agenda reno-tahoe airport authority finance & … · 2018. 3. 29. · b. review of operating...

BOARD OF TRUSTEES PRESIDENT/CEO *** Adam Mayberry, Chair Marily M. Mora, A.A.E. Nat Carasali, Vice Chair EXECUTIVE VICE PRESIDENT/COO *** Rick Murdock, Secretary Dean E. Schultz, A.A.E. * Dr. Kosta Arger, Treasurer GENERAL COUNSEL Bill Eck Ann Morgan, Fennemore Craig Jones Vargas Jerry Hall CLERK OF THE BOARD ** Steve Katzmann Jessica Olives Bob Larkin Andy Wirth * Chair of Finance and Business Development Committee ** Vice Chair of Finance & Business Development Committee *** Member of Finance and Business Development Committee

AGENDA

RENO-TAHOE AIRPORT AUTHORITY FINANCE & BUSINESS DEVELOPMENT

COMMITTEE MEETING DATE & TIME: Tuesday, February 11, 2014 9:00 a.m. LOCATION: Reno-Tahoe International Airport Administrative Offices, Conference Rooms A-B Reno, Nevada AGENDA

I. Approval of meeting minutes from January 14, 2014

II. Public Comment (limited to 3 minutes)

III. Items to be presented to the Finance and Business Development Committee for review and recommendation to the Board:

A. Adoption of Resolution No. 516, amending Resolution No. 500 – A Resolution adopting Policy No. 600-007 to provide financial incentives/inducements to Scheduled Passenger Airline Carriers to revise the Policy

B. Authorization for the President/CEO to execute 1) A Public Highway Agreement with the Nevada Department of Transportation for the sale of Reno-Tahoe Airport Authority-owned property and Temporary Construction Easement, and 2) A Public Utility Easement with the Regional Transportation Commission to allow for the construction of the Southeast McCarran Boulevard Widening Project Phase II

IV. Items presented to the Finance & Business Development Committee for approval: None.

V. Items presented to the Finance & Business Development Committee for

discussion: None.

Reno-Tahoe Airport Authority February 11, 2014 Finance & Construction Committee meeting

VI. Items presented to the Finance & Business Development Committee for information: A. Investment Portfolio report for the quarter ended December 2013 B. Review of Operating Results through December 2013 C. Review of Budget Transfers (if any) D. Review of Contracts and Professional Service Agreements through January

2014 E. Review of Legal Expenses through December 2013 F. Review of Board Budget through December 2013 G. Review of Legislative Consultants Budget through December 2013

VII. General member comments, questions and items for future Committee meetings VIII. Public Comment (limited to 3 minutes)

IX. Adjournment

Items will not necessarily be considered in the sequence listed. This meeting may be continued if all of the items are not covered in the time allowed. If the meeting is to be continued, the time and place will be announced at the end of the portion of the meeting to be continued. Supporting Material: The designated contact to obtain supporting material is the Clerk of the Board, Jessica Olives P.O. Box 12490, Reno, NV, 89510 or 775-328-6410. Supporting material is also available at the Reno-Tahoe Airport (Administrative Offices) and at the scheduled meeting. Members of the public who are disabled and require special accommodations or assistance at the meeting are requested to notify the Clerk of the Board in writing at P.O. Box 12490, Reno, Nevada 89510 or by calling (775) 328-6410 prior to the meeting date. THIS NOTICE HAS BEEN POSTED AT THE FOLLOWING LOCATIONS: 1. Airport Authority Administrative Offices – 2001 E. Plumb Lane, Reno 3. Reno City Hall – One East First Street, Reno 2. Washoe County Administrative Offices – 1001 E. 9th Street, Reno 4. Sparks City Hall – 431 Prater Way, Sparks

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*** These draft minutes have not yet been approved and are subject to revision at the next regularly scheduled meeting. ***

RENO-TAHOE AIRPORT AUTHORITY BOARD OF TRUSTEES FINANCE AND BUSINESS DEVELOPMENT COMMITTEE

Minutes from the Meeting January 14, 2014

9:00 a.m.

In Attendance: Dr. Kosta Arger, Trustee* Steve Katzmann, Trustee* Adam Mayberry, Trustee* Rick Murdock, Trustee* Jerry Hall, Trustee Bob Larkin, Trustee Nat Carasali, Trustee Marily M. Mora, President/CEO Dean Schultz, Executive Vice-President/COO Ann Morgan, Fennemore Craig Jones Vargas Rick Gorman, Chief Financial Officer

Tina Iftiger, Vice President of Airport Economic Development Quentin Koch, Vice President of Air Service Development Brian Kulpin, Vice President of Marketing & Public Affairs Leah Williams, Manager of Accounting Tony Osendorf, Manager of Budget & Finance Joyce Humphrey, Manager of Purchasing & Materials Management Mike Dikun, Manager of Reno-Stead Airport Patrick North, Senior Internal Auditor Paula Murphy, Internal Auditor Alex Kovacs, Financial Analyst David Mieding, Real Estate Supervisor Brian Pratte, Director of Airline Business Development Chrissy Gonzales, Administrative Assistant II Michael Dermody, Chairman & CEO, Dermody Properties Douglas Kiersey, Jr., President, Dermody Properties Brendan Egan, Regional Director of Development, Dermody Properties Patrick Gallagher, Partner, Southwest Region, Dermody Properties Michael Russell, COO, United Construction James Endres, Government Affairs Group Executive Director, McDonald Carano Wilson Kathleen Conaboy, Government Affairs Group Vice President, McDonald CaranoWilson Bradley Meinhardt, Area President Managing Director-Aviation, Arthur J. Gallagher Steve Martin, Senior Vice President, InterVistas Consulting Burnham Moffat, Public * Denotes Finance Committee member

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TOPICS DISCUSSED: I. REVIEW OF MEETING MINUTES FROM DECEMBER 10, 2013

A motion was made by Trustee Katzmann, Seconded by Trustee Murdock to approve the minutes from the December 10, 2013 Finance and Business Development Committee meeting.

