 25 years ago our nation endured an unimaginable tragedy that reshaped our communities, families, and the work of public service across all modes of transportation. On September 11th, 2001, nearly 3,000 lives were lost, and countless more were changed in the months and years that followed. On Friday, at the airport, our fire department is organizing a ceremony where we’ll pause to honor the victims, the first responders who ran toward danger, the survivors who rebuilt their lives, and the families whose grief and resilience remain part of our national fabric. This day is a moment of reflection, and we recognize that after 9/11, some communities — especially Muslim and Muslim American communities — experienced prejudice, fear, and backlash rooted in misunderstanding and bias. Our community has learned to anticipate those dynamics and come together quickly in support of fairness, dignity, and inclusion.
For us at the Port of Seattle, this anniversary is also a reminder of the role we play in security, safety, and preparedness. Our mission, and the responsibility we carry as public servants, has been deeply influenced by the lessons learned in the aftermath of 9/11. While we’re better prepared today — and I know we are — we’re stronger in coordination, clearer in our emergency protocols, and more unified in our commitment to remain vigilant and ready to respond. There are also reminders for us today: the aviation incident that happened last weekend in Miami, which resulted in five deaths, reminds us of the high stakes in our work at the airport and in other modes of transportation, and how important it is that we all continue to focus on safety, on improving our procedures, and on our preparedness as an industry. So thank you for your dedication to this work, today and every day. Commissioners, that concludes my remarks. Thank you.
Committee Reports
Felleman: Thank you, Executive Director Metruck, for that extensive report and some serious anniversaries to acknowledge. We’re now up to committee reports. Francis Cho, our strategic advisor, will provide the report.
[Note: this is the staff Commission Strategic Advisor, not Commissioner Sam Cho — flagging for confirmation since the name overlaps: [confirm: “Francis Cho” — staff title “Commission Strategic Advisor”]]
Francis Cho: Thank you very much. Commission Vice President Felleman, Executive Director Metruck, commissioners — Francis Cho, commission strategic advisor, providing today’s committee reports.
On August 13th, Commission Vice President Felleman and Commissioner Cho convened the Waterfront and Industrial Lands Committee. They reviewed the Port of Seattle’s Economic Development Action Plan. The report includes analysis of the Port’s real estate portfolio, economic development programs, stakeholder feedback, and both near-term and long-term economic, workforce, and environmental goals. The committee co-chairs recommended that a briefing on the report be offered to their fellow commissioners.
On August 18th, Commissioners Cho and Mohamed convened the Aviation Committee to continue the taxi discussion from the June committee meeting, including marketing, geofencing, and multi-purpose room discussions.
Then the Audit Committee, chaired by Commission Vice President Fred Felleman, joined by Commissioner Mohamed and public member Sarah Holstrom, met on September 4th. The committee received an entrance audit report from the office of the Washington State Auditor. The audit to be conducted will cover January 1, 2025 through December 31, 2025, and will be an accountability audit examining management, use, and safeguarding of public resources, and evaluation of adherence to applicable state laws, regulations, and policies and procedures. The committee then heard from Internal Audit Director Glenn Fernandez, and approved adjustments to the 2026 audit plan, approved the proposed 2027 audit budget, and approved internal audit charter adjustments reflecting an update to the source of auditing standards. The committee further heard audit reports from the internal audit team and management’s responses to the audits. Audits included a performance audit for the Primary Fire Station continuing operations preservation project, and limited contract compliance audits for Six Rent-A-Car LLC and Marmot Mountain LLC. [confirm: contractor names]
The Sustainability, Environment and Climate Committee met on September 8th, with Commissioners Calkins and Felleman convening. There were two items for discussion: first, a 60% update on the C Concourse expansion, and a briefing on the underwater noise program. That concludes my committee report. Thank you.
Public Comment
Felleman: Thank you, Francis. Seems like we’ve been busy. The commission now welcomes public comment as an important part of the public process. Comments are received and considered by the commission in its deliberations. Before we take public comment, Clerk Clark, please display the QR code to our public comment rules of procedure. For members of the public providing public testimony, it’s essential these rules are followed. Written copies of the rules are available at the door.
[Brief technical aside about the speaker timer.]
Thank you, Clerk Clark — please call our first speaker.
Clark: Our first speaker is Ron Finney.
Felleman: [Notes that Commissioner Calkins has arrived, at 12:23 p.m.] Thank you. Right there, please — and if I could get you to repeat your name for the record, and your agenda item or topic related to the conduct of Port business, and then I’ll start the timer.
Ron Finney: Ron Finney, on ACL — American Cruise Lines. Good afternoon, commissioners. My name is Ron Finney, president of International Longshore and Warehouse Union Local 19. ILWU fights for family wages, safe working conditions, and fair treatment for workers across Seattle’s working waterfronts. The trade and commerce that flows through this international gateway contributes billions of dollars in economic activity annually, and the ILWU advocates to ensure local working families benefit from these opportunities in turn.
American Cruise Lines is an East Coast company that operates freely on our waterfronts while offering sub-minimum wages, ignoring Washington’s established labor standards, and pressing workers into long shifts with no breaks. ACL has broken promises — for compensation, for its workers, but also for a commitment to Washington families who expect better of companies that call on our working waterfront. And that’s all I’ve got. Thank you.
Felleman: Thank you, Mr. Finney. Clerk Clark, next speaker.
Clark: Our next speaker is Patrick Johnston.
Felleman: Hi, Patrick — please repeat your name for the record and your topic, then I’ll start the timer.
Patrick Johnston: Patrick Johnston, ACL as well. Commissioners, my name is Patrick Johnston, labor relations, ILWU Local 19. These are public waterways and public docks, and the labor standard on them is a standard working people already established on this waterfront. We are not a vendor — we are the labor that made this public port possible. That standard is wages, benefits, and the safety that lets a working person raise a family on this waterfront. When a company uses public piers and doesn’t meet it, the public has a right to know. That’s why we’re running an area standards picket regarding American Cruise Lines. We’re telling this community that ACL is operating on public docks without meeting the labor standards that prevail in this industry and region.
The Port of Anacortes already faced that choice — they backed longshoremen at Local 25 and stopped ACL operations on their docks rather than let the standard slip. We’re asking this Port not to make it easy to undercut what workers already paid to establish.
Mark Zuckerberg’s launch pad and its support vessel at Smith Cove [confirm: subject/company name] are a different matter — that’s public property. Public docks are not a private marina. We view that call as falling within longshore jurisdiction — line handling, setting the gangway, and using shoreside crane to load provisions. The size of the boat doesn’t move that work off this waterfront; if it uses a public dock, that jurisdiction applies. We’ve been on this waterfront for more than a century, and we’re not leaving it. We will not stand by while area standards fade and jurisdiction on these public docks is allowed to slip away. Remember who we are. Thank you.
Felleman: Thank you, Mr. Johnston. Clerk Clark, next speaker.
Clark: Our next speaker is Chris Peeler.
Felleman: Chris, please repeat your name for the record and your topic, then I’ll start the timer.
Chris Peeler: Chris Peeler. Good afternoon — my name is Chris Peeler, I’m on the labor relations committee for Local 19 here in Seattle. I have a few questions I want to get on the record for you. I understand you won’t be able to answer them, but I’d like you to think about them, if at all possible. Oh, I’m sorry — my topic is American Cruise Lines.
First question: have you, the Port of Seattle Commission, seen the agreement that allows ACL to berth at a public dock in Shilshole Bay Marina? Second: if you haven’t seen it, are you okay with Port staff leaving you out of that process? Third: when will we, the public, get access to that agreement? Because we’d like to see it too. Are you, as a commission, okay with Port staff attempting to control ILWU Local 19’s ability to engage in a peaceful, informational gathering by only “allowing” us to do so in their chosen boxes on a public street? I want to know if you’re okay with that. Does the commission think it’s appropriate for Port staff to try to control Local 19 members again on a public thoroughfare? And finally — and this is a sincere question from the membership of Local 19 — what do the unelected Port of Seattle personnel do to support the ILWU workforce? Because we’re not sure what. Thank you for your time, and we hope we can get these answered at some point.
Felleman: Thank you, Mr. Peeler. Clerk Clark, next speaker.
Clark: Will you be coming up together or separately? Pete Mills and Tom Graf. [confirm: “Graph”/”Graf”]
Felleman: Please state your names for the record and your topic, then I’ll start the timer.
Pete Mills: Hi, this is Pete Mills. I’m here with some comments related to item 11A, the 2026 financial performance briefing — loosely related.
Tom Graf: I’m Tom Graf — I’m here to speak with gratitude to the Port from the Belltown community.
Felleman: Thank you, please proceed.
Mills: Good afternoon, commissioners. I’m Peter Mills, a volunteer board member with Belltown United. With me is Tom, chair of the board for Belltown United. We’re here to thank the Port of Seattle for its history of small but meaningful grants to the Belltown neighborhood. For more than five years, the Port has supported Belltown United’s economic development and tourism promotion efforts in the neighborhood. We especially acknowledge the work of Sally Deliro [confirm: name] and her team in community engagement — I understand it was her birthday recently.
Though the Port’s grants have only been a few thousand dollars at a time, they’ve allowed Belltown United to leverage those funds to promote tourism and economic development. This year we partnered with Norwegian Cruise Line to create a corridor of murals stretching from Pier 66 up into the heart of Belltown. Next year we plan to approach Delta and Alaska Airlines as well — so if they’re listening, heads up. We can do much more with additional funding, but today we simply want to express how grateful we are for what we’ve received from the Port. With your support, Belltown United has sponsored neighborhood cleanups, community programs like the Belltown Mural Fest, movie nights, busker performances, graffiti removal, community beautification projects, and more. These efforts reflect the Port’s own triple bottom line — they strengthen the local community, they improve the environment we share, and they advance equity for the people doing the work and enjoying the benefits, as well as for tourists exploring the neighborhood and the small businesses that need their support.
As the executive director mentioned regarding the recent gun violence, we’re a strong partner with the Port in working toward making the neighborhood a more welcoming place for everyone, including tourists and cruise passengers. I’ve passed around an overview of the Mural Fest programs, with some great photos — have a look. Our whole point here is just to say thank you. My comments are submitted, and that concludes them. Thank you.
Felleman: Thank you, Pete — great to see you. Tom, did you have separate comments?
Graf: Just very quick. I also want to thank the Port for your partnership with the community. Sally has been an invaluable person we can connect to for outreach, and she supports us — that is not normal. Most stakeholders don’t do that, and I just want to tell you I have gratitude for the cooperation the Port has shown the Belltown community. Your work in and around this building — the Bell Street Pier, Centennial Park — is spectacular. You’re probably the best property owner in our district. You take care of your properties better, and you cooperate with the community better, than any other stakeholder. Sally has been fabulous — I don’t know how you’re possibly letting her go, and we just need someone like her to continue to engage with. As I say, you have the gratitude of the community. Thank you.
