PORT OF TACOMA Capital Lumber Lease Extension Action Requested of Commission Authorize the Chief Executive Officer or his Designee to enter into a Lease Amendment with Capital Lumber for a five-year extension to occupy 202 East F Street, Tacoma, WA. Submitted by Port Real Estate – Sept. 23, 2010 Mtg.

PORT OF TACOMA Capital Lumber Lease Extension Previous Commission Action Commission considered action on Sept. 2nd Potential community interest in a mural on the warehouse Deferred action and directed staff to determine if Capital Lumber would relinquish its signage right Capital Lumber signed a release letter Sept. 16th

PORT OF TACOMA Capital Lumber Location Map

PORT OF TACOMA 202 East F Street – Site Map 202 East F Street Site Map

PORT OF TACOMA Capital Lumber - East View

PORT OF TACOMA Capital Lumber – North View

PORT OF TACOMA 202 East F Street Warehouse CC

PORT OF TACOMA Capital Lumber Lease Extension Lease Terms Term: 60 Months (1/1/11 to 12/31/15) Lease Rate: $28,000 per month ($336,000 /yr. ) plus leasehold tax Renewal: Upon mutual consent of Landlord and Tenant Tenant continues responsibility for ongoing maintenance and repairs Landlord will make structural repairs and reimburse tenant for painting

PORT OF TACOMA Capital Lumber Lease Extension Financial Impact Projected net profit of $1,103,840 over the five- year term Lease rate increased to reimburse the Port 50% of building repair costs Repair work will be repaid within 18 months Average annual return on cost during the 5-year extension before depreciation is 6.5%

PORT OF TACOMA Capital Lumber Lease Extension FINANCIAL SUMMARY Projected Gross Lease Revenue $1,680,000 Estimated Cost of Building Repairs 550,000 Fixed Price Cost for Painting 26,160 Ongoing Maintenance and Repair Cost 0 5-Year Net Lease Income $1,103,840

PORT OF TACOMA Capital Lumber Lease Extension Action Requested of Commission Authorize the Chief Executive Officer or his Designee to enter into a Lease Amendment with Capital Lumber Company for five-year extension to occupy of 202 East F Street, Tacoma, WA.

PORT OF TACOMA Capital Lumber Lease Extension

PORT OF TACOMA Capital Lumber Lease Extension Overview Location : 202 East F Street - Foss Peninsula Premises: /- Acre site 100,800+/- square foot warehouse 5000+/- square foot office building Purchased for $3.4 M from Labrador Ventures in 2005 Assumed Capital Lumber lease that extends through December 31, 2010

PORT OF TACOMA Capital Lumber Lease Extension Overview (cont.) Capital Lumber has an excellent payment history Proposed Amendment will extend lease term until December 31, 2015 Port will be obligated to make structural repairs to the warehouse at an estimated cost of $550k

PORT OF TACOMA 202 East F Street Background Warehouse constructed in 1942 as a plywood manufacturing plant Building was expanded from 1948 through 1961 through a series of additions North end was demolished for Commencement Bay restoration in 1997 North wall was rebuilt south of shoreline Engineering recommends replacement and reinforcement of roof trusses, lateral members and the north wall.

PORT OF TACOMA

Capital Lumber Lease Extension Structural Conditions

PORT OF TACOMA Capital Lumber Lease Extension

PORT OF TACOMA Cost and Source of Funds Engineering estimates structural repair cost at $550,000. Painting bid is $26,160. Q3 Capital Budget Update to the Program Budget will be updated to add $580,000 for the building repairs and painting reimbursement.

PORT OF TACOMA Capital Lumber Lease Extension Next Steps Upon Commission approval, Port signs Lease Amendment - becomes effective January 1, Engineering starts design work for construction and bid documents. Will request Commission authorization to Call for Bids and Award Bids in Q4 of 2010.

PORT OF TACOMA Capital Lumber Lease Extension Projected Schedule for Building Repairs Develop Construction and Bid Documents Q Commission Call For BidsQ Award of ContractQ Construction StartsQ Construction CompletedQ2 2011