II. PUBLIC COMMENT None III. ITEMS TO BE PRESENTED TO THE FINANCE AND BUSINESS

DEVELOPMENT COMMITTEE FOR REVIEW AND RECOMMENDATION TO THE BOARD:

A. #14(01)-01 AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE

A PROFESSIONAL SERVICES AGREEMENT FOR INSURANCE BROKER SERVICES, WITH ARTHUR J. GALLAGHER RISK MANAGEMENT SERVICES, IN THE AMOUNT OF $318,400

Staff gave a presentation to request approval to authorize the President/CEO to execute a Professional Services Agreement for Insurance Broker Services, with Arthur J. Gallagher Risk Management Services, in the amount of $318,400.

Trustee Mayberry requested clarification about the fixed fee compensation structure and whether the broker will receive a commission in addition to the fixed fee. Staff stated that it is just the fixed fee. Staff further explained that the fixed fee pays for the marketing of insurance policies and any additional services needed by the Reno-Tahoe Airport Authority (RTAA) during the year including requests for information and claims assistance.

Committee Chair Arger wanted clarification whether, under the current agreement, the RTAA’s previous broker received a commission each time an insurance product was purchased on behalf of the RTAA. Staff confirmed and stated that the marketing and placement of insurance policies was compensated at an average commission rate of 11%. Committee Chair Arger also asked if the vendor paid that commission or if the RTAA did. Staff stated that the commission was included in the invoice paid by RTAA.

Trustee Murdock inquired about the total compensation paid to the RTAA’s previous broker over the past five years. While staff did not have the entire five years compensation amount immediately available, staff stated the total commissions paid for the last two years were in the amount of $127,077 for FY 2012-13 and $145,234 for FY 2013-14. The new proposed agreement represents a savings of more than 60% as compared to the current year.

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Trustee Katzmann asked for clarification as to whether the insurance companies are going to invoice the RTAA on a net basis excluding any commissions. Staff stated that the premium paid on policies will exclude any commissions. Any additional compensation paid to the new broker, from the insurance companies, will be remitted back to the RTAA as an offset to the fixed annual fee in the amount of $60,000. Trustee Katzmann also asked if the insurance companies bill the RTAA directly. Staff explained that Arthur J. Gallagher would submit an invoice to the RTAA and then remit payments to the numerous insurance companies.

Trustee Hall who served on the selection committee indicated he is in favor of the recommendation to go to a fixed fee compensation structure. This recommendation was based on receipt of fee proposals under both a fixed fee structure and a commission based approach from all proposers.

A motion was made by Trustee Katzmann; Seconded by Trustee Mayberry and the Committee unanimously recommended this item [#14(01)-01] for Board approval at the upcoming Board meeting.

B. #14(01)-03 AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE

A PROFESSIONAL SERVICES AGREEMENT WITH FENNEMORE CRAIG JONES VARGAS TO SERVE AS THE LEGAL FIRM OF RECORD FOR THE RENO-TAHOE AIRPORT AUTHORITY

Staff gave a presentation requesting authorization for the President/CEO to execute a Professional Services Agreement with Fennemore Craig Jones Vargas (FCJV) to serve as the Legal Firm of the Record for the RTAA.

Trustee Katzmann asked if staff had explored the option of a flat monthly retainer instead of FCJV being paid on an hourly rate that would be multiplied by the total hours provided. Staff stated that due to the unpredictable nature of legal service needs, a fixed fee did not properly serve either party. Furthermore, staff explained that should a fixed fee be established, it was likely that the RTAA would benefit during the extensive use of FCJV services; however, the RTAA would also pay for services not provided during low usage months. In addition, the uncertainty might increase overall costs due to the contingency necessary, by FCJV, to ensure profitability.

Trustee Katzmann also asked for clarification on whether outside legal services hired by FCJV would be subject to the hourly cap rate. General Counsel, Ann Morgan, stated that the hourly cap rate would apply to all attorneys within FCJV no matter what the location; however, any legal assistance outside the firm would not be subject to the cap.

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A motion was made by Trustee Mayberry; Seconded by Trustee Murdock and the Committee unanimously recommended this item [#14(01)-03] for Board approval.

C. #14(01)-04 AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE

A RIGHT OF ENTRY AND HOLD HARMLESS AGREEMENT, TO NEGOTIATE FINAL TERMS AND EXECUTE A 50-YEAR LAND LEASE WITH DERMODY PROPERTIES, AT THE SOUTHEAST CORNER OF MCCARRAN BOULEVARD AND AIRWAY DRIVE

Staff gave a presentation requesting authorization for the President/CEO to execute a Right of Entry and Hold Harmless Agreement, to negotiate final terms and execute a 50-year land lease with Dermody Properties, at the Southwest Corner of McCarran Boulevard and Airway Drive.

Committee Chair Arger inquired whether the land is currently served through the City of Reno sewer and water. Staff explained that the previous property owners used septic systems, ground water wells and heating oil tanks to meet their needs and that since acquiring ownership of the property, the RTAA has removed all abandoned systems on the site.

