(January 2015 photo of Terminal 5 by Long Bach Nguyen)

By Tracy Record
West Seattle Blog editor

Just one week after a new promise that a tenant for Terminal 5 would be announced “soon” – we know who’s moving in.

And that news opens the door for the modernization project to begin; the city has just granted the permits.

A briefing is set to start at 11:30 am at the Northwest Seaport Alliance‘s managing-members’ (Seattle and Tacoma port commissioners) meeting at Sea-Tac Airport – you can watch the stream here.

First, the toplines. The last major tenant at Terminal 5, Westwood, moved out in 2014. The port and the NWSA have been planning the modernization project and seeking a tenant. From the announcement that’s being made today:

… The investments in Terminal 5 will be coordinated with the proposed new tenant, Stevedoring Services of America Terminals (SSAT) and Terminal International Limited (TIL Group). The proposal calls for a new 32-year lease with these two terminal operators, which together are in partnership with several of the world’s largest ocean carriers.

To support the Phase I construction schedule for Terminal 5 modernization, estimated to begin this Spring and be completed by 2021, the Port Commissioners will be considering a realignment of marine cargo in the Seattle Harbor. Specifically:

Matson’s Hawaii service moves from T-30 to the South berth of T-5 in Spring 2019.

International marine cargo would be re-assigned to the Terminals 18 & 5, beginning with the current customer at T-46, TTI, moving to T-18.

This presents the opportunity to use Terminal 46 for other project and break-bulk cargo, and relocating Seattle-based Foss Maritime, to this terminal. The Port of Seattle Commission is also studying using approximately 29 acres of the 86-acre Terminal 46 could be accommodate a cruise berth to meet the demand for Alaskan cruise industry, which is a growing business in Seattle. …

Foss has been an interim tenant at T-5.

Port commissioners are expected to take final action on the newly unveiled plan on February 26th.

1ST ADD: We talked this morning with Seattle Port Commissioner Fred Felleman, in advance of the briefing/meeting. First, what’s been a big issue for many West Seattleites looking ahead to the modernization project: No, the deal does not require ships to use shore power while berthed at T-5. But it will be shore-power capable, and he contends that will be attractive to shippers for financial as well as environmental reasons, since electricity here is relatively cheap.

He also notes that the new plan basically consolidates many freight operations at the two on-dock-rail-equipped terminals, 5 and 18 (which is on Harbor Island), which makes a dent in truck traffic. The port’s requirement for newer, cleaner trucks is already in place. And Felleman noted another port program that is making it possible for trucks to get in and out more efficiently, an economic benefit to drivers as well as an efficiency enhancement regarding traffic. And the T-5 project will come with a railroad “quiet zone,” as previously reported.

On another environmental point – Felleman notes that, with a background as a whale biologist, he shares the newly intensified concern about shipping noise and its effect on marine life including the Southern Resident Killer Whales. He is hopeful that fewer – though larger – ships will have less of a noise impact, though he acknowledges that research hasn’t verified that yet.

While the new T-5 tenants have partnerships with shipping alliances that already call in local ports, Felleman says they expect there will be a net increase in jobs.

2ND ADD, BRIEFING UPDATES, STARTING AT 12:24 PM: We are now at the NWSA meeting briefing on this, which is happening in the conference center at Sea-Tac. (Looks like the feed is up and running here.) The first slide deck they’re going through is here, and it begins with toplines from the report unveiled last week at T-18, regarding regional cargo-shipping economic impact.

Preceding this, it was reiterated that final action on this is three weeks away and the commissioners want to hear from the public. NW Seaport Alliance CEO John Wolfe called this “an exciting day” as they unveil the T-5 details, and noted that along with the port’s $340 million capital investment, there are two phases of private-sector investment totaling $250 million, “overall investment of half a billion dollars.”

Speaking of money:

From the first slide deck:

Key Elements of Draft Term Sheet
MATSON HAWAII BUSINESS AT T5

1. Parties intend for Matson Hawaii business to move from T30 to T5

•Lessee: SSA Terminals (SSAT)

•Premises: 60 acres

•Basic Rent: $3 million plus leasehold tax (LET) for 21 months

•Term: April 1, 2019 -December 31, 2020

And:

Key Elements of Draft Term Sheet
T5 PHASE 1

2.Parties intend to enter into a long-term lease at T5
•Lessee: SSAT and other participants

•Premises: 65 acres

•Basic Rent: $150k/acre/year plus leasehold tax (LET) beginning January 1, 2021 or on completion of T5 Phase I

•Term: April 1, 2019 -32 years, with two five-year extension options at mutual agreement

As the first part of the briefing wrapped up, Tacoma commissioner John McCarthy asked, how is this going to increase the ports’ market share? Reply: This is necessary even just “to maintain the volumes we have … as the fourth largest gateway in North America in international container trade.” And, it was reiterated, if you’re wondering why they are not bringing in “a new customer” – the reply was that everybody “is already here,” and they hope to ultimately get more of those existing clients’ business.

