Seattle Monorail Services 370 Thomas Street, Second Floor Seattle, WA 98109

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1 October 1, 2015 Seattle Monorail Services 370 Thomas Street, Second Floor Seattle, WA Ms. Lizzy Melton Seattle Center Executive Office 305 Harrison Street, Suite 215 Seattle, WA Submitted via to Re: SMS response to SC RFP 1 (Next 50 Pavilion and Annex) and SC RFP 2 (370 Thomas Street building) Dear Ms. Melton: Seattle Monorail Services LLC (SMS) is providing this document in response to the City of Seattle s request for proposals SC RFP 1 and SC RFP 2. In summary, SMS is proposing: 1) a Seattle Center Monorail Station- area Plan (SCMSAP) be jointly created (by SMS and Seattle Center) as part of the monorail Capital and Major Maintenance Program Plan (CMMP); 2) that the effort be funded with SMS Irrevocable Renewal Account and appropriate Federal Transit Administration grant funds; and, 3) that this effort include Seattle Center staff and be overseen by them through the already established CMMP team. SMS is not proposing any particular use or occupancy at this time, but instead is proposing that Seattle Center continue its direct management and control of both the Thomas Street building and the Next 50 Pavilion and Annex. Potential desired future uses for these properties and the remainder of the Seattle Center (SC) property immediately surrounding the SC monorail station would be determined through the planning effort. Once the SCMSAP is complete, SC would then proceed however it solely determines. Acceptance of this SMS proposal by SC would not bind SC in anyway nor would it confer upon SMS any rights beyond those it already has under the monorail concession agreement. SMS is proposing this SCMSAP under these terms because both SMS and SC have an interest in maximizing the monorail transit access to SC and because the opportunity to consider the entire area around the monorail station is enhanced with the current short- term occupancies of these spaces. This is a rare opportunity and SMS believes it worthwhile to undertake the planning effort so as to achieve the best long- term outcomes for monorail riders, monorail financial performance, Seattle Center visitors, and Seattle Center revenues. 1

2 SMS hereby requests the opportunity to meet with the Seattle Center review team to further describe and discuss our proposal. Sincerely, Tom Albro (digitally signed) Tom Albro Managing Director Specific responses to submittal items requested in the RFP s A. General Overview of SMS Seattle Monorail Services (SMS) was formed on June 4th, 1994 specifically to operate the Seattle Center Monorail and has continuously done so under a concession agreement with the City of Seattle since then. SMS was originally formed as a joint venture of Railsafe, Inc. and WMS, Inc., which were both locally owned and controlled. These two partners brought specific strengths to the venture. Railsafe contributed its engineering, technical, and maintenance expertise, and WMS, with its relationship to the Space Needle (many common owners), contributed its capabilities operating a public venue. In 2007, Railsafe through an amicable arrangement with WMS and the consent of the City of Seattle, purchased WMS s interests in the joint venture. As a result of this transaction Seattle Monorail Services became a Limited Liability Company (LLC) with Railsafe as its sole member. In 2011, Railsafe, Inc. changed its name to Fruitful Ventures, Inc., retaining the Railsafe name as a DBA. Railsafe (Fruitful Ventures, Inc) is fully owned by Tom and Tina Albro, a married couple living in Seattle. They founded Railsafe in 1994 (incorporated in Washington State on April 28, 1994) and have been sole owners since SMS has a long and successful history working with Seattle Center. Past and current contracts include: Concession Agreement for Operation, Maintenance, and Marketing of Seattle Center Monorail executed in 1994; amended in 1996 (twice), 1998, 2002, and 2005; new Concession Agreement commenced 2015 total revenue over $50 million. Deferred Major Maintenance Program (DMMP) Agreement executed in 2007; clarified via Letter of Agreement in 2009; amended in 2010, 2012, and 2013 total over $8 million. Capital and Major Maintenance Program project agreements 3 small contracts signed

3 Transit services contract for the Bill and Melinda Gates Foundation employees commencing in 2011 and totaling almost $250,000 to date. Numerous agreements wherein SMS served as contractee for services related to the operation, maintenance, and improvement of Seattle Center Monorail as authorized under the agreements above (1994 to present) - total difficult to estimate, but easily over $15 million Organizational structure: Contact information: The officers and directors of Railsafe (Fruitful Ventures, Inc.) are Tom and Tina Albro. The contact person for Seattle Monorail Services LLC and the officer authorized to execute documents is: Historical performance: Tom Albro, Managing Director Seattle Monorail Services LLC th Avenue South Seattle, WA tom.albro@nakesa.com In over 20 years of existence, SMS and its controlling entity have maintained an exemplary record of business performance. 3

4 Seattle Monorail Services has never had a contract terminated for cause or default. No liquidated damages have ever been assessed to SMS. SMS has never been in bankruptcy, reorganization, or receivership. It has never been disqualified or debarred by any federal, state, or local agency. No regulatory agency (WSHA, OSHA, Ecology, L&I) has filed a complaint against SMS. SMS has never been fined for non- compliance for our work or the work of our subcontractors. We have not received an unsatisfactory performance rating from a client or any agency overseeing a client. B. Detailed Plan of Proposed Use SMS is not proposing any specific use of any of the spaces included in RFP 1 and 2, but instead is proposing: 1) a Seattle Center Monorail Station- area Plan (SCMSAP) be jointly created (by SMS and Seattle Center) as part of the monorail Capital and Major Maintenance Program Plan (CMMP); 2) that the effort be funded with SMS Irrevocable Renewal Account and appropriate Federal Transit Administration grant funds; and, 3) that this effort include Seattle Center staff and be overseen by them through the already established CMMP team. In addition the CMMP team, SMS believes it would be productive to engage other stakeholders in the planning discussions. These would include the Space Needle, EMP, the Children s Museum, and other entities that the CMMP team identified. SMS is not proposing any particular use or occupancy at this time, but instead is proposing that Seattle Center continue its direct management and control of both the Thomas Street building and the Next 50 Pavilion and Annex. Potential desired future uses for these properties and the remainder of the Seattle Center (SC) property immediately surrounding the SC monorail station would be determined through the planning effort. Once the SCMSAP is complete, SC would then proceed however it solely determines. Acceptance of this SMS proposal by SC would not bind SC in anyway nor would it confer upon SMS any rights beyond those it already has under the monorail concession agreement. SMS is proposing this SCMSAP under these terms because both SMS and SC have an interest in maximizing the monorail transit access to SC and because the opportunity to consider the entire area around the monorail station is enhanced with the current short- term occupancies of these spaces. This is a rare opportunity and SMS believes it worthwhile to undertake the planning effort so as to achieve the best long- term outcomes for monorail riders, monorail financial performance, Seattle Center visitors, and Seattle Center revenues. C. Management and Operation of the Facilities Since the SMS proposal leaves total control and management of the properties with Seattle Center, there would be no direct operation and management by SMS under the proposal. 4

5 D. Proposed Term and Financial Return to Seattle Center Under the SMS proposal there is no specified term improvements, tenants, and terms would be determined by Seattle Center in its sole discretion and through whatever process it determined. That said, as the direct financial beneficiary of monorail operating profits there is great financial benefit to Seattle Center in improving access to the monorail station and enhancing the synergies around it. With better transit access through an improved monorail station, all tenants at Seattle Center will benefit which in turn produces additional revenue to Seattle Center. As an example, it is not unreasonable to envision a 5% increase in monorail ridership as a result of better and more seamless station connections to the campus. Since there is very little marginal cost to the additional revenue that would result, it almost all falls to the bottom line 67% of which is paid to the Seattle Center in concession fees. At current fares and ridership levels the incremental new revenue to Seattle Center from a 5% ridership boost would be over $130,000 per year. Better yet, the increased ridership makes the spaces in the RFP even more attractive and will serve to push up the market value and of the properties. E. Contributing to the Seattle Center Purpose This proposal contributes directly to the high and public purpose of Seattle Center as Seattle s urban park, gathering place, and visitor destination. It does so through the leadership of Seattle Center and the direct involvement of key stakeholders. These entities interests are incredibly aligned and their commitment to Seattle Center s goals well demonstrated. Effective planning efforts will lead to improvements and occupancies that make sense and further enliven the Artists at Play playground not only with those offerings, but also through better connections to the monorail and the areas around it. As a concessionaire of Seattle Center, SMS is directly and totally dependent on the success of the Center, its tenants, and the Campus overall. Since we are only proposing a planning effort and one that would be shaped by Seattle Center and other key stakeholders there is no risk that our proposal would lead to eventual uses and tenants that were counter to Seattle Center s goals. Good planning, particularly at this juncture with so much room to maneuver, will set the path to the highest and best occupancies for the spaces, improved marketability and revenues for Seattle Center, and help to attract the most financially stable entities. 5

6 F. Schedule SMS is prepared to begin the planning project as soon as an agreement can be reached. Our staff is in place and eager to get to work. Our hope is that an agreement could be finalized between SMS and Seattle Center around the end or shortly after. Once in place, we estimate that the project will take about a year to complete. During that time, and for however long after Seattle Center wishes, interim uses would continue with all revenues going directly to Seattle Center. G. Working with Seattle Center SMS and Seattle Center have an excellent relationship and a well- honed process in place for working together. We propose that this planning project be part of our established CMMP efforts and overseen by that joint Seattle Center/SMS team of managers. Under the CMMP process, the only agreement necessary between SMS and Seattle Center would be a project agreement. H. SMS Financial Condition SMS has been operator of the Seattle Center Monorail since Over these 20 years, we have had an exemplary record of financial performance. That fact primarily stems from three defining characteristics: Prudent, dedicated, and able team Integrity Financially healthy and committed ownership We believe it takes all three of these to be a reliable partner financially and otherwise. Prudent, diligent, and able team: At its root, Seattle Monorail Services is financially capable because our operating team is outstanding and proven in their ability and commitment to deliver safe, reliable, and desirable service. The single largest factor in the long- term financial dependability of the Seattle Center Monorail concessionaire is the ongoing attractiveness and performance of the Monorail as a transit system. Financial reliability is an outgrowth of the skill, care, and dedication the concession team brings to operating the Monorail system and every person and part of that team matters. 6

7 Integrity: Financial dependability hinges on the private entity s integrity this includes follow- through on financial commitments, compliance with regulation, and robust financial systems and controls. Over almost 20- years of continuous operation, Seattle Monorail Services has met or exceeded every financial commitment contained in the Concession Agreement between itself and the City of Seattle. SMS has a perfect record of making accurate and timely payments of concession fees and other monies owed to Seattle Center (such as Leasehold Improvement Tax). Similarly, as the project administer for many of the mostly publicly funded capital projects for the Monorail system, SMS has administered all funds and payments transparently and in accordance with the highest standards. SMS has also repeatedly demonstrated its commitment and systematic ability to comply with all regulatory requirements. These span from prevailing wage requirements for capital projects to the daily compliance with all state and federal laws. Integrity also means that commitments to other private parties are met. It s this commitment that has resulted in a stellar record of on- time payment of agreed sums owed to all SMS vendors large and small. We ve never missed a payroll or been late with one, even during prolonged periods of system shut down. While we are committed to paying agreed amounts owed to those we procure from, we also demand performance as a condition. Others need to meet their commitments to SMS too, and we make sure they have before making payment. When integrity requires that we hold our ground, either refusing to pay what is claimed or demanding correction of deficiencies, we do exactly that. As a result of our consistent performance and demand for performance, we have an outstanding record of ensuring that the Monorail system receives the highest level of service and that the public s money is well spent. Financially healthy and committed ownership: Seattle Monorail Services is a closely held, locally owned business. As with all such small businesses, the financial commitment and health of the owners is critical to the long- term viability of the business itself. The owners are the source of any needed start- up capital. The capability and integrity of the operating team stems from and is reflective of the owners. The organization s financial discipline comes from the owners. The owners financial responsibility to the business and influence doesn t stop there, however. There are times when the enterprise simply needs the owner to step in and provide the organization with financial and managerial resources beyond what it has at its disposal as an operating entity. Usually these times can be anticipated and planned 7

8 for in advance. Occasionally, however, they present themselves without warning and threaten the very survival of the enterprise. The ability and willingness of the owner to bring additional resources to the organization is critical to the life and ongoing success of the organization. The owners of SMS have demonstrated both their willingness and ability to bring financial and other resources to the organization. Without overstating it, this very same willingness and ability is why we have a Seattle Monorail today. Ownership demonstrated its commitment to employees by insuring that during the entire out- of- service period not one employee was laid- off or had a cut in hours. When fire struck the Monorail in 2004, and the insurer resisted payment of the resulting claims, it was the SMS ownership that funded operating expenses and repair work to the trains. The owners also provided necessary funds for the repairs and pursuit of insurance recovery eventually prevailing long after the system was returned to service. The story is much the same for the 2005 collision repair and recovery, although the insurer was much less resistant. Together, these events required millions of dollars of wherewithal. The organization needed the owners to step in, take the risk, and commit the resources. And that s what SMS did. 8