Felleman: Thank you so much. I think we should stop there. Clerk Clark, please call the next speaker.
Clark: Our next speaker is Steve Danishek.
Felleman: Thank you — Steve, if I can get you to repeat your name for the record and your topic.
Steve Danishek: My name is Steve Danishek. This is item 10, Pier 66 extension. I’m a resident at Waterfront Landings. We have a unit that used to have a water view — now we have a shore power view. We did file a claim; it was denied. But beyond that, we now find there’s another extension of Pier 66 shore power. We heard this not from the Port — even though we’d filed a claim on that specific topic — but from Ivar’s, Mr. Donnegal [confirm: name], who informed some clients, who we heard about. So we got in touch with Ms. Courtney and tried to find out what was going on. Our concern, obviously, is: are we going to lose twice as much use as we already lost? We lost $20,000 in market value. Mr. Fellin [confirm: name] recommended we get an appraisal — we did that.
My concern is: are we going to lose twice as much? I’ve been told no by Ms. Courtney, who we’ve been in touch with. But it seems the Port assumes we’re going to get disclosures by osmosis — if she tells a couple of people down here, those most affected will ultimately hear and be able to protect their rights on claims. Anyway — I don’t have a response. I’ve asked for one, and I hope at some point Mr. Metruck or someone in his office can tell us, in writing please, whether it’s the box going up, going wider, or what — because we’ve lost our view, we have a collection of containers out there that block even more of it, and we’d just like to know how much more of our view we’re going to lose. That’s it. Thank you.
Felleman: Thank you, Mr. Danishek. Clerk Clark, next speaker.
Clark: Our next speaker is John Cheney.
Felleman: Please repeat your name for the record and your topic, then I’ll start the timer.
John Cheney: My name is John Cheney, and I’m here to comment on Port stewardship related to the property of Salmon Bay Marina — which I think may be an interesting point in your financial discussions. My partner and I are pensioners, and we’d had our houseboat at Salmon Bay Marina for 20 years. In three days, September 11th, will be the anniversary of one year since the Port called us together and gave us word that we were going to be evicted. All of us — every liveaboard there, 17 households, plus all the other boats moored there — under covered mortgage. You cast us into the sea at a time when there were reduced slip availabilities and slip prices were going up. Some people didn’t make it — they abandoned their boats. Others moved elsewhere, out of Seattle, even though they had strong connections to being here. It was their home. You evicted them from their home.
So I’m concerned that you bought this — this private marina — and essentially took action to close it, this commission. It took me a long time to figure out what you did, but you apparently didn’t object to the executive director’s authorization to close the marina. So that was a non-public action — a non-public engagement action by this commission. And yet this is what’s happened: we’ve all been evicted from there. I guess the going-forward part for me is, what are you going to do with this? You paid for the marina, you bought a million dollars of permits that you’ve allowed to expire for that marina — what a waste of public funds. And now we hear you’re doing something about planning. How can we be involved? Thank you.
Felleman: Thank you, Mr. Cheney. Clerk Clark, next speaker.
Clark: Our final sign-up today is Alex Zimmerman.
Felleman: When you’re ready, Alex — please repeat your name and the item you’re speaking on, then I’ll start the timer.
Alex Zimmerman: My name Alex Zimmerman. I president of Stand Up America party, and I will speak about agenda number eight. It’s about money for security — money for policemen, for security, for everything. What is [confirm: unclear term, possibly organization or program name] — yeah, for last 25 years. So I want to explain to you: I think you’re doing something wrong, and I’ll explain where. Last meeting, a policeman come to me — I’m sitting here, come to me right here — he told me if I don’t stop talking before the meeting, he will arrest me. Very interesting for me — why policemen doing this to me? They smell like Gestapo. Why? Because council is Nazi, Gestapo, fascist mob, Democrat — yeah. They make trespass for only one man, Alex Zimmerman. They change rules, they interrupt me, trespass me — one man, one man, for 115 years what port exist. Very interesting — they are crooked by definition. This looks like pure [confirm: unclear — possibly a foreign-language term] to me, and I explain why: this whole five, elected without competition, in civilized country they cannot present her as [unclear]. They supposed to be refused, because there’s no competition for election. This is what’s happening — why they not doing nothing? Because they not care about this — they have absolute power. Is this exactly what happened. So today, ten o’clock, I come to Burien 190 for justice, police commission — you know what I mean — talking about, five times, what is police trespass me so I cannot go to council meeting. It’s a crime, right now, is very important. So you guy, by definition, not only criminal, you are bandita — because without competition. Viva Trump, we were new American revolution, stand up slave, and happy. Thank you very much.
Felleman: Thank you, Mr. Zimmerman. That concludes our sign-ups for today. Is there anyone else present on the Teams call or in the room who didn’t sign up but wishes to address the commission? Mr. McKissen [confirm: name], please take a seat, and please state your full name and topic.
Dan McKissen: Good afternoon — I’m Dan McKissen. I’m a member of ILWU Local 19, and a member of our International Executive Board. I’m here to talk about item 8D. But first, as a member of Local 19, I support the statements of our officers from earlier.
8D is a security contract for employee parking lots out at the airport. Our Local 9 president wasn’t able to be here — he’s working the swing shift training security people at the airport. ILWU Local 9 does the security screening for the employees and other duties out at the airport. I believe I agree with the “pro” on that alternative — that it needs to be insourced, not outsourced. On the first con, it says it’d be disruptive and you might not be able to get people hired — Local 9 has no problem hiring people, they’re really good jobs, they negotiated good jobs, and they’ll fill those positions readily. The second — women- and minority-owned business enterprises — that local supports that exactly, so you don’t need to go outside to do that. And finally, on disruption and other workforces claiming that work — Local 9’s been doing the security work out there for quite a while. So please support that, support alternative one. I apologize the president of Local 9 couldn’t be here, but thank you.
Felleman: Thank you, Mr. McKissen. Anyone else who wishes to address the commission? All right — at this time I’ll ask Clerk Clark to give a synopsis of any written comments received.
Clark: Thank you, Mr. Commission President, members of the commission, and Executive Director Metruck. We received one written comment today, from Pete Mills and Tom Graf, in support of their spoken comments today. That concludes the written comments we’ve received.
Felleman: Thank you, Clerk Clark. Hearing no further testimony, we’ll move on in the agenda.
Consent Agenda
Felleman: Our next order of business is the consent agenda. Items on the consent agenda are considered routine and will be adopted by one motion. Items removed from the consent agenda will be considered separately, immediately after adoption of the remaining consent agenda items. Did we in fact remove 8D? Okay.
At this time, the chair will entertain a motion to approve the consent agenda items covering A, B, C, E, and F.
[Unidentified]: So moved.
[Unidentified]: Second.
Felleman: The motion’s been made and seconded. Commissioners, please say aye or nay when your name is called for approval of the consent agenda items. Beginning with Commissioner Cho.
Cho: Aye.
Felleman: Thank you. Commissioner Felleman — aye. Thank you. Commissioner Hasegawa.
Hasegawa: Aye.
Felleman: Thank you. Commissioner Mohamed.
Mohamed: Aye.
Felleman: Thank you. Commissioner Calkins.
Calkins: Aye.
Felleman: Thank you — five ayes, zero nays for this item. And with that, the consent agenda passes.
Item 8D — Employee Parking Security Contract (Postponement)
Felleman: Moving on in the agenda, we have one new business item today. Clerk Clark, please read the item into the record, and then we’ll have Executive Director Metruck introduce it.
Clark: Mr. Commission President, let’s take us back to 8D.
Felleman: Oh — we’re just pulling it, right? We’re not — are we considering it today, or delaying it for consideration later?
Clark: That hasn’t been stated yet.
Felleman: Got it, okay.
Clark: I can go ahead and read it into the record.
Felleman: Please do.
Clark: Through the commission president to Commissioner Mohamed — if there’s a motion to postpone, we need to have the main motion on the floor first. So, just so everyone on the commission knows, we actually have to put a motion on the floor to do something with it, unless there’s a motion to amend the agenda to remove it entirely, which would be different. So I’ll go ahead and read it into the record.
This is item 8D: authorization for the executive director to execute a contract for security services to support employee parking operations at the North Employee Parking Lot and three new leased parking lots, known as Lots A, C, and M, for a total estimated cost of $6,200,000 over five years, and a request for $700,000 to fund and maintain existing security coverage for the duration of the RFP process and through the contract’s final extension, October 2027, for a total authorization requested of $6,900,000.
Felleman: Okay. And with that — do we need a motion and a second to consider, and then entertain a motion to delay to a date certain?
Mohamed: One moment — did you have introductory comments, or do we just want to go straight into it?
Felleman: I think we should go to the procedure. Because we’re hoping to delay to a date certain, if there’s a motion to postpone to a time certain, the main motion must be on the floor first. So — do I hear a motion and a second to consider the item?
[Unidentified]: So moved.
[Unidentified]: Second.
Felleman: All right, now with it on the floor — is there a motion to postpone to a date certain?
[Unidentified]: So moved.
[Unidentified]: Second.
Felleman: Is there any discussion on the motion to postpone to a date certain?
[Unidentified]: Mr. Commission Vice President — the next meeting date?
Felleman: Sorry, thank you — yes. Commissioner Mohamed.
Mohamed: Yes — I’m happy to provide some comments. First, I’ll just say I understand the importance of this item and the importance of supporting security services, and I understand staff is recommending alternative three here, particularly for cost and operational flexibility. And at the same time, when we choose a contracted workforce rather than Port employees, I want to understand what that means for the workers who’ll actually be doing the work every single day. These employees will be working 24 hours a day, seven days a week, at our facilities, and they’re providing a very important security function for thousands of people who come through our airport — airport employees. I want to understand the labor standards that will be applied here, including wages, access to quality and affordable health care, working conditions, and worker protection. Cost savings and flexibility are important, but I don’t want those savings to come from workers receiving lower wages, inadequate health care, or poor working conditions. At this time I’d like to better understand these implications and talk to the workers who’ll be impacted — and I did receive significant calls this week about this item. So for that reason, I’d like to delay this item.
Felleman: Any further debate or discussion on the motion to postpone? Hearing none — Clerk, can you please take the roll for the vote on the motion to postpone, to a time certain of September 22nd? Beginning with Commissioner Cho.
Cho: Aye.
Felleman: Thank you. Commissioner Felleman — aye. Thank you. Commissioner Hasegawa.
Hasegawa: Aye.
Felleman: Thank you. Commissioner Mohamed.
Mohamed: Aye.
Felleman: Thank you. And Commissioner Calkins.
Calkins: Aye.
Felleman: Thank you — five ayes, zero nays for that motion. So that motion passes, and we’ll take that up again under unfinished business on the 22nd.