One summary that’s just been voiced: This isn’t “build it and they will come” – it’s “build it so they will stay.” Competitors to the north and south are spending to improve, it was noted, including a $200 million capacity-doubling project in Prince Rupert, B.C., and $300 million in Delta in Vancouver, B.C., an even-closer rival. “Staying relevant and staying competitive” brings a sense of urgency to this, commissioners were told.

Next phase of the briefing features this slide deck about the modernization work itself. Highlights:

Terminal 5 Current Status

Berth Modernization construction ready to advertise

•Pre-solicitation complete
•Environmental reviews and permit approvals complete
•Construction schedule phased over next 4 years

Uplands Improvement Project

•Design & permitting 2019
•Construction 2020-2023

Estimated Program costs $340 million including

•Management reserve $20 million
•Stormwater reserve $30 million

And then:

Terminal 5 Permit Conditions

Air Quality

•Implement Air Quality Management Plan
•Monitor PM 2.5 to confirm operations meet modeled assumptions < 6 tons/year Noise

•Implement Operations Noise Management Plan
•All mobile cargo handling equipment uses broadband safety alarms
•Railroad Quiet zone

Traffic

•Implement Gate Queue Management Plan
•Avoid backups past intersection of SW Spokane St and access bridge
•Roadway and signalization improvements

Stormwater

•Treatment system design is informed by future use
•Tenant holds ISGP (Industrial Stormwater General Permit)
•Best management practices and benchmark sampling

The safety alarms, we should note, also came up in our earlier conversation with Commissioner Felleman. The equipment won’t “beep.”

The bottom line for all this, “a terminal that is capable of handling two ultra large class vessels, by early-2023. The improved wharf will support up to 12 cranes and provide ship-to-shore power for vessels berthed at the facility.” The commissioners were told that they hope ultimately SSA also would pick up Phase 2, but they have a backup plan if a second tenant had to be found for the rest of T-5. More details are in this briefing paper.

Another note – they are proposing waiving a fee that would cost the port millions in revenue but would be an enhancement in encouraging the on-dock rail. That has drawn some commissioner questions.

Meantime, back to T-46 – TTI’s lease (MSC ships) there would end in April of this year as part of this overall deal (otherwise, it goes to 2025), with those ships moving to T-18. What happens to 46 then? As quoted in the announcement toward the start of this story, as mentioned above, one shorter-term possibility is moving Foss there. Its chair spoke in the public-comment period just before this briefing, saying that it’s been a “fabulous relationship.” (You might recall the high-profile start to that relationship four years ago, when Foss brought in equipment and vessels related to Shell’s plan to drill in the Arctic. We’ve chronicled some of the lower-profile vessels seen there since.) NWSA staff said that the possibility of moving Foss from T-5 has just been in the “initial conversation” phase, pending what the commissioners do with the T-5 plan on February 26th.

1:50 PM: That phase of the briefing’s over and some commissioners have expressed concerns and voiced questions. Now they’re listening to more public commenters, starting with a rep of SSA. (Added: SSA containers president Edward DeNike.) “We’ve done our due diligence on this – we’re not going to let this project fail,” he began, while adding that they “have (their) reasons” for not wanting to commit to T-5 Phase 2 from the start. “This isn’t the first project like this that we’ve done, and we’ve been successful on every one. … We understand the complexity of this industry up and down the coast. … We plan on convincing the major carriers to put more cargo in this area.”

He was asked about what opportunities he sees. Most of the containers that come through here go “west of the East Coast,” he noted, while also saying that California is maxing out on its capacity, so that’s an opportunity. Our area is likely to “be the least expensive” and that’s attractive given that shippers are fighting to survive – but he said “labor” has to help with that. “If we can improve on the docks and get labor to buy into that,” there’s a lot of potential, he said. If it all works out, “we’re going to take that whole terminal and … everybody’s going to be happy.” In response to a question from Felleman, DeNike said they would like to go to “night gates,” but that’s a “very large extra cost” and there are some complicating factors.

2:08 PM: Now the construction toplines/timelines briefing (we prematurely featured the excerpt above). They expect actual on-site work to start in July or August. The “uplands” portion of the project is still being designed. Some discussion has centered on discussion of the stormwater component; there’s still litigation involved on that issue.

Shore power came up again, and it was noted that they will be monitoring its use as part of this agreement. (“Living up to the cap” would require at least 30 percent use, and they believe they’ll surpass that.)

A commissioner brought up the issue that was touched on during the discussion with SSA’s DeNike, future potential addition of a second 8-hour shift. He wanted to be sure that the permits would allow that without requiring renegotiation – in terms of noise, for example. Paul Meyer from the port’s environmental staff said they would, and mentioned what was studied in the environmental-review process.

HOW TO COMMENT: Contact info for the NWSA and its managing members – again, those are Seattle and Tacoma port commissioners – is here. The February 26th meeting will include a public hearing.