Date of Meeting: 04/04/17 Item No.: 5A_Supp UPDATES TO THE NORTHWEST SEAPORT ALLIANCE CHARTER

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1 Date of Meeting: 04/04/17 Item No.: 5A_Supp UPDATES TO THE NORTHWEST SEAPORT ALLIANCE CHARTER 1

2 Updates to The Northwest Seaport Alliance Charter BRIEFING REQUESTED: This is a briefing of the proposed amendments to the Northwest Seaport Alliance (NWSA) Charter. Managing Members will be asked to approve amending the NWSA Charter as proposed and described below by motion at the May meeting. 2

3 Updates to The Northwest Seaport Alliance Charter BACKGROUND: On August 4, 2015, the Managing Members adopted various founding documents to create The Northwest Seaport Alliance. On January 19, 2016, the Managing Members approved the first revision of the Charter and other founding documents. Bond Counsel recommended changes Amendments to Schedule 2, the description of Port of Tacoma Licensed Properties to provide more clarity Revised 3.2.(g)iii and added a new 3.2.(g)iv to state that where a PDA Project development triggers a requirement for mitigation, then all costs associated with that mitigation shall be the responsibility of the PD Based on one year of operations, Managing Members are requested to make the following changes to the Charter. 3

4 Updates to The Northwest Seaport Alliance Charter Environmental and Finance Staff recommended amendments to: Section 3.2, Allocation of Environmental Costs Section 3.7, Working Capital Section 3.9, No Additional Contributions Without Managing Member Vote Section 3.12, Capital Construction Section 4.2, Bond Income Calculations Schedule 2, Amendments to the description of Port of Tacoma Licensed Properties to provide more clarity concerning the South Intermodal Yard. The valuation of Port of Tacoma s contribution d. 4

5 Section 3.2 Allocation of Environmental Costs Section 3.2(b) Remediation of Pre-Effective Date Contamination Clarifies potential conflict in the Charter regarding contamination found on newly acquired property to support PDA development. This section had the word development, which was confusing and potentially conflicting with development related roles in r3(f). Section 3.2(c) Maintenance Dredging Clarifies costs of clean up dredging for legacy contamination is the Homeport s responsibility. Current charter language was silent on regulatory dredging responsibilities. Section 3.2(e) Post PDA Redevelopment Clarifies incremental disposal costs not associated with an agency order are the PDA s responsibly. Current charter language was silent on incremental disposal costs not associated with a regulatory order. 5

6 Section 3.2 Allocation of Environmental Costs Section 3.2(g)(i) Post Formation Habitat Mitigation Clarifies mitigation banking is a homeport option for providing credits. Current charter language only contemplated advanced mitigation, which is different from mitigation banking. Section 3.2(g)(iii) Future Mitigation Sites Clarifies that Homeport is to develop an all in cost for sale of mitigation credits and any long term operational and maintenance costs would need to be included in per acre credit price. In addition, clarifies that the homeport will retain O&M responsibilities. Current charter language was in conflict as it required the homeport to develop an all in cost but then indicated once credit was purchased PDA was responsible for all operations and maintenance responsibilities. 6

7 Section 3 Membership Interest, Budgeting, Working Capital, Cash Use and Reserves, And Capital Construction Section 3.7 Working Capital Clarifies actual use of working capital reserve and actual flow of funds. Working capital has a reserve component to be used only when needed, and a liquidity component for working capital Working capital may be used to pay for capital construction temporarily until capital (cash) is provided by the two home ports. This allows timely payment of invoices. Section 3.9 No Additional Contributions Without Managing Member Vote and Section 3.12 Capital Construction Allows funding of delegated projects without a vote of the managing members. Requiring a vote to fund projects delegated to the CEO essentially eliminates the delegation. Home ports can contribute Capital Construction cash to the PDA when projects are approved by the CEO. No mechanism exists today without a vote of the Managing Members. 7

8 Section 4 Cash Distributions, Reserves, and Member Bond Obligations Section 4.2(b) Bond Income Calculation Clarifies that the bond income calculation applies to the bonds outstanding on August 4, 2015, when the PDA was formed and clarifies that the bond income is based on cash income by excluding depreciation. Section 4.2(c) Rate Coverage Management Created a new section 4.2(c) by separating this from section 4.2(b). This clarifies that this is a separate stand-alone requirement different from the Bond Income Calculation. Subsequent sub-paragraphs are renumbered accordingly with no content changes. No new requirements. 8

9 Schedule 2 Licensed Properties and Maps South Harbor SIM Yard Clarifies that the business located at the SIM is included in the Alliance, but that the property is not. The SIM real estate is owned by the City of Tacoma, and all improvements revert back to the City if the lease is ever cancelled. No change to valuation or NWSA income. 9

10 Updates to The NWSA Charter FINANCIAL IMPLICATIONS There are no financial impacts associated with the proposed changes. ECONOMIC There are no economic impacts associated with the proposed changes. ENVIRONMENTAL There are no environmental impacts associated with the proposed changes. NEXT STEPS Managing Members will be asked to approve the proposed amendments by motion in May The amended Charter will be filed with the Federal Maritime Commission, as an update to the Alliance founding documents. Alliance staff and legal counsel will continue to monitor and advise if/when future revisions may be required. 10