Item 10A — Pier 66/Terminal 91 Cruise Shore Power Extension
Felleman: All right — we have one new business item today. Clerk, please read the item into the record, and we’ll have Executive Director Metruck introduce it.
Clark: Yes — this is agenda item 10A: authorization for the executive director to execute a guaranteed maximum price contract amendment to the alternative public works progressive design-build contract for the T91/Pier 66 cruise shore power extension project, to complete construction of Pier 66 and Pier 91 east shore power extension systems, bollards, and limited deck panel replacement, and to authorize funding for a validation phase to include the rehabilitation of the section of Pier 91 delineated as Development Unit 9202, for a total requested amount of $49,330,000, a total project authorization of $69,980,000, and an estimated total project cost of $116,480,000.
Metruck: Commissioners, this item advances the next phase of our shore power program by funding construction at Pier 66 and the east berth of Pier 91, along with validation work that prepares the west berth improvements for delivery in the following season. These upgrades are essential to meeting the commission’s directive that all homeport cruise ships connect to shore power by 2027 — a cornerstone of our strategy to reduce emissions, improve air quality, and uphold our leadership in sustainable maritime operations. Integrating structural rehabilitation at Pier 91 with the shore power work provides a more efficient, cost-effective solution — protecting cruise operations and significantly reducing long-term capital needs. Staff will outline how this two-milestone approach keeps the program on track, supports our community and environmental commitments, and ensures reliable shore power across all cruise berths.
Presenting this afternoon are Linda Springman [confirm: name], director of cruise operations, and Kelly Purnell [confirm: name], capital project manager, waterfront projects. Linda?
Springman: Thanks, Executive Director Metruck, commissioners. We’re here today for the next phase of the project to provide flexibility for cruise shore power, which you’ve heard from us on a few times already. As the project has evolved, additional elements have been identified that allow for integration into this project — ultimately saving time and money. While the shore power project was under design and development, infrastructure issues at T91 West were identified that indicated potential use restrictions in critical areas. By integrating this into the shore power project, we get the infrastructure work done earlier and save costs by using an innovative repair protocol.
This project is now broken into two milestones, which you’ll hear about. The first will deliver shore power certainty to Pier 66 and Terminal 91 East by 2027. The second will complete shore power flexibility at T91 West and perform full rehabilitation of the T91 West section of the dock. You’ll see a cost increase in this project from combining the two, but by combining them we realize a reduction to the overall CIP. I’ll turn it over to Kelly.
Purnell: Thanks, Linda. Good afternoon, commissioners and Executive Director Metruck. Today we’re here to request the next phase of funding for the Terminal 91 and Pier 66 cruise shore power extension projects, as well as funding for the additional scope to rehabilitate the section of Pier 91 west berth dock delineated as Development Unit 9202, which must be integrated with the west berth shore power work. For clarity, throughout this presentation I’ll refer to that Pier 91 section as DU9202 — that’s also how it’s listed in the memo.
Next slide. As a reminder, our purpose in coming here — as you’ve seen in previous presentations — is that Commission Order 2024-08 was passed in July 2024, mandating all cruise ships connect to shore power by 2027. All ships can’t connect today because the shore power cables simply can’t reach all the different connection points on different ship configurations. This project extends those cables and the connection system to allow cruise ships to plug in and provide maximum flexibility across ship configurations.
Next slide. As Executive Director Metruck and Linda already noted, since our last commission authorization for this project in May, a significant structural scope addition has been identified for Pier 91 West. Our latest engineering inspections show the condition of the Pier 91 section delineated DU9202 — which is fully within the project footprint of the west berth shore power work — is deteriorating at an accelerated rate. Engineering has implemented load restrictions on 12 of the most deteriorated panels, but I want to note engineering has also done a full review of all equipment currently in use out there, and there are no restrictions on that existing equipment — so operational impacts are not yet in place. That said, DU9202 needs to be rehabilitated without delay to avoid operational impacts to cruise and commercial fishing.
So what does this mean? The project team is collaborating with our design-builder, Skanska, to develop an innovative solution to rehabilitate Pier 91 section DU9202, since these projects need to be completed together. By integrating DU9202 into this progressive design-build project, we’re accelerating the pier rehabilitation by a year — a significant mitigation of further operational impacts. This does require the west berth shore power to be implemented by cruise season 2028 instead of 2027. But by combining west shore power with DU9202 rehabilitation, it’s likely to result in net savings of approximately $20 million to the overall capital plan, due to efficiencies and an innovative design approach.
Next slide. In this image, the area of DU9202 — which includes berths H, I, and J of the west berth of Pier 91 — is fully within the construction area of west berth power. I want to note the deterioration of the deck panels in this section is quite unique; we’re not seeing the same rate of deterioration in other sections. So it’s critical to address the repair now and complete these projects together, given the significant overlap and timing.
Next slide. So we have two action requests today. First, authorization for funding to execute a guaranteed maximum price contract amendment to the progressive design-build contract for the T91/Pier 66 cruise shore power extension project, to complete construction of Pier 66 east shore power, bollards, and limited deck panel replacement within DU9202 that needs to be done this year. Second, authorization of funding for the validation phase, including the rehabilitation of the Pier 91 dock section.
Next slide. Going forward, this contract will proceed as two milestone scopes, for which separate GMPs will be negotiated. In this slide the lettered milestone lists correspond to the next two slides, which show the location and scale of each scope. Milestone one — the bulk of today’s request — includes construction funding for the scope I’ve already defined, and will be completed by cruise season 2027 as originally planned. Milestone two includes completion of Pier 91 west shore power and full rehabilitation of DU9202, except for the pieces we need to do this year. Today’s request includes validation and rehabilitation funding, and funding authorization for the full GMP, which we’ve fully negotiated and agreed to with Skanska — that number won’t change at this time. GMP development and the final GMP for milestone two will be requested in a future commission authorization.
Next slide. This is the extent of the Pier 66 cruise shore power extension project, which will install one new sawtooth box for shore power connection at footmark 352, just north of the berth gangway. I want to note the sawtooth box will be installed behind the terminal building and can’t be seen from the street — this project won’t add any visual impact to the surface of the pier, as all equipment will be installed below the pier and in existing electrical cabinets on the south end.
Next slide. The extent of milestone one scope is shown in orange, items B and C on this slide. Item C includes limited deck panel replacement and bull rail repair as part of DU9202 that needs to be done this year. The extent of milestone two is shown in blue, and includes the shore power pathway location in item D and the full rehabilitation of DU9202 in item E.
Next slide. Our current request for funding is $49,330,000. As you can see, the bifurcation of scope and addition of DU9202 has added significant cost to the overall progressive design-build project. However, I want to reiterate — this is not additional cost to our capital plan. The budget for DU9202 has been reallocated from another capital project, and through our collaboration with the design-builder to integrate this critical repair with the overlapping shore power project, it will both accelerate the pier rehabilitation and result in net savings to the capital plan.
Next slide. We’ve seen this risk table before, so I’ll keep it brief, but I’ll highlight the project continues to carry significant risk, primarily due to a very constrained and aggressive schedule. We’ve mitigated much of that schedule risk by using progressive design-build alternative project delivery, and Skanska has been a good partner to date in maintaining our schedule milestones. That said, schedule remains a risk, and electrical projects in particular are being impacted by supply chain constraints — especially due to competition from data center demand on electrical equipment. We’ve worked with Watts Marine and Skanska to mitigate that increasing risk through early owner-furnished equipment procurement and some precast deck panel work — and our mini-GMP for early work, which we did in April or May, to procure electrical cable and some precast deck panels in advance. We’re also continuing to work with SSA Marine [confirm: “SCCL”] to collaboratively develop a long-term plan at T91 with our service agreements there.
Next slide. Our cone of certainty — as you can see, milestone one has progressed all the way up to construction, so that’s what we’re here for today; most of our request is for the final GMP to start construction, which will begin in late October and go through the entirety of the winter, to be ready for cruise season 2027. I’ve added milestone two to this cone of certainty — you can see it’s way back, in the validation phase, pre-30%. That’ll be moving on a parallel, somewhat offset path, with its own GMP development and negotiations as we go through this process, for completion in 2028.
Next slide — just the next steps. As I said, we’ll be starting construction likely in late October, so we can finish most of the original scope by 2027. We’ve been able to maintain that schedule, which has been very good with our partners. Our next steps will be milestone two validation and GMP development, running Q4 2026 through Q3 2027. We’ll be back in a couple of months for our post-validation GMP development funding request, and milestone two commission authorization for final design and construction in Q3 2027 — a very similar timeline to this first milestone — with construction of that last scope in Q4 2027 through Q2 2028.
Next slide — that’s it. Any questions?
Felleman: All right, commissioners — are there any questions for staff at this time? Commissioner Cho, and then Commissioner Felleman.
Cho: Thanks for your presentation. I think you addressed the question I had, which was in response to the constituent earlier talking about any potential further obstruction of waterfront views to his property. It sounds like — because the box is being put, when you look at the diagram, toward the water side and underneath the pier — it won’t be obstructing any further views of the residents. Is that correct?
Purnell: Yes, that’s correct. The only thing that’ll be above ground for this next phase of Pier 66 is the sawtooth box — it’ll look very similar to the one already out there from the last installation. It’ll be tucked behind the cruise terminal building and won’t be visible from any of the properties across Alaskan Way.
Cho: So is the previous box what this gentleman was referring to?
Purnell: He’s probably referring to the electrical cabinets on the south end of the pier, which are larger. We’re not adding any infrastructure above ground like that for this project — we’ll be utilizing that existing cabinetry.
Cho: And despite the fact that this next phase won’t be obstructing any more views, are we planning to do outreach to the residents to make sure they’re informed there won’t be further obstruction? I think it’d just be good practice — the gentleman claimed he wasn’t notified this was going to happen. I don’t know if there’s truth to that, but this seems like a good opportunity to clarify if we did notify anybody.
Springman: Yeah, I’ll chime in — we’ll triple check that we’re making the community notifications. We understand notification has been made, but it may have crossed with the timing he inferred. We’ll make sure the neighbors, the hotels, and everyone in the vicinity are aware of the plans and timing, and that the work will be done over the winter.
Cho: Great, thank you.
Felleman: Commissioner Felleman.
Felleman: Thank you. There’s a lot going on here, and we appreciate that we’re trying to preserve our goals. This is the only item on the action agenda, right? So I hope other folks have questions and we can delve in. I haven’t been able to get into the level of detail I’d like, but I have some questions.
The schedule risk is pretty high — it definitely seems like we’re betting on everything going right. I do appreciate that you’re fully aware of that and taking steps to mitigate it, but — if T5 was any example of unexpected things happening — you’re using Watts Marine for the sole-source contract for this?
Purnell: We are, for both operations, 66 and T91.