Committee Chair Arger also asked if the RTAA provided water rights to Dermody Properties to assist in the land development, and if this would hinder the RTAA’s ability to provide water rights for other future potential development in other areas. Staff stated that the RTAA has approximately 1,000 acres of water rights and approximately 700 of those are unencumbered at the moment. An analysis has previously been conducted and showed that the RTAA has sufficient water rights to develop all existing vacant properties.

A motion was made by Trustee Mayberry; Seconded by Trustee Murdock and the Committee unanimously recommended this item [#14(01)-04] to the Board for approval.

D. #14(01)-05 AUTHORIZATION FOR THE PRESIDENT/CEO TO ENTER INTO

PROFESSIONAL SERVICES AGREEMENTS WITH INTERVISTAS CONSULTING, LLC TO ASSIST THE RENO-TAHOE AIRPORT AUTHORITY IN ACHIEVING THE FY 2014-18 STRATEGIC PLAN PRIORITIES AND GOALS TO INCREASE AIR SERVICE DEVELOPMENT, INCREASE AIR CARGO DEVELOPMENT, ECONOMIC DEVELOPMENT AND TO OPTIMIZE GENERAL AVIATION OPERATIONS AND SERVICES FOR AN AMOUNT NOT TO EXCEED $275,000

Staff gave a presentation requesting authorization for the President/CEO to enter into Professional Services Agreements with InterVISTAS Consulting, LLC to assist the RTAA in achieving the FY 2014-18 Strategic Plan priorities and goals to increase Air Service Development, Air Cargo Development, and Economic

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Development and to optimize General Aviation operations and services for an amount not to exceed $275,000.

Trustee Mayberry asked which consultants the RTAA currently uses to assist with Air Service Development. President/CEO, Marily Mora, stated that the Air Service Development department is currently using InterVistas and Campbell Hill Aviation Group. Staff stated that 85% to 90% of the work associated with Air Service Development is completed by staff in-house.

Trustee Katzmann inquired if the RTAA is asking other stakeholders for financial assistance in pursuing the aircraft parts and sales tax abatement effort and, inquired if staff finds it necessary to hire an outside consultant to complete the outlined scope of work with all the in-house expertise that the RTAA currently has. Staff stated that the RTAA needs the expertise of the consultants, especially in the areas of econometric modeling, expert testimony, and access to expensive data resources. Additionally, staff stated InterVISTAS is critical to obtain economic impact information and financial benefits in all four areas of work proposed.

Staff also stated that last year the RTAA obtained financial contributions to help fund the first aircraft parts and sales tax abatement study from other interested parties. While the RTAA would serve in the leadership role to facilitate this effort, staff will request financial support from other key stakeholders. President/CEO, Marily Mora, also stated that there will be additional work and other opportunities to fund this campaign in the future and the other stakeholders are expected to make significant contributions at that time.

Trustee Carasali clarified that the RTAA was asked by the Governor’s Office of Economic Development (GOED), the Governor, and various State Legislators for credible information to support the aircraft parts and sales tax abatement effort. Furthermore, that this information is critical in displaying to other local government entities and legislators that this initiative will generate significant economic activity and increase tax revenue, in excess of the proposed abatement. Ms. Mora also stated that GOED staff indicated that RTAA will be required to provide specific econometric modeling to successfully move this initiative forward.

A motion was made by Trustee Mayberry; Seconded by Trustee Murdock and the Committee unanimously recommended this item to the Board for discussion and possible action at the upcoming Board meeting.

IV. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT

COMMITTEE FOR APPROVAL

None

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V. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR DISCUSSION

None

VI. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT

COMMITTEE FOR INFORMATION

A. AUDIT REPORT ON MCDONALD’S RESTAURANT LOCATED AT RENO-TAHOE INTERNATIONAL AIRPORT

Staff gave a presentation on the Audit Report for the McDonald’s Restaurant located at Reno-Tahoe International Airport (RTIA)

B. REVIEW OF OPERATING RESULTS THROUGH NOVEMBER 2013

Staff reported on the Operating Results through November 2013

C. REVIEW OF BUDGET TRANSFERS

None

D. REVIEW OF CONTRACTS AND PROFESSIONAL SERVICES AGREEMENTS THROUGH DECEMBER 2013

Staff reviewed the Administrative Award of Contracts pursuant to Resolution #462

E. REVIEW OF LEGAL EXPENSES THROUGH NOVEMBER 2013

Staff reported the Legal Budget had expended 30.6% of the budget with 42% of the budget year expired.

F. REVIEW OF BOARD BUDGET THROUGH NOVEMBER 2013

Staff reported the Board of Trustee’s had expended 29.4% of their budget with 42% of the budget year expired.

G. REVIEW OF LEGISLATIVE CONSULTANTS BUDGET THROUGH

NOVEMBER 2013

Staff reported the Legislative Consultants Budget had expended 39.1% of their budget with 42% of the budget year expired.

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VIII. GENERAL MEMBER COMMENTS, QUESTIONS AND ITEMS FOR FUTURE COMMITTEE MEETINGS

None

IX. PUBLIC COMMENT

None X. ADJOURNMENT

The meeting was called to order at 9:04 a.m. and was adjourned at 11:12 a.m. AK: RG/cg

*** These draft minutes have not yet been approved and are subject to revision at the next regularly scheduled meeting. ***

Board Memorandum Reno-Tahoe Airport Authority

Date: February 5, 2014 Memo: #14(02)-08 To: Chairman & Board Members For: February 13, 2014 Board Meeting From: Marily Mora, A.A.E., President/CEO Subject: ADOPTION OF RESOLUTION NO. 516; AMENDING RESOLUTION NO.