Felleman: And they seem to be the ones who get it right, so that’s a good sign. One of the things that always strikes me is — this is a large chunk of change, and it takes money to make money, but I’ve always thought — when we talk about profitability of cruise, what is the net gain? We often have the CIP over here and the revenues over there, and we never really talk about the net. I assume cruise will always be net positive, but this is $116 million, and I think we’ve talked about something like $50 million as roughly what we hoped cruise generates annually — and I’m not sure that even accounts for all the inputs, fendering, new gangways — it seems like every year, water lines — it takes money to keep these little floating cities afloat. I don’t deny that, but I’ve always wanted a realistic picture. At the Seaport Alliance we say we want a 4.5% return on investment — the numbers are pulled out of the air a little, but what’s our goal? Do we have any idea, do we have such a concept?
Springman: I may have to lean on our CFO, who stepped back from the table a little, to get to that. I’ll say that in the preliminary 2027 budget, net of terminal operations — which is CTA at Pier 66 and Pacific Cruise Ship Terminal — cruise is bringing in, before the four staff who operate this, $62 million. And I know this is much more than that — that’s far and away the most money we put into this infrastructure. So if we did a five-year spend-versus-revenue, I think it’d be very reasonable. To your point, we should have that number netted out for you — we’ll do that.
Felleman: And to your point that this isn’t an annual expense but we depreciate it over time — it would be a good idea, so if we look at a future contract, what do we consider profitable? I’d like to know what the litmus test is that we’re going to use. I’d assume we’re happy with this operation — if this is what we consider good, I kind of want to know what good is. And to your point on the gangways — the last time gangways were purchased for 91 was 15 years ago.
Springman: So we have to look at a broad view on that.
Felleman: Exactly — and I have no doubt it’s positive, I just want to know how positive. And the lifespan for these assets is long, and preserving the dock isn’t just good for cruise — I acknowledge you’ve got to maintain your assets.
Metruck: Yeah, I just want to add — thanks, commissioner, you mentioned — I just reviewed with the CFO our long range, and cruise is the most profitable of all our business lines, and it’s actually paying for a lot of what else we’re doing here. It pays for both the capital costs and the operating costs. But we can come up with something to give you more specifics on how that all works out.
Felleman: Thank you. I think the budgeting process is one of the things we found — because infrastructure purchases are paid for over here and the revenues are over there, we don’t regularly look at the net. Just a couple more things. The point I was really committed to hearing was that the goal was 2027, and we made that clear to the cruise lines — and I don’t see a requirement that only shore-power-capable ships will be calling on the docks come 2027.
Springman: They’ve already defined their deployments — they have to have, they’re selling ’27, they’re selling ’28, and we’re starting to get requests for ’29. So they’re publishing two years out, and the ships committed to Seattle from ’27 on are shore power capable — they could plug in if our infrastructure were there.
Felleman: Do we have a tariff requirement for that?
Springman: We did add it to the tariff, but I’ll double check that for you.
Felleman: Because things change, and I just think the spirit of the requirement should be retained — but the fact that we’ll have all our terminals working, I think, is eventually a good thing. I am concerned about the schedule, though — it looks like we haven’t even begun tribal negotiations, and we’re going to do this through a fish opening [confirm: term].
Springman: We have begun tribal negotiations. We have concurrence on 66, and we’re confident we’ll have concurrence on 91. We’re not doing in-water work — we’re simply above it, with a skiff — so we’ve had good conversations with them so far.
Felleman: So those pilings aren’t being replaced — it’s really all above deck?
Springman: Correct.
Felleman: That’s great. All right, I think that’ll cover me.
Felleman, as chair: I do want to give Chris an opportunity to respond to your specific question about how we determine the financial viability of the cruise business. Thanks, Chris.
Whisenhunt: Sure. In general, the financial viability or profit determination wouldn’t be different from what I think we’d expect. It would be: first, does it recover its operating expenses? Does it recover its share of depreciation? And then, does the investment, on an ROI basis, give us a return comparable to what we’d have gotten had we invested the cash? That would be the litmus test — is the return better than what we’d have gotten had we just put that money in our investment portfolio.
Felleman: Thank you, I appreciate that — it’s pretty straightforward. I just want to be clear, though — I think, even being neutral, we’re generating all sorts of economic stimulus, right? We’re not in the profit-margin business, so I don’t want this to be seen as though we have to hit 4.5%. I think it’s important we set goals, but the job here is to make jobs. I just want to make sure you understand my motivation, but clear visibility is what I’m asking for. Thank you.
Felleman, as chair: Thank you. Commissioner Hasegawa.
Hasegawa: Thank you for the presentation. I’m just wondering what the implications are for the workforce. This project is coming at a time — I don’t know what that background noise is — at a time when a lot of electricians are on the bench right now, looking for work. Maybe you could frame this in the context of jobs.
Springman: Sure — this project does have a PLA that we’re implementing, with a WMBE goal of 6%. Our contractor, Skanska, has already started to execute their subcontracts and has done their best to meet our goals and work within the PLA.
Felleman: Commissioner Mohamed.
Mohamed: Thank you — I just had a quick question about whether we pursued any federal funds for this particular project.
Springman: We did not.
Mohamed: Is there a reason why not?
Springman: Let me go back on that — we may have done some grant outreach on this, but I don’t believe we got any federal grants. I believe they did explore that option.
Mohamed: So we did explore federal funds — what about state funds?
Springman: We’re still trying to work on a grant for Pier 66 with Quiet Skies [confirm: “Quashtat”] — that’s the only one we were successful in pursuing, from my understanding.
Mohamed: Do you know the dollar amount?
Springman: A million.
Mohamed: A million, okay — so not significant for this. I mean, obviously I support our shore power mandate and accelerating it, but these numbers are really big, and I am concerned about the timing and the budget constraints we’re already dealing with. I do appreciate the work, and appreciate it coming forward. Thanks for the time.
Felleman, as chair: I’d like us to put this on the table, and then we’ll do one more round of comments and debate. Hearing no further questions — is there a motion and a second to approve the item?
[Unidentified]: So moved.
[Unidentified]: Second.
Felleman: The motion’s been made and seconded. Is there any further discussion or debate? Mr. — I believe you mentioned something in the CIP that you were delaying as a result, to keep the CIP constant?
Purnell: No, it’s not delaying it. We had another CIP project for the full dock rehabilitation. We’ve pulled that scope out to do this with the shore power project, because of the overlap in timing and location — which, because of what we’re doing with the progressive design-build contract, saves us $20 million on that project.
Felleman: Okay — so even though we’re front-loading the money —
Purnell: I know the net is a benefit, but we weren’t expecting to spend this this year — they’re in design right now, both of them going.
Felleman: Yeah. Okay. And there was one calculation here — in terms of greenhouse gas emissions, what it would have been had we been at 100% versus what we expect with — what, three ships?
Purnell: Two ships, making 20 to 25 calls each — around 50 calls.
Felleman: Fifty calls out of 327 [total ship calls].
Purnell: Correct.
Felleman: I think that’s an important framing — it’s disappointing, but it’s by far not the majority. So I guess the delta — how much gas are we not saving — I just think, in terms of reflecting on the environmental policy goal, it’s worth being able to say we’re falling short, but not as short as it might look, given how much we’re spending. But thank you, I just wanted to clarify.
Calkins: Yeah — and in my briefing on this, I think the trade-off between a little short-term pain for a lot more long-term gain is well worth it — echoing what Commissioner Felleman said. My only thought is this is a perfect example of the Port’s commitment to its triple bottom line — if we were simply making an economic decision here, this project doesn’t pencil out; we’re not going to collect enough additional revenue to justify the system. Rather, it’s a recognition that there are social and environmental benefits that, while expensive, are absolutely critical to sustaining a cruise industry here in Seattle, based on the demands of our community and our commitment to being at the forefront of social and environmental considerations in how we handle our participation in the cruise industry. So with that in mind, and in spite of the cost, I’m certainly going to support this.
Felleman: Are there any further comments? I just hope we’re going to have the tariff item — I mean, they say they’re committed to doing it, but I want to see the shore power requirement in the tariff.
Springman: I’ll get that to you, absolutely.
Felleman: And I want to give credit to the project management team who came up with this innovative solution to combine these projects, to get it done quicker and at a better cost for the Port — great job, and the construction management team very instrumental.
Felleman, as chair: Commissioner Mohamed, did you have another thought?
Mohamed: No — I just wanted to say I heard Commissioner Felleman say he didn’t feel he’d had enough time to dig into this item, so I wanted to make sure we covered his questions.
Felleman: Okay, great. All right — Clerk Clark, can you please call the roll for the vote? Commissioners, please say aye or nay when your name is called. Beginning with Commissioner Cho.
Cho: Aye.
Felleman: Thank you. Commissioner Felleman — aye. Commissioner Hasegawa.
Hasegawa: Aye.
Felleman: Thank you. Commissioner Mohamed.
Mohamed: Aye.
Felleman: Thank you. Commissioner Calkins.
Calkins: Aye.
Felleman: Thank you — five ayes, zero nays for this item, and with that the motion passes.
Item 11A — Q2 2026 Financial Performance Briefing
Felleman: All right — we’re now at presentations and staff reports. Clerk Clark, can you please read the next item into the record? We’ll have Executive Director Metruck introduce it.
Clark: Thank you — and before I read the item into the record, Commissioner Hasegawa, I believe that’s your mic, and we’ll have that checked after this meeting. This is agenda item 11A, the Quarter 2, 2026 financial performance briefing.
Metruck: Commissioners, this presentation is the first in a series of budget presentations occurring over the next couple of months, leading up to adoption of the 2027 budget. Today’s presentation provides a status report on the Port’s second-quarter financial performance.
Bottom line up front: while we continue to see consistent demand for the Port’s services, we’ve noted recently a lower rate of revenue growth than we’ve been accustomed to, especially in recent years, and a rate of expense growth that continues to outpace that revenue growth — something our CFO, Chris Whisenhunt, will discuss. With this in mind, our divisions and departments are making real-time adjustments this year as we plan for 2027 budget development, especially through a sustained effort to manage expenses and generate new revenue opportunities, both in ’26 and ’27.
Perhaps the most difficult decision we made this year was to eliminate positions. In the third quarter we notified 17 employees in aviation and central services that we were eliminating their positions, and we also eliminated approximately 60 unfilled positions. The eliminated filled and unfilled positions were primarily tied to the active number of ongoing aviation capital programs. Our goals for today, and for 2027 budget development, are to increase the margin between revenue and expenses, with the ultimate aim of increasing our future capital capacity and continuing to make transformative investments that advance our mission and values for decades to come.
Staff will outline the results of the second quarter in more detail, and discuss how mid-year performance aligns with our broader financial outlook. Presenting this afternoon are Chris Whisenhunt, chief financial officer; Michael Tong, director of corporate budget — I see he’s here — Vi Donnelly, who’ll brief us on the aviation financial update; Kelly Zaputil [confirm: name], who’s here to talk about the maritime second-quarter update; and Heidi Papa, joining virtually, for any questions on the aviation presentation.
Portwide Financial Overview
Whisenhunt: So I’ll get us started. Good afternoon, commissioners. Chris Whisenhunt, chief financial officer, happy to be here with you today. Through the second quarter we continue to see a mixed bag of results across our businesses — revenue growth continues, which is encouraging, but margins remain under pressure as a result of expense growth outpacing revenue growth. If we can go to the next slide —
These are four of the several key economic indicators the team keeps a close eye on as we look at the environment and make decisions about 2026 expenses going forward. GDP growth rate is positive, and actually the most recent revisions on a national level have been upward — so growth isn’t necessarily moderating; if anything, previous growth may have been higher than we’d thought. But the growth rate of the economy is still, at both the national and certainly the local level, below the rate of inflation — and that’s challenging, because if the economy doesn’t grow at the rate of inflation, real growth is either flat or negative, and that’s something we need to keep a close eye on.
Unemployment at the national level hasn’t really, in recent memory, been of concern — this could be due to larger economic dislocation caused by the changing nature of work. But one encouraging sign has been the convergence of the local unemployment rate, which historically has run slightly higher than the national average, with the national average — we’re seeing those rates draw closer together.
Through July, consumer confidence remained lower than the prior year, likely the result of ongoing concerns about geopolitical tensions and inflation. One unfortunate fact about inflation is that it often becomes a self-fulfilling prophecy — expectations of inflation create expectations of further inflation, which drives consumer confidence down even more. And CPI in the Seattle area remains elevated relative to the historic norm, as well as relative to the national level.
If we can move to the next slide — our Port fiscal health indicators kind of tell a similar story to what they’ve told over the last several months. The two indicators at the top are financial operations indicators. On the top left, days cash on hand — this is a measure of liquidity, something ratings agencies and investors want to see, to verify we have a substantial cash cushion to absorb shocks. The most recent example of a cash cushion being needed was COVID, and many organizations, the Port of Seattle included, responded by deciding to build a more substantial cash cushion. We’ve drifted lower in days cash on hand over recent months, but that’s not a cause for concern — there’s always seasonality in cash on hand, partly a function of when bond payments are due. We still forecast to be at or above our targets by year end.
Our cash conversion cycle, top right, is the measure of time it takes to convert a receivable into cash. We’ve always performed very well on this measure, but it’s important to ensure we’re able to collect on what’s owed to us — it could be a leading indicator of economic challenge if people found it increasingly difficult to pay their bills. But we’re in good shape on the cash conversion cycle.
The bottom two measures speak to the structural imbalance Executive Director Metruck mentioned, of expenses outpacing revenue growth. Operating cash flow margin is a simple math problem — net operating income divided by total operating revenues. Our operating cash flow margin is below our target, substantially lower than it’s been over the last 10 years — though over the last several months we’ve started to see it move sideways rather than down, and that’s a good sign. Downward movement makes this chart red; sideways movement will eventually change it to yellow, a cautionary indicator rather than a negative one. As it starts to recover and move up and to the right, that’ll be a sign our margins are increasing and we’re making progress on aligning our expenses and revenues and repositioning ourselves financially.
Free, or net, cash flow margin is on the bottom right — a more complicated measure, more prone to cash flow cycles. We’re below our target there, below the historical mean, but I think the really informative margin measure here is the operating cash flow margin. We haven’t gotten materially worse than the first quarter, but we haven’t materially improved either — and that’ll be the focus of our efforts as we look into the 2027 budget, and as we look at the rest of the year to make financial decisions.
Next slide — key financial highlights. Some positive things to look at: total operating revenues were $16.6 million above the revised budget year-to-date through Q2, and $29 million, or 5.6%, above Q2 of last year. Total operating expenses were below budget by about 3.9%, but up 10.7% year-over-year. So that’s a 5.6% increase in revenue against a 10.7% increase in expenses — that’s the crux of the issue. There are some seasonal factors and timing issues in there, which we’ll address on the next slide.
Key financial highlights for the year-end forecast: total operating revenues are projected to finish above the revised budget, and are forecast to be up 2.2% year-over-year on a full-year basis. That growth rate is actually understated, because there were some one-time operating revenues last year related to the Terminal 30 settlement — notwithstanding that settlement, the growth rate for 2026 would have been higher. Total operating expenses for year end are forecast to be above the revised budget, at a 12.9% growth rate year-over-year. So again, 2.2% versus 12.9%. But if we exclude some one-time timing factors — including a $26 million pension credit and an almost $22 million legal settlement credit — total operating expenses are forecast to be up only 5.4%. So the delta is much smaller once we take out those one-time factors. And total capital spending is projected to be right in line with the 2026 budget.
Next slide — key takeaways: growth, while modest, remains positive. Unbudgeted and under-budgeted items continue to be a potential source of variance in our returns, and something we’ll keep a close eye on. Our payroll budget is an area of focus, as a result of decreased charges to capital, which is driving the overage in the overall 2026 budget forecast at year end — both year-over-year and against budget, payroll is certainly a source of focus.
Next slide — this is a portwide year-to-date operating expense summary. You can see the payroll variance in the top two lines, salaries and benefits and wages and benefits — both up year-over-year, both with an unfavorable budget variance year-to-date. Other than that, there are a lot of timing factors at work — in outside services we’re $14.2 million under budget, but that’s mostly timing, as well as in equipment expenses.
Next slide — this is the portwide financial summary, showing numerically what I just covered verbally, in terms of where the end-of-year forecast is expected to land relative to budget and to the prior year.
Next slide — this layers in significant sources of non-operating revenue and expense. We see the tax levy here, the Passenger Facility Charge, which is levied at $4.50 per leg, each way, on airport passengers who buy tickets, and the Customer Facility Charge, levied on rental car passengers. We see significant variance in these charges year-to-date, most of it due to timing, because we’d only really expect to see major variance in those items with significant shifts in passenger traffic, which we haven’t seen — we’ve seen modest growth. The other item I’ll note on revenues is interest income — our treasury team, as we’ve discussed before, invests our cash balances through a pretty rigorous process in line with our investment objectives and policy, and we’re substantially above both budget and prior year-to-date on interest income.
Next slide — this is a graphical representation of portwide capital spending, and as you can see, total portwide capital spending is in line with the budget for 2026 at year end. So, if there are no questions on the portwide overview, I’ll pass it to Vi Donnelly, and Heidi Papa, who’s on the line, to take us through the aviation division update.
Felleman: We do have a question real quick.
Cho: If we can go back to — I don’t know what to call the slide, but the one where you showed net operating year-over-year. If we just go back — I’ll tell you which slide. Can I go forward one more? Forward — one more. Okay — I think it’s slide four.
Whisenhunt: Okay.
Cho: So one thing worth noting is that we had a huge lump sum payment last year for the Terminal 30 settlement, and so our year-over-year growth in revenue is a little distorted because it accounts for — I think it was probably around $40 million — that we got from SSA and Matson. At the same time, I think there was a pretty substantial increase in operating expenses — if you take out the pension credit and the other thing you mentioned, it’s a 5.4% increase. What I didn’t see in your slide was, if you compensate for that one-time payment and compare that to the revenues — that delta’s probably not as big. Do you have that number?
Whisenhunt: I don’t have it on hand, but that’s a good number to have — we make a correction on the expense variance, we don’t necessarily make a correction on the revenue variance. You’re right, it makes the delta smaller. It’s still positive year-to-date, revenue versus expense, but it does make it smaller. I can follow up.
Cho: Okay, that’d be great, because some of those expenses are things we can’t control, right? And the settlement was a one-time thing — if you account for it on both ends, I think it’d give a more accurate picture of where we are financially, and that would be helpful for me to understand. Right now, when I saw that twenty-some percent increase, I was a little shook, and I’m realizing after looking at your slides the delta is a lot smaller.
Whisenhunt: Yeah, it is — correcting for the one-time items, the delta is smaller.
Cho: Okay, thank you — appreciate you bringing attention to that.
Felleman: So I see a lot of the forecast ends in June — if you’re looking at those numbers versus what we know today, how accurate do you think that forecast is?
Whisenhunt: The forecast quality certainly improves as you move forward in the year — we update it quarterly, and we’ll have the Q3 update shortly after the end of the month. I do think our forecast, particularly on the expense side, is fairly conservative. I think of it in a very similar context to the cone of certainty on capital projects — the closer you get to the end of the year, the smaller the expected variance in forecasting outcomes. So based on the information available at the end of Q2, and applying prudently conservative assumptions, I think the forecast represents a good approximation of where we think we’ll end up. The Q3 numbers will be a better approximation.
Felleman: I’m just wondering — if you look at the trajectory of the world since Q2, do you see this as a continued trend, or anything unforeseen? We seem to be getting a lot of local layoffs of late, the price of gas is through the roof — there are certain things I’d think aren’t foreseen.
Whisenhunt: Yeah, it’s been interesting — airline earnings calls are something I keep an eye on, since our primary counterparties are airlines. Earnings calls talk about the relative inelasticity of their business model, how they seem able to charge whatever they want and people will pay it. I think that’s a symptom of the K-shaped economy, which might be overrepresented in our region — so I think there are probably at least two distinct types of economies present, and the one the airlines describe as inelastic to their prices is probably fairly inelastic to the fees we charge as well. So we’d have reason to believe we could continue at that trajectory — that probably applies to our cruise business too. But continued geopolitical uncertainty isn’t good for anybody’s business, least of all ours. What I’ll say on the unemployment front is the headlines seem to overstate what the data shows — if we can trust the Bureau of Labor Statistics data, I had expected a much more significant shock to local employment after seeing the layoff headlines, and we haven’t seen that really carry through in the data, which has been interesting.
Felleman: Thank you. Commissioner Cho.
Cho: You mean the ramifications of those layoffs haven’t been seen in the local economy?
Whisenhunt: What I’m saying is, I expected to see the ramifications in the data in a more significant way — from a consumer spending standpoint, but also in the unemployment figures and the aggregate employment figures by industry — and it hasn’t shown through yet, or at least it hadn’t as of the last update I saw.
Calkins: Yeah, it’s probably because when they get laid off they get all their stock options, so they’ve got a nice cushion.
Felleman: Any other questions before we proceed with Vi’s portion? All right, let’s jump in — thank you.
Aviation Division Q2 Update
Vi Donnelly (Assistant Director, Aviation Finance and Budget): Good afternoon, commissioners, Executive Director Metruck. My name is Vi Donnelly, assistant director, aviation finance and budget, and I’m here to present the aviation Q2 financial reporting.
Passenger growth — the orange bar is 53.1 million passengers forecast for year-end 2026. Compared to budget, that’s negative 1.8%. However, compared 2025 actuals to the 2026 forecast, we’re looking at 1.8% growth — about 0.7% growth domestic and 4% growth international.
Next slide — this is the airport financial summary for our year-end forecast. The top few lines are our revenues — aeronautical revenue is on a cost-recovery model, so the changes are due to impacts on debt service as well as operating and maintenance expenses. Non-aeronautical revenues are up 13.8 million compared to the 2026 revised budget — strength in public parking, rental cars, flight kitchens, airport dining and retail — and the delay of construction closures for the south concourse lounge is providing an additional three months of operations compared to budget. Our operating expenses for the year end are expected to be higher than budget by $950,000.
Next slide — this is our Q2 operating expense summary. At this point we’re 13.2 million, or 4.5%, under budget. Payroll is 1.6 million under budget, driven by vacancy savings. Outside services is underspent by 8.3 million, due to professional, personal, and contracted services — mainly timing between budget and actuals and some missed accruals — offset by overspending on on-site consultants due to project timing. Other expenses are underspent by 2.5 million, in equipment, training, travel, and general expenses, offset mostly by higher maintenance materials charges. Other-division charges are underspent by 858,000, mostly due to underspent indirect non-payroll wages, offset by overall allocated cost.
Next slide — operating expense summary for year-end 2026. At that point we’re looking at $953,000 over budget. Payroll is under budget by 4.6 million, mostly due to vacancies and lower charges to capital on unfilled positions. Outside services is over budget by 2.1 million, mostly due to a large capital project that changed from capital to expense, and some other changes on on-site consultants for accelerated schedules on the SEA gateway project, offset by projects under budget in professional, janitorial, and other equipment expenses. Other expenses are over budget by 895,000, due to maintenance materials — Q2 was forecast to be over budget by 1.8 million, offset by savings in training and travel and lower charges to capital. Other division charges are over budget by 2.2 million, mostly from central services, due to anticipated higher costs.
Next slide — aeronautical revenues. We’re looking at a $4.7 million reduction, due to decreased debt service, partially offset by GASB 103 adjustments [confirm: standard reference] and slightly higher operating and maintenance increases to aeronautical expenses.
Next slide — non-aeronautical revenues are 13.8 million higher, 4% higher, at $368 million — I’ve already covered the drivers on those.
Next slide — net debt service coverage ratio is slightly below the revised budget, at a year-end forecast of 1.6, driven by higher net debt service for the year.
Felleman: Sorry, what’s that last column in the table?
Donnelly: The last column is the revised budget variance — the variance between our 2026 forecast and the 2026 revised budget.
Felleman: Oh, I see — got it, it’s the variance.
Donnelly: Yeah. Any other questions? Nope — next slide. Our airport development fund balance is projected on target at $882 million, which is 18 months of O&M in 2026.
Next slide — lastly, this is our 2026 capital spending forecast — also forecast to be in line with budget. There are some changes — spending has increased as design effort is frontloaded due to the accelerated schedule. SEA Gateway spending is lower, as projected savings increased, and CCE [confirm: acronym] spending is higher due to unanticipated change orders. That concludes the aviation presentation — any questions?
Felleman: Commissioner Felleman — if you had to push one button to increase revenue, what would you recommend?
Donnelly: Non-aero, definitely — how to increase non-aeronautical revenues, we need a lot of ideas. How can we get people to spend at the airport? So, definitely looking at increasing our non-aero NOI.
Felleman: There you go, that’s what I was going to say.
Metruck: Yeah, if I could — non-aero is really great, and Vi’s exactly right, from an operating perspective, because it’s unrestricted — we don’t have to spend more money to get it, like we do with aero. If we were able to raise the PFC cap, it would make a meaningful difference in our capital capacity, and for every airport in the country — but unfortunately we can’t do that here.
Felleman: So we’ve heard the lounges are doing really well — the K-shaped economy, right — so we built all these beautiful facilities and people aren’t eating here. We seem to be somewhat competing with ourselves. I’ve mentioned before — having a good strategy, come early, enjoy the art, take a load off, don’t stress, have a good meal — we have the assets, we just have to encourage people to relax and smell the roses. Seems to me that’s an ad campaign, relatively cheap given we’ve already spent the money building the facilities. My two cents.
Metruck: Sure — if I could follow up on that, I think my observation is we’re the victim of our own success. You rewind back five-plus years, there was always a fear about how long TSA lines would be, whether you had to get there two or three hours early. Now that we’ve been relatively successful reducing wait times, people don’t feel the need to get to the airport three or four hours early — and a lot of people did, and they’d go through security and find themselves with an extra hour behind security. That, compounded with these new fancy lounges people are taking advantage of — we have to look at what that takes away from our ADR tenants. Let’s be honest — if you have a free meal waiting at the Centurion Lounge, you’re more incentivized to go there than to buy at an ADR tenant. And these are all good things — I feel like we have a good problem on our hands. Passenger volume continuing to go up, wait times down, more and better dining options than ever before — all good things. But to Commissioner Felleman’s point, how do we take all these good things and optimize them from a non-aeronautical perspective? I think it’s a big question we all need to put our heads to. If travel behavior doesn’t change, we need to find other sources of revenue within the terminal that don’t necessitate more spending — Chrissy and I have had talks about ad revenue at the airport, digitizing all our static screens. I do think there’s still a lot of low-hanging fruit. But the reality is we can’t change PFCs, and we can’t really change traveler behavior — even I used to go to the airport three or four hours beforehand to hang out, and I’m increasingly finding myself arriving at the gate right as we board. So I think it’s skating to where the puck is going — we’ve got to figure out how to keep those non-aeronautical revenues up, even if that means creating new revenue streams in different lines of business.
Felleman: I’m going to go to Commissioner Mohamed, and then Executive Director Metruck.
Mohamed: I’m glad Executive Director Metruck has his hand up, because that’s what I was going to go to — get some of your thoughts on this. It sounds like we have a lot of challenges but opportunities as well — what’s some of the visioning we’re looking at, and what opportunities can we consider as we think about the 2027 budget?
Metruck: Thanks, commissioner — yeah, just to add to that discussion and then get to the bigger picture: I think we’re not the only ones experiencing this. If you go back to the consumer confidence measure Chris showed — you can talk to any owner of a sports team, people are still buying tickets, but the average spend per customer coming in is spending less and less, because they have less consumer confidence — they’re spending more on energy costs and other things going up, so they’re spending less. We’re experiencing that at large. So I do agree on looking at different ideas there, and I know Wendy and her team are looking at it — we’re seeing some positives there, and that’ll come up in the ’27 budget, what our strategies are for that. There’s a premium product there people are willing to pay for, and we have to look at where some of those opportunities are.
But I think, on the other side — the big thing you’ll see in the ’27 budget is the growth of expenses. You get it both ways — you want to work on increasing revenues, but you also want to control the growth of expenses. So you’ll see a lot of work coming on both sides of that when we bring the ’27 budget before you. Thank you. I see Heidi’s hand is up too.
Felleman: Yeah, Heidi.
Heidi Papa (Aviation Finance and Budget Director): Yes — sorry, good afternoon, commissioners, and Executive Director Metruck. Heidi Papa, aviation finance and budget director. I just want to add on to the different approaches for non-aero revenues — we’re looking at expanding our fifth-floor reserve parking program in our public parking garage at the airport. As you may recall, we launched that a couple years ago on the fourth floor, and it’s been very successful — the non-aero team, led by Jeff Wolfe, is launching the fifth-floor reserve parking this year. So that’s some excitement, as public parking is one of our key revenue drivers for non-aero. Just wanted to give you an example of the innovative ways the airport is looking at increasing revenue, with more to come in the 2027 budget process.
Felleman: Thank you, Heidi. Commissioner Cho.
Cho: Thanks, Heidi — I appreciate you highlighting the parking revenue. I know we discussed at our last retreat about changing that, and I want to make sure we’re really tracking, holistically, the parking revenue, because — going back to my point about being a victim of our own success — now that light rail connects to the east side, we’re going to see a lot of people on the east side taking light rail to the airport, which then cannibalizes our parking revenue, I think. So while I understand we’re adapting to circumstances, I want to make sure we’re also tracking overall trends to the airport, because I think this might be a patch for now — but when you have a bunch of people opting to take light rail, which I suspect has been the trend the last five or six years, that might be a short-term fix relative to what we could be doing longer term. So it’s a good fix for now, but I’d like to make sure we’re tracking how patterns are changing, so if we need to make further changes later, we’re ready to do that.
Felleman: Commissioner Hasegawa, did you have a — Commissioner Felleman?
Felleman: Thank you, Commissioner Cho, for bringing up one of my pet peeves — we don’t track the number of people going through light rail. I don’t get it — we’ve been wanting to encourage people to use it, but at the same time it’s a countervailing stimulus, but trends would be nice if we had the data.
Calkins: Have you requested it repeatedly?
Felleman: Can we press the turnstiles — I heard they’re putting in turnstiles at the light rail stations now. Maybe — well, we may know someone. I kept — why don’t we just have the lasers, right, the seeing eyes, and count the legs and divide by two? What’s the problem with not knowing the modality split — it’s foundational to a transportation center. What’s the hangup?
Felleman, as chair: All right, I’m going to encourage us to get back on track with our presentations, and I can see Kelly sitting and waiting.
Kelly Zaputil (Seaport Finance and Budget Director): Thanks.
Seaport/Maritime Division Q2 Update
Felleman, as chair: Next we’ll have Kelly Zaputil, our seaport finance and budget director, give us the Q2 update for those divisions.
Zaputil: Good afternoon, commissioners, Executive Director Metruck. Today I’m going to go through seaport, which includes economic development, maritime, and our joint venture with the Northwest Seaport Alliance.
The first slide is our key metrics through Q2 2026. Year-to-date, Q2 container volumes are down compared to the pre-tariff buildup in 2025. For cruise, we continue to see steady, yet stabilizing, growth. For Shilshole Bay Marina, occupancy — particularly in Q1 — was impacted by delays in assigning slips at the beginning of the year, to accommodate the dislocated Salmon Bay Marina customers. And for grain, we got a return of soybeans — not a huge one, but a little bit of a return, since we haven’t had much since 2024.
Next slide. This is a rollup of overall seaport performance through Q2, including the forecast. As Chris noted earlier, one thing we see in the forecast — we may look a little conservative, but you’ll see it in our actuals and forecast — is that we tend to have a hockey-stick impact on our expenses. We budget them like we think we’re going to get them done, but it takes a while for contracting and invoicing to work its way through, so we tend to have a lower Q1 and a higher Q4, rather than an average spend throughout the year.
For the maritime division, cruise is driving a little of that. We had really strong grain volumes in the first half of the year. And with our cruise budgets, one of the things we’re going to change in 2027 is — for 2026 we budgeted flat occupancy throughout the year, but in reality, in July and August we have 109 to 110% occupancy, and in April and May we’re under 100%. So year-to-date, our cruise revenue is going to be lower than budget, but — as you asked, Commissioner Felleman — in July and August we’ve seen significantly better cruise revenue throughout that period.
For the joint venture, timing of grant revenue at the alliance is one of the big factors year-to-date, but we expect to catch that up by year end. And on the expense side at the joint venture, they’re driven more by non-budgeted ERL and tribal payments — we have both backdated tribal payments, since we moved them from the alliance to the joint venture, and some in the forecast for the current year on those tribal payments.
So the next two slides — as ERL becomes a bigger part of our budget each year, I wanted to do a slightly deeper dive on environmental remediation liabilities.
Next slide. As both legacy contamination costs and project remediation costs are absorbing such a significant portion of our funding — along with now being attached to our income statement through changes in the Government Accounting Standards Board, or GASB, requirements — we thought it would be helpful to better inform the public how much cost and effort the Port is putting into cleaning up the region.
So let me take a little time to walk you through the chart above. There are two types of ERL you’ll see. One is business- or capital-project-related — a perfect example is we’re going to be doing some demolition out at Terminal 91, and you’ll see this in the budget. When we do project work and it triggers contamination, or we find it, we book the expense right at that moment, create a project, and track it until the project is completed — there’s usually a plus or minus at the end, depending on the total project cost.
Then we have legacy-driven ERL projects. The capital-driven ones are usually shorter duration and booked right to actual. With the legacy-driven ones, there aren’t going to be many numbers we can disclose here, because most of them involve multiple parties — usually King County is right there along with us, and Boeing, and some other groups — and we’re constantly negotiating the shares of those payments, so we don’t disclose those publicly. They’re big — many years, many decades, and extremely high dollars — and that’s what’s soaking up a lot of our tax levy dollars each year, as you see in the plan of finance presentation.
So who gets charged? Maritime has very little of the legacy-driven ones — a little at 91, but most of it is just project cleanup. And the joint venture — because most of the legacy projects are along the Duwamish and whatnot — has a much larger portion of the legacy-driven contamination.
Next slide. Here’s a list of the key ERL projects. For maritime, the Terminal 91 uplands abatement — you’ll see about $1.5 million booked this year — and I’ve listed the legacy projects there too. The joint venture has a lot of projects coming forward, as you can see to the right. One tricky piece with the joint venture ERL projects is that you, as managing members, and the Port of Seattle Commission, approve the project through the managing-member process at the alliance — but then the ERL portion comes through, and if it’s above a certain level, you have to approve the ERL project here through the Port of Seattle, and the Port of Seattle pays for the ERL portion of these projects through the joint venture, by itself.
So — a lot going on here, and you will see going forward, this is one of those hard things to budget for, and often what drives our expenses above budget when it happens. I don’t know if you have questions on that, otherwise I’ll move to the next slide.
Felleman: Commissioner Felleman has a question. So, when it comes to ERL liability for the alliance managing members — you made it sound like it was about who gets to share the amount. My question is whether, like in a deepening project, whether it’s the wharf or the waterway — how much is home port versus the alliance — isn’t that based on location rather than the amount of money?
Zaputil: It’s location. If it’s in the North Harbor and there’s cleanup, the Port of Seattle pays for it, and the alliance doesn’t — it’s in the charter that we pay for all contamination there.
Felleman: But I must have misunderstood — I thought you were suggesting that once it comes to a certain dollar amount, we somehow can’t forecast or budget for it. I thought the amount of money allocated for ERL is in the alliance —
Zaputil: It’s not in the alliance, it’s in the joint venture — it’s our portion of the alliance properties that pays for it, not the alliance itself. I was talking primarily about the Ex2 authority — if it’s a smaller amount, we’ll run it through the Ex2 process; if it’s multiple millions of dollars, we come to you through the project authorization for maritime, or we’ll have to go through a separate authorization. That’s the distinction — if it’s a joint venture one that meets that threshold, it requires commission authorization.
Felleman: Thank you, appreciate it.
Zaputil: Sure, yeah — it’s confusing to me too sometimes, a lot of complexity there. So, if no more questions, we’ll move on.
Next slide. So this slide is the maritime and joint venture key takeaways. Terminal 91 — demolition of three buildings — we’re expected to spend about $2 million in 2026, but we had $8 million budgeted, so that’s going to drive a lot of the expense savings you’ll see throughout the presentation. Also, revenue year-to-date is tracking just ahead of budget — I think our forecast is actually going to be higher than that. And the joint venture’s revenue is tracking, but they’re forecasting a lot higher expenses from tribal payments and remediation.
Next slide. This is our forecast for the maritime division. Cruise is about a million dollars higher than budget — probably likely to be slightly higher than that. The big driver is, when we negotiated with Pacific Cruise Ship Terminal, we ended up getting a much more favorable revenue share — 93.5% versus 88% — than we had from CTA at Terminal 91. So this should generate a little more than a million bucks in 2026, and it’ll also help going into the 2027 budget.
One other expense line item — there was a derelict vessel, about $700,000 net hit. It hit in Q1, but we hope to get reimbursed, usually by DNR, later in Q3 or Q4. Sometimes we get some insurance on that as well.
Next slide. For Q2, revenue was up — grain and some FIFA-related items. ERL and the derelict vessel were some of the key drivers in expenses, and our capital spending is really in line with budget.
Next slide. Here’s a quick look at the Northwest Seaport Alliance financials. As I said, not included in the financials is the $16 million shortfall in budgeted grant revenue — some will show up later this year. That’s why you see distributable income for the joint venture below budget on the next slide, despite a favorable net income variance here.
Next slide. As mentioned, distributable revenue should catch up to budget by year end as some of that grant revenue gets recognized. Key expense variances: 1.5 million combined for ERL, and 1.8 million in tribal payments.
Next slide — maritime capital. It’s tracking within 5% of budget. Through our progressive design-build, we identified some efficiencies — as you were briefed earlier, on the Terminal 91 shore power extension, we were able to get about $20 million in net capital capacity by replacing the deck panel rehab with a structural slab.
So that’s it for maritime, and then we’ve just got one slide more — economic development division. Like most of our groups, under budget year-to-date, but still forecasting to hit budget. There’s a lot of work ongoing, expected to complete in Q3 and Q4, particularly the grant program — a lot of that work will hit in Q4. That’s it — any questions?
Felleman: Other questions about seaport economic development division? Mr. Felleman, could you go to slide 28?
Felleman, continuing: So all those lines of business are in the black for revenue, right?
Zaputil: All right — I mean, you can see we’re forecasting revenue.
Felleman: All right. So I’m just — six-to, you know, budget a little under a million, forecasting about six million above. But they’re all — after, so the net income, right? Are they all positive?
Zaputil: No, not all of them are positive. Cruise, as we mentioned earlier, cruise is positive — we had a budget discussion the other day, and it’s popped up, they’re the one that’s positive. Shilshole Bay Marina — they’re negative, they’re not covering their depreciation. And then the rest of them — particularly fishing — we’re heavily subsidizing the fishing terminal, and some of the commercial, most of the other marinas.
Felleman: So I don’t see anything for fishing on any line — I mean, the marinas, the variance is $20,000 on the revenue side.
Zaputil: I have that in the appendix — we break it down by each of the business lines in the appendix.
Felleman: All right, I mean, to me — so the summaries typically have them all lumped together, maritime, and so I’m just saying, within our maritime portfolio, where would we want to be exerting more effort? We know marinas and fishing terminals aren’t cash cows — but you’re saying grain is up, right?
Zaputil: It’s up, but pretty flat — we like soybeans, right? Not enough to meaningfully offset all our costs there.
Felleman: Anyway, I just think it would be helpful to understand the numbers for what they are, why — what we can do better — rather than just saying this is how they’re performing.
Zaputil: Well, it’s our Q2 presentation — next month, when we go through the budget, I’ll be walking through each of those, probably more so than you’ll want to see. But I’ll hit each of the profit-and-loss statements, and they’ll be annualized for cruise, direct boating, ship canal.
Felleman: I appreciate that — the cone gets better and narrower, but I guess the “why” is what I’m looking for — it’s not just the net result.
Zaputil: Yeah, and that we can help explain how we got here, and what’s the plan to get out. Well, I think one of the things I don’t have listed here that will make it look like we’re doing fantastic is we’re starting to see depreciation go up, because the cost of all our capital projects has shot up — depreciation for us is usually a 20-to-30-year horizon, so when a dock we built 40 years ago cost $5 million, and now it costs $80 million, that’s a huge change in our depreciation. Every one of the business lines is really impacted by that.
Stephanie — [confirm: “Joan Stein” — likely referring to Managing Director Stephanie Jones, mentioned by name later in this transcript] — our managing director, has a goal to try to get the maritime division profitable after depreciation, and operating-wise, I think we’re working that way. Chris Whisenhunt implemented zero-based budgeting, we’ve shrunk our costs, but the cost of rebuilding all our infrastructure is so high that we need to expand our margins — not just a little, but a lot — to be able to cover that. And hopefully we get some improved settlements on some of these ERL liabilities going forward, which will help a lot too. Those are some big lifts on our plate — ERL is something we have no choice about, but cutting is only part of the solution; we need to be looking at where we push into the future.
Felleman: I just had a quick follow-up — when you said we’re heavily subsidizing fishing, by how much — what are those numbers?
Zaputil: Commissioner Felleman, you should be careful what you wish for the next presentation — remember that.
Felleman: Can I take that as a takeaway? I have my pronoun right here.
Zaputil: Yeah, we’ll have all the details and P&L when we go through the budget process, so you’ll be able to see each of those.
Mohamed: That would be helpful — and also, like the justification for that, and thinking from the division directors, would be helpful to us. I know that comes up in other areas — ground transportation and so forth — so it’d be good to know how you’re all tackling that.
Zaputil: Yeah, I’ll leave that to Stephanie a little bit — I know there’s a lot of jobs involved with the fishing piece as well, but I’ll leave that to Managing Director Jones.
Zaputil, continuing: So in general, I’m hearing a desire to have the by-business-line, NOI-style look — we’ll make sure we surface that for Q3.
Felleman: Yeah, we’ve got it already.
Zaputil: Great, great. Steve and I were at an event this morning, and I had the opportunity to hear a quick presentation from the executive director’s counterpart at the Port of Everett — they describe their harbor as, “everything north of the Navy is the fun part, and everything south of the Navy” — the recreational marinas, the ferry to Jetty Island, the fun stuff — “everything south of the Navy is what pays for the fun part.” I think there’s a bit of a similar dynamic at the Port of Seattle.
Felleman: Yes. Commissioner Hasegawa.
Hasegawa: I just wanted to ask — you said we’re going to get into more specific portfolio and line items in a subsequent briefing about — food, real estate properties, and [unclear]?
Zaputil: I can break those out too — we can break them out down to the property. Salmon Bay we usually bunch into our ship canal area, which we combine with fish terminal, but I can break those out for the budget, if you’d like Salmon Bay separately.
Hasegawa: One more note — when we’re talking about fishing, I think — and you always do this, and I’ll find it beneficial this time as well — is just how it’s performing year-over-year, because I know we subsidize a lot.
Zaputil: Yeah, yeah, I’ll definitely break those out. And the real estate portfolio too — there’s some subsidy there, a lot of subs—
Felleman: Don’t add an extra 15 minutes to the presentation on my account.
Zaputil: No — we’ve already got that in there, we’re planning to present it.
Felleman, as chair: Thank you, Executive Director Metruck — commissioners, before we go on, just a comment on this: a lot of these things will be covered in detail as we look at the proposed ’27 budget. These quarterly updates are meant to give you a picture, but we just want to figure out what’s the right level for that. Obviously we appreciate all the interest in the budget and the factors driving it, and we will examine a lot of those. One thing I do want to say — as I’m looking forward, a preview: the cost for us going forward is going to be eating a larger and larger portion of our CIP for maritime, at least for the near future into the medium future. That’s where we are with our remediation programs.
Mohamed: Since we’re putting in requests — I also think it would be helpful for the next presentation, before we pass the budget, to understand the cost of some of the facilities we oversee, including Pier 69, and also the Maritime Innovation Center. There’s a lot of dollars that went into that — what’s the return on investment on that property as well? That would be really helpful, thank you.
Central Services (Essential Services) Q2 Update
Michael Tong (Director of Corporate Budget): Okay, good afternoon, commissioners and Executive Director Metruck. I’ll go over the essential services update. Next slide, please.
So, several key takeaways for essential services. Total operating expenses were $835,000, or just 0.8% below the revised budget, and $8.8 million, or 9.5%, higher than the same period last year. Total operating expenses are projected to be $2.6 billion — or 1.3% higher than the revised budget — and $41.6 million, or 25%, higher year-over-year. That’s because of two big items — as Chris mentioned earlier — one is the DRS pension credit for the central services portion, which is $13.2 million, and then the almost $22 million legal settlement credit. Without those, we’re projecting a $6.6 million, or 3.3%, increase year-over-year.
Next slide. This gives a little more detail by account for year-to-date expenses. Overall, we’re $835,000, a little below 1%, under the revised budget, mainly due to a couple of factors — the biggest piece is outside services, offset partially by salaries and wages on the payroll side, as well as less charges to capital.
On the year-to-date year-over-year changes, if you look at the last two columns, it’s a very similar story — increases in payroll and in outside services, almost a $2.8 million increase there year-over-year. The other one I want to point out is the second-to-last line, other expenses — that’s a $2.6 million increase from last year, partly because of GASB changes related to some of the long-op expenses. One example is election expenses — we used to book those to long-op in the past, but under the new GASB requirement they’re recognized as operating expenses. The other one is insurance expenses, up compared to 2025 actuals.
Next slide. For the full year, we expect payroll expenses will be over budget, as well as the charges-to-capital line, which will impact expenses. Overall — again, without the two items I mentioned earlier — that’s a 3.3% increase from 2025, and the biggest piece is in core essential services, year-over-year, $26 million, with both of those adjustments and credits booked into core essential services. Engineering and PCS [confirm: acronym] — if you look at the year-over-year changes, expect about a $4 million increase, mainly because of more support for project expenses for the operating divisions.
So with that, we’ll be happy to answer any questions you may have — I also want to point out there’s a lot of detail in the appendix and slides at the back.
Felleman: Questions on central services?
Cho: Forgive me if you already covered this — did you just say that payroll would be over budget?
Tong: Yes, but we also heard we’re under budget, because of the vacancies.
Cho: The aviation division — they were under budget.
Tong: Partly for two factors — in the payroll account we have three different accounts: one is salary and benefits, the second is wages and benefits, which is for the represented, or organized labor employees [confirm: phrasing], and the third account is charges to capital — those direct charges. I believe aviation was talking about all three accounts combined. For central services, the expense portion was over budget, and partly for exactly the same reason — we had less charges to capital.
Cho: Okay, thank you, sir.
Tong: Sure.
Felleman: Any other questions? Okay — well, thank you so much for the presentation, and we’re going to spend a lot of time with you all over the next month and a half.
Closing Remarks
Felleman: All right — with that, our business meeting agenda for the day is concluded. Are there any closing remarks or comments at this time, or motions relating to committee referrals from commissioners? Commissioner Felleman.
Felleman: Thank you. A couple of those anniversaries I thought were worthy of noting again — the Port of Anacortes, its 100th anniversary — so we’re 115, but Anacortes, this little port up the block, has been around a while too. I thought that was an interesting reality — I thought we were the old guys in town. I’d also like to mourn the loss of — sorry, I was going to go somewhere else, but I understand SpotSaver [confirm: program name] is no longer going to be around, because we’re doing such a good job moving people through the gates that we don’t need it anymore. I don’t need to make light of that, but — the Shilshole food trucks, Ann Tran did a great job getting the rest of the team together to get that out there. I’m looking forward to it — and you’re not supposed to still be laughing — the idea that we’re trying to make up for never getting Duke’s out onto Shilshole. Hopefully that’s profitable for both the visitors and the vendors.
And I guess — 9/11 is always an important thing to me, as a New Yorker, and I appreciate you recognizing it. The one date that wasn’t recognized — we have Rosh Hashanah, the 5,787th year — pretty old religion there — and this is also the Days of Awe, concluding in Yom Kippur. I’ve got to say, for the Jews living in Israel, I think there’s a lot of atoning that needs to be done. I cannot believe what’s still going on in the Middle East, and I think I can say it as a Jew, but I’m dismayed that we’re still trying to — that there’s still an effort to exterminate people who’ve been living there a long time as well. It concludes with Sukkot, the celebration of the harvest — and one thing I do like about Rosh Hashanah is that, unlike December 31st to January 1st, where you notice no difference in the climate, right now we have the change of seasons, and you feel it. It makes more sense to have your new year happen when there’s a change in your surroundings. So anyway, thank you for that.
Felleman, as chair: Any other comments from commissioners? Commissioner Mohamed.
Mohamed: Thank you, and thanks for running this meeting today — and thanks to Vice Commission President Felleman for running the first half of the meeting. I also wanted to add to the Labor Day remarks — I want to pause and thank the workers who keep our region moving, from the longshoremen who work our docks to those working throughout our airport, baggage handlers, the crews — we’ve heard significantly from those who work inside our airport, and I’m sure, as commissioners, you’re all receiving emails from airport workers continuing to advocate for themselves on health care. So during Labor Day I did think about them, and about ways this commission could take action to support them. We appreciate the work folks on our facilities are doing every single day.
I also wanted to add that I received some outreach from stakeholders who care about the work we’re doing in committee as commissioners, and I think there’s a way we could provide greater transparency for the discussions happening in committee — whether that’s publishing the slides, or some of the notes in more detail — because what I feel like I end up doing, colleagues, is providing an update when someone calls me, and I wish I could point them back to where that information is public. I stepped in for the audit committee — I think the audit committee is an excellent example, a lot of that information is online, easy to follow. So I think for our committee work, we ought to consider how we provide more clarity and transparency for what’s happening in those meetings, as those elected by the voters of King County. So I wanted to elevate those two items — thank you for the time.
Felleman: And Clerk — maybe you and I could discuss how, either committee minutes or something we can do that takes advantage of existing resources, without a bunch of new work, to get that information out.
Clark: Absolutely, we can certainly discuss options. I just want to note the audit committee is a good compare-and-contrast — that’s actually an open public meeting forum, as opposed to our internal committees, which don’t have a quorum of commissioners present, so they’re mostly internal. But there are some things we can discuss and look at, to bring some visibility to the process. I’ll note our agendas for committee meetings are all online on the public site, and we do have public committee pages for all our committees, available to the public.
Mohamed: I think the public appreciates that, from what I’ve heard — having the agendas and knowing what’s going on. I think that also creates the follow-up, because they see what’s on the agenda, what’s been discussed, and then look for the slides on that, and want commissioners to provide additional briefing. So it would be helpful if there’s an easy way, without creating additional work for you, Clerk, to create greater transparency. And I believe other jurisdictions — local cities — their committees are public and recorded. I don’t know if we want to look at other examples out there for best practices, but we ought to consider that — I’m not requesting the change happen immediately, just elevating something that’s been brought to my attention.
Felleman: Agreed, and we will definitely look into some further transparency. Thank you. Commissioner Felleman, did you have one more thing?
Felleman: Yeah, one last thing — the folks from ILWU were asking for the ACL contract, and they’d asked me whether I’d seen it as well. I don’t know — I know this isn’t a Port jurisdiction document, but there seems to be something — they’ve made a public disclosure request. I just hope that’s done in a timely fashion — I think the commission should have a chance to see it. So that’s a request to have that go out and make sure we just put that to bed. Thank you.
Felleman, as chair: Executive Director Metruck, any comments?
Metruck: Thanks for recognizing Ann Tran and the social — we kind of moved quickly to see if we could meet a need there. I also want to say thanks to staff for the work done putting the two projects together and saving $20 million — an incredible thing we’re going to need going forward, I just want to note that as well. And best of luck to Stephanie Jones for a quick recovery — I was really sorry to hear she had an accident. She got hit by an Amazon truck.
Felleman: All right, with that —
[Unidentified]: Was that a joke, or are you serious?
Metruck: No, serious — I’m just going to — let me just say there’s a lot of questions there. She was involved in an accident, I’m just trying to protect her personal health information, but she’s fine, and she has some follow-up things she has to do from her bike accident. She’s watching — she’s online, watching us.
[Unidentified]: Oh — sorry, wish you well.
Felleman: Okay — so my one comment is to share one of my favorite moments of joy, and that was getting to watch Mr. Sam Cho get some new hardware. Hold up that left hand of yours, Commissioner Cho.
Calkins: Hey — it was truly — I am so glad, and talk about marrying up, she is such an awesome person, and you are so lucky. Yeah, truly, I’m so excited for you.
Cho: You want — now I got a comment. Yes, of course. Thank you, Commissioner Calkins, for pointing out my nuptials. I just — I guess, first, I want to thank you all for attending. I had the privilege of having all my colleagues here at the commission attend my wedding, and sincerely appreciated it. It was a beautiful day, hopefully for you all — it was a fun event. It was an honor to have you all partake in that ceremony, and — yeah, wish us luck. And I did marry up, so I’ll put that on the record. Thank you.
Recess to Executive Session
Felleman: Hearing no further comments and having no further business — if there’s no objection, we’ll now recess to executive session for approximately 75 minutes, to discuss three items regarding litigation, potential litigation, and legal risk per RCW 42.30.110(1)(i), and one item regarding RCW 42.30.110(1)(f). There will be no action taken, and the meeting will adjourn immediately at the close of the session. Thank you again for joining us today.
[Meeting recesses to executive session.]
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