500 - A RESOLUTION ADOPTING POLICY NO. 600-007 TO PROVIDE FINANCIAL INCENTIVES/INDUCEMENTS TO SCHEDULED PASSENGER AIRLINE CARRIERS TO REVISE THE POLICY AND INCLUDE INCENTIVES FOR NEW AIR CARGO CARRIERS

STAFF RECOMMENDATION Staff recommends that the Board adopt Resolution No. 516; amending Resolution No. 500 - A Resolution adopting Policy No. 600-007 to provide financial incentives/inducements to Scheduled Passenger Airline Carriers to revise the policy and include incentives for new Air Cargo Carriers. PURPOSE The purpose of this action is to adopt Resolution No. 516 and revise policy No. 600-007 regarding financial incentives/inducements for Scheduled Passenger Airline Carriers to now include financial incentives/inducements for new Air Cargo Carriers at the Reno-Tahoe International Airport (RTIA). This action is in support of Strategic Priority 3 – Cargo Development, as identified in the Airport Authority’s FY 2014-18 Strategic Plan. The approval of this action would assist the Airport Authority with efforts to position the region as a West Coast distribution point by actively growing air cargo development at the RTIA. BACKGROUND The Reno-Tahoe Airport Authority (Airport Authority), like most airports in the United States, has found it necessary to create incentive/inducement programs in order to increase services by both passenger and cargo air carriers. Beginning in May 2001 the following occurred:

In May 2001, the Board approved Resolution No. 416 and Policy No. 600-007 – a Resolution adopting a policy to provide financial incentives/inducements to Scheduled Passenger Air Carriers to increase air service to the RTIA by authorizing the President/CEO to waive or discount airport fees and authorize marketing/advertising support for up to 90 days.

In May 2004, the Board approved Resolution No. 445 which amended Resolution No. 416 and updated Policy No. 600-007 by authorizing the President/CEO to: 1. Waive or discount airport fees and authorize marketing/advertising support for up to

365 days. 2. Offer airline incentives for a minimum of one flight per week. 3. Offer airline incentives for new destinations with no nonstop service, or less than

two scheduled flights per week.

In February 2010, the Board approved Resolution No. 500, which amended Resolution No. 445 and updated Policy No. 600-007 authorizing the President/CEO to: 1. Waive airport fees and authorize marketing support for up to 365 days for same-

plane, one-stop scheduled service to new cities with no nonstop air service.

Resolution No. 516 - Airline Carrier and Air Cargo Incentives #14(02)-08 February 14, 2014 Board Meeting Page 2

Previous Resolutions regarding financial incentives only applied to Scheduled Airline Carriers and did not include financial incentives for Air Cargo Carriers. DISCUSSION The proposed amendment to the current Resolution (No. 500) and Policy No. 600-007, governing financial incentives offered to Scheduled Passenger Airline Carriers would result in a number of changes. The first of which is the need to add incentives for Air Cargo Carriers. This action was identified as necessary during negotiations with an all-cargo carrier that plans to provide new nonstop all-cargo service to/from RTIA. With Board approval of this action, staff would have the ability to secure this current opportunity as well as have an additional tool to attract future opportunities for other new Air Cargo Carriers and new cargo markets, when warranted. The necessity now exists to offer incentives to new scheduled Air Cargo Services providing nonstop service to new air cargo markets in order to remain competitive. The next modification to the policy includes the elimination of the previously outlined marketing support elements, which are now outdated and irrelevant. Instead, the section was replaced with three marketing incentive criteria and associated dollar limits. These criteria provide more flexibility on how marketing support efforts can be utilized. Finally, the last modification includes the elimination of language pertaining to incentives for one-stop direct or same plane air service. As the passenger network environment has become much more nimble, schedules for same plane direct service to a specific market are not reliable from schedule to schedule and as such, offer no true value any longer. Instead, planned incentive dollars can be better utilized in other areas. Therefore, Resolution No. 516 has been created to revise Policy 600-007 and authorize the President/CEO to offer these new incentives. FISCAL IMPACT The fiscal impact of the new all-cargo service opportunity presently being contemplated would be $216,840 which includes waived airport fees for one flight, operated five times per week, 52 weeks of the year. The financial impact of future incentive offers for new air cargo service would vary based on the size of the aircraft and importance of the destination. The funding of the incentive program is from discretionary savings generated by the airport’s operating and fuel tax revenue. The cost of this program does not impact other carrier’s rates and charges at RTIA. COMMITTEE COORDINATION This item is scheduled to be presented at the February 11, 2014 Finance and Business Development Committee meeting. RECOMMENDATION It is hereby recommended that the Board adopt the following motion:

Resolution No. 516 - Airline Carrier and Air Cargo Incentives #14(02)-08 February 14, 2014 Board Meeting Page 3 “It is hereby moved that the Board adopt Resolution No. 516, amending Resolution No. 500 adopting Policy No. 600-007 providing financial incentives/inducements to Scheduled Passenger Airline Carriers and revise the Policy to now include incentives for new Air Cargo Carriers.” MMM/bp/jo

RESOLUTION NO. 516:

A RESOLUTION AMENDING RESOLUTION NO. 500: A RESOLUTION ADOPTING POLICY NO. 600-007 TO PROVIDE FINANCIAL INCENTIVES/INDUCEMENTS TO SCHEDULED AIRLINE CARRIERS AND AIR CARGO CARRIERS TO THE RENO-TAHOE INTERNATIONAL AIRPORT

WHEREAS, Airport Authority’s Strategic Priority is to increase Air Service and expand Cargo Development and Service as identified in the FY 2014-18 Strategic Plan; and WHEREAS, increased air service and cargo service is vital to the economy of the Reno-Tahoe region; and WHEREAS, the Federal Aviation Administration permits airport revenue to be used for the full costs of activities directed toward promoting competition at an airport, new air service and cooperative advertising; and WHEREAS, the Reno-Tahoe International Airport is competing for increased air service and cargo development with communities and airports that are offering financial incentives; and WHEREAS, the President/CEO has the authority to negotiate financial incentive/inducements to temporarily waive or discount airport fees and authorize marketing/advertising support for a maximum of 365 days to a scheduled passenger airline(s) and/or cargo carriers to a new destination from the Reno-Tahoe International Airport; and

WHEREAS, a minimum of one flight per week is required to qualify for these incentives and may be offered in new destinations with either no existing nonstop service or less than two scheduled flights per week; and WHEREAS, the Reno-Tahoe Airport Authority desires to establish a competitive policy to establish financial incentives/inducements that may be offered by the Airport Authority to a new or existing scheduled airline(s) and new cargo carriers; and WHEREAS, a copy of Policy No. 600-007 referred to herein is attached hereto and made a part hereof; and NOW, THEREFORE BE IT RESOLVED that the Board of Trustees of the Reno-Tahoe International Airport that this Resolution on incentives/inducements hereby adopts Policy No. 600-007 as set forth below:

1. That the President/CEO has the authority to negotiate financial incentives/inducements to temporarily waive or discount airport fees and authorize marketing/advertising support for maximum of 365 days to a scheduled

passenger airline to a new destination from the Reno-Tahoe International Airport.’

2. That a minimum of one flight per week is required to qualify for incentives. 3. That incentives may be offered in new destinations with either no existing

nonstop service, or less than two scheduled flights per week for scheduled passenger airline carriers.

On motion by Trustee ___________, second by Trustee __________, the foregoing Resolution was passed and adopted this day of , 2014, by the following vote of the Board: AYES:

NAYS:

ABSENT: ABSTAIN: ___________________________________ Chairman Adam Mayberry ATTEST: __________________________ Secretary, Rick Murdock

Reno-Tahoe Airport Authority Airline Business Development Department Policy and Procedures Manual

February 2014

Page 1 of 3

AIRLINE INCENTIVE POLICY FOR NEW SCHEDULED PASSENGER AIRLINE AND AIR CARGO SERVICE

Policy Number 600-007 PURPOSE The purpose of this policy is to establish specific guidelines for AIRLINE INCENTIVES that may be offered by the Reno-Tahoe Airport Authority (RTAA) to any new or existing scheduled Passenger Airline(s) and/or Cargo Air Carrier(s) entering the Reno-Tahoe International Airport market place, providing it meets the established criteria defined below. This policy specifically addresses and is limited to meaningful (minimum of one flight per week), nonstop or one-stop direct, same-plane scheduled air service, open to the and public, service under one of the following conditions: and scheduled to a destination from Reno-Tahoe International Airport (RNO) that has no existing nonstop air service.

• Non-stop services on existing Passenger Airlines to a destination(s) that Reno-Tahoe International Airport (RNO), that has no existing non-stop air service;

• Non-stop services by a new Passenger Airline to a new or existing destination(s) from RNO;

• New service on a new dedicated all-cargo carrier from RNO to a cargo market that has no existing service.

This policy will details the RTAA Board of Trustees’ approved guidelines, limitations, and authorization for authority delegation to the President/CEO to waive or discount specific Airport Rental Fees, Landing Fees and Security Bond requirements described in the Airline Lease and Operating Agreement. The policy also addresses specific marketing programs that may be undertaken by RTAA to support non-stop passenger or air cargo air service one-stop direct, same plane air service to a new destination with no existing nonstop air service. Finally, in an effort to maintain balance and fairness with the existing Passenger and Cargo Airlines serving RNO, RTAA may develop a separate Local Advertising Program to promote RNO’s existing airlines and the destinations they serve or service they provide.


February 2014

Page 2 of 3

AUTHORITY/ REFERENCE The President/CEO and/or his/her designee are responsible for administering this policy. This policy and action is permitted under Federal Register/Vol. 64 No. 30/Tuesday, February 16, 1999, Section V and VI (copy attached). This policy supports RTAA Resolution No. 516, “A Resolution Adopting a Policy to Provide Financial Incentives/Inducements to Scheduled Passenger Airlines and/or Cargo Air Carriers to Increase Air Service and Cargo Development to the Reno-Tahoe International Airport,” dated February 14, 2014.

POLICY The decision to offer Airline Incentive Options (defined under Procedures) will be considered on a case-by-case basis at the discretion of the President/CEO. RTAA incentives are to be based on the size and value of the destination being considered (Origin and Destination numbers, long haul or short haul, population of the destination, the tourism and/or business travel value to the community) and/or air cargo target markets. The Airport Rental Rates, Landing Fees, and advertising values considered in this policy are to be based on the specific rates for the fiscal year in which the incentive(s) is being considered. It is understood that the total value of various Airline Incentives would vary based on the specific level of air service being considered (number of flights, type of aircraft being flown, length of haul, etc.) New carriers and destinations are defined as those without 12 months prior service from RNO. Carriers are not eligible for incentives based on mergers or acquisitions of prior RNO carriers or destinations. The incentives/inducements listed in this policy are at the maximum level under the authority of the President/CEO. Under special circumstances, it may be necessary to increase incentives/inducements to airlines to secure flights for RNO (for example, for flights to major destination or cargo markets). If this occurs, the President/CEO will request authority from the Board of Trustees to increase incentives/inducements. PROCEDURES 1. The procedures for this policy include waiving airport fees for a maximum of 365

days and providing Local Advertising/Marketing support for up to 365 days. Incentives may be offered to any new or existing passenger or air cargo airline provided the airline meets the conditions outline in the purpose section. offers new nonstop or one-stop direct, same plane air service to a destination with no existing nonstop service.


February 2014

Page 3 of 3

A. AIRPORT RENTAL FEES Terminal counter space Office space Holdroom space or per turn charge

B. AIRPORT LANDING FEE RATES

Waive for a maximum of two (2) flights per day for a maximum of 365 days

C. SECURITY BOND

Postponed for a maximum of 90 days

D. MARKETING SUPPORT – Consisting of one of more of the following: Offered to any scheduled airline initiating nonstop or one-stop direct, same plane service to a market with no existing nonstop service

Outdoor board advertising space.

o One time offer o Subject to availability of the board(s) o Maximum exposure – 90 days

Co-Op newspaper advertisement in Reno Gazette Journal RTAA website promotion

o Maximum exposure on site – 365 days Local public relations campaign Travel agency and business travel community functions Co-Op marketing dollars $25,000 in targeted marketing support for passenger airlines

commencing new non-stop service from RNO to destinations without existing non-stop service

$25,000 in targeted marketing support for new passenger airlines commencing service from RNO

$25,000 in targeted marketing support for new dedicated all-cargo air carriers commencing service from RNO

2. The above incentives are at the maximum level of the President/CEO’s authority.

Under special circumstances, it may be necessary to increase these incentives. When that occurs, the President/CEO will request authorization from the Board of Trustees to increase incentives.

Marily M. Mora, A.A.E., President/CEO Date

Board Memorandum Reno-Tahoe Airport Authority

Date: February 5, 2014 Memo # 14(02)-09 To: Chairman & Board Members For: February 13, 2014 Board Meeting From: Marily M. Mora, A.A.E., President/CEO Subject: AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE 1) A PUBLIC HIGHWAY AGREEMENT WITH THE NEVADA

DEPARTMENT OF TRANSPORTATION FOR THE SALE OF RENO-TAHOE AIRPORT AUTHORITY-OWNED PROPERTY AND TEMPORARY CONSTRUCTION EASEMENT, AND

2) A PUBLIC UTILITY EASEMENT BETWEEN THE RENO-TAHOE AIRPORT AUTHORITY AND THE REGIONAL TRANSPORTATION COMMISSION TO ALLOW FOR THE CONSTRUCTION OF THE SOUTHEAST MCCARRAN BOULEVARD WIDENING PROJECT PHASE II

STAFF RECOMMENDATION Staff recommends that the Board authorize the President/CEO to execute 1) a Public Highway Agreement with the Nevada Department of Transportation (NDOT) for the sale of Reno-Tahoe Airport Authority-owned property and Temporary Construction Easement, and 2) a Public Non-exclusive Utility Easement (PUE) with the Regional Transportation Commission (RTC) to allow for the construction of the Southeast McCarran Boulevard Widening Project Phase II (Project). PURPOSE NDOT, in association with RTC, will continue the widening of McCarran Boulevard from Longley Lane to Greg Street to reduce congestion, enhance safety and improve the performance of the transportation system serving the southeast region of Reno/Sparks. The purpose of this action is to seek approval from the Board of Trustees to authorize the President/CEO to execute two separate agreements, 1) a Public Highway Agreement between the Reno-Tahoe Airport Authority (RTAA) and NDOT and 2) a PUE Agreement between the RTAA and the RTC. The Public Highway Agreement with NDOT will effectuate the sale of 23,974 square feet of RTAA-owned property (Fee Interest) adjacent to East McCarran Boulevard, between South Rock Boulevard and the Boynton Slough (Exhibit A). The Public Highway Agreement will also include a 2-year Temporary Construction Easement (Temporary Easement) encompasing 36,342 square feet adjacent to the Fee Interest portion of land (Exhibit A) to enable construction. The PUE with the RTC will encompass 17,998 square feet of RTAA-Owned land and will also be located adjacent to the Fee Interest portion of the property (Exhibit A) for the purpose of utlitiy improvements. BACKGROUND The Southeast McCarran Widening Project’s overall goal is to provide the improvements needed as identified in the Southeast McCarran Corridor Study and to incorporate NDOT’s pavement rehabilitation project. This phase of the project will include the following (Exhibit B): • Pavement rehabilitation from Mira Loma Drive to 200’ south of Equity Avenue. • Widening from four lanes to six lanes between Mira Loma Drive and Greg Street.

Southeast McCarran Boulevard Project, Phase II #14(02)-09 February 13, 2014 Board Meeting Page 2 • Addition of a shared use path on the south/east side between Alexander Lake Road and

Greg Street. • Aesthetics and soundwalls between Longley Lane & Greg Street. The pavement rehabilitation will upgrade the pavement conditions for years to come. Widening of the roadway will relieve congestion, increase safety, and improve air quality and aesthetics. The portion of the Project that impacts RTAA-owned property extends along the west side of McCarran Boulevard between South Rock Boulevard and the Boynton Slough. The scope of work along this stretch includes pavement rehabilitation, widening from four to six lanes, a shared use path and upgraded aesthetics. The Project will impact RTAA-owned property that was purchased as part of a Federal Aviation Administration (FAA) approved land acquisition program in the 1970s and 1980s. The RTAA, acquired 37 residential parcels located in the former Eastside Subdivision, east of Runway 7/25. The properties were purchased using a combination of three FAA grants, 1) Airport Development Aid Program [ADAP] Grant 12, 2) Airport Improvement Program [AIP] Grant 1, and 3) AIP Grant 4. Since then, and in accordance with the original acquisition guidelines, the RTAA has converted the former residential properties into more compatible, revenue-generating developments. The land acquired through the FAA grants has been subsequently leased and improvements have been made by tenants. The two tenants who occupy this property are GE Capital Real Estate and Scannell Properties #32. Both tenant leasehold’s will be impacted by the Project. RTAA received notification from NDOT on April 27, 2012 that they, in association with RTC had approved and accepted the location and scope of the Project and that a portion of the Project would impact RTAA-owned property adjacent to East McCarran Boulevard. On May 4, 2012, the RTAA was contacted by Overland Pacific & Cutler, Inc (OPC), a sub-contractor for NDOT responsible for acquisition services, requesting permission to survey and appraise RTAA property affected by the Project. After surveying, design, engineering and appraisals were complete, OPC notified the RTAA that purchase offers had been prepared. On July 31, 2013 OPC presented both the NDOT and RTC offers.

NDOT Offer NDOT’s original offer to the RTAA contained compensation for three transactions. The first was for the purchase of 23,974 square feet of land (Fee Interest). The second was for a 36,342 square foot Temporary Construction Easement, and the third was for the landscaping improvements within both the Fee Interest and Temporary Easement areas. The landscaping improvements are the property of the tenants - GE Capital Real Estate and Scannell Properties #32.

NDOT’s original offer to compensate the RTAA for the tenant-owned landscaping improvements required a proportionate share of compensation for each tenant’s improvements to be distributed by the RTAA to the tenants through escrow. However, after further consideration, NDOT decided that it would be more appropriate to directly compensate the tenants for the impacts to their landscaping improvements. This change required NDOT to revise the origninal RTAA offer documents.

Southeast McCarran Boulevard Project, Phase II #14(02)-09 February 13, 2014 Board Meeting Page 3

The RTAA received NDOT’s revised offer on December 6, 2013. The revised offer included compensation to the RTAA for 1) the Fee Interest and 2) Temporary Easement portions of the Project only. Offers for the landscaping improvements have been presented separately and directly to GE Capital Real Estate and Scannell Properties #32.

RTC Offer RTC’s offer contained compensation for the 17,998 square foot PUE that is required as part of the Project. The PUE will provide access for NV Energy and AT&T among others, to install and maintain utility infrastructure.

DISCUSSION The business terms contained in the Public Highway Agreement between the RTAA and NDOT are the sale of 23,974 square feet of land (Fee Interest) for $119,870.00 through a grant, bargain and sale deed, and the 2-year Temporary Construction Easement for $36,342.00, through a temporary easement deed. Value for the land is based on an appraisal performed by Anthony J. Wren, Certified General Appraiser on April 29, 2013 which was independently reviewed and verified by Johnson Perkins & Associates, Inc. on June 21, 2013. The appraisals establish the land value at $5.00 per square foot. The total amount of $156,212.00 to be paid by NDOT to the RTAA would be deposited in escrow with First American Title Company and dispursed to the RTAA after recordation of the deeds and close of escrow. Regarding the second transaction with the RTC, the PUE will be a separate agreement for a 17,994 square foot easement adjacent to the Fee Interest area extending south from South Rock Boulevard. Compensation for the PUE will be in the amount of $44,985.00. The value is based on another appraisal by Anthony J. Wren and also independently reviewed and verified by Johnson Perkins & Associates, Inc. These appraisals also establish the fair market value of the land at $5.00 per square foot, and when applied to the land area of 17,998 square feet, results in a fair market value of $89,970.00. A 50% easement factor indicates a fair market value for the PUE in the amount of $44,985.00. The easement factor takes into consideration the fact that the subject property will retain usefulness to the RTAA and its tenants. However, the easement will impose certain physical and legal restrictions on the use and development of the subject property. FISCAL IMPACT Total compensation to the RTAA from NDOT for the land sale and the Temporary Construction Easement and from RTC for the Public Utility Easement will be $201,197.00. However, because the property was purchased using FAA grant funding, proceeds from the land sale require specific treatment. Prior to executing the Public Highway Agreement or the Public Utility Easement, the RTAA will work with the FAA to ensure that all FAA requirements for land sales are met. Pursuant to FAA policy, upon sale of FAA grant-purchased property, the RTAA must apply a percentage of the sale price equal to the percentage of the original grant/sponsor share breakdown to another AIP grant eligible project. In this case the percentage is 93.75%, which equals $112,378.12. Proceeds from the Temporary Easement ($36,342.00) and PUE ($44,985.00) would be eligible for any designated use by the RTAA. As part of this transaction, there would also be a reduction in revenue from land leases as a result of a reduction in the area of the leased premises due to the land sale. The land sale will reduce

Southeast McCarran Boulevard Project, Phase II #14(02)-09 February 13, 2014 Board Meeting Page 4 GE Capital Real Estate and Scannell Properties’ leaseholds by 11,032 and 12,942 square feet, respectively, resulting in an annual revenue reduction of $7,772.24 for the remaining 40-year lease terms. The table below outlines the major financial terms.

Financial Summary NDOT Land Sale $119,870 NDOT Temporary Construction Easement $36,342 RTC Public Utility Easement $44,985 Total to RTAA $201,197

COMMITTEE COORDINATION This item is scheduled to be presented at the February 11, 2014 Finance and Business Development Committee meeting. RECOMMENDED MOTION It is hereby recommended that the Board adopt the following motion: “It is hereby moved that the Board of Trustees authorize the President/CEO, to execute a Public Highway Agreement with the Nevada Department of Transportation for the sale of Reno-Tahoe Airport Authority-owned property and Temporary Construction Easement, and a Permanent Non-exclusive Utility Easement with the Regional Transportation Commission to allow for the construction of the Southeast McCarran Boulevard Widening Project, Phase II. MMM/dm/jo

Exhibit A

Exhibit B

Southeast McCarran Boulevard Widening Project, Phase II

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Administrative Report Reno-Tahoe Airport Authority

Date: February 5, 2014 Administrative Report # 07-14 To: Chairman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: FINANCIAL REPORTING PACKAGE – DECEMBER 2013 EXECUTIVE SUMMARY Attached is the Fiscal Year 2013-14 Financial Reporting Package for the six month period ending December 31, 2013. The budget amounts mentioned below assume one twelfth of the revenue budget is received and one twelfth of the operating expense budget is spent each month. AIRLINE COST PER ENPLANED PASSENGER Due to operating expenses being 4.5% below budget, the airline cost per signatory enplaned passenger, based on actual activity for the six month period ending December 31, 2013, is estimated to be $6.96 as compared to budgeted cost per enplaned passenger of $7.85. For the six month period ending December 31, 2013, net available cash flow, after funding debt service, is $2.934 million, an increase of $1.686 million above the adopted FY 2013-14 Budget.

Y E A R T O D A T E as of December 31, 2013 (In Thousands)50.0% Of Fiscal Year

CURRENT PRIOR Y-T-DYEAR YEAR VARIANCE % BUDGET VARIANCE %

Operating Revenue Airline 7,247$ 6,902$ 345$ 5.0% 7,065$ 182$ 2.6% Non-Airline 14,804 14,885 (81) -0.5% 14,332 472 3.3%

Total Operating Revenue 22,051 21,787 264 1.2% 21,397 654 3.1%

Non-Operating Revenues/ Transfers 1,022 879 142 16.2% 824 197 24.0%

Total Revenue 23,073 22,666 406 1.8% 22,221 852 3.8%

Operating Expenses (17,741) (16,505) (1,236) 7.5% (18,570) 829 -4.5%

Net Revenue Available for Debt Service 5,332 6,161 (829) -13.5% 3,651 1,681 46.0%

Debt Service After PFCs (2,398) (1,831) (567) 31.0% (2,403) 5 -0.2%

Net Available Cashflow 2,934 4,330 (1,396) -32.2% 1,248 1,686 135.0%

December 2013 Financial Summary Administrative Report #07-14 February 6, 2014 Page 2

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TOTAL REVENUE The Authority is approximately $654,000 or 3.1% over budget in operating revenues due to higher airline revenues of approximately $182,000 and non-airline revenues of $472,000, which primarily reflects higher auto rental concession and public parking revenue. The Authority’s revenue results are discussed in more detail later in this report. The chart below reflects actual operating revenues for the fiscal year-to-date as compared to the year-to-date budget amount.

AIRLINE Landing Fees The RTAA executed a six-year agreement with the airlines effective July 1, 2010. The formula for calculating landing fees consists of almost 100% cost recovery of airfield related operating and capital improvement expenses offset by other airfield derived revenues. Landing fees are budgeted and currently being collected at $2.78 per 1,000 lbs. of landed weight. For the six month period ending December 31 2013, landing fee revenues registered $3,373 million, which is approximately $95,000 or 2.9% above budget. This increase is due primarily to


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a 26% increase in landed weight by Fed Ex due to larger aircraft as compared to the adopted budget estimate. The costs allocated to the Airfield Cost Center, or Net Requirement per the Airline Agreement, are 5.1% under budget based on activity through December 2013. Airline Terminal Rents Airline terminal rents reflect cost recovery of terminal costs allocated to airline occupied facilities (commercial compensatory basis) with total facility costs divided by rentable terminal square footage. For the six month period ending December 31, 2013, airline terminal rental revenue registered $3,874 million, which is approximately $87,000 or 2.3% over budget. This increase is primarily due to the higher than forecasted lease of operations space from American Airlines pending completion of its proposed merger with US Airways. The budgeted average signatory rental rate is $60.27 per sq. ft. per annum. The costs allocated to the Terminal Building Cost Center, or Net Requirement, are 4.8% under budget based on activity through December, 2013. NON-AIRLINE REVENUE With airline revenues derived from cost recovery formulas and no net profit resulting directly from their operations, non-airline revenues are critical for the Authority to meet other operating costs and to generate internal funds for equipment and capital projects that do not directly benefit the airlines. Non-airline operating revenues are primarily comprised of terminal and rental car concession revenues, public parking revenue, building/land rent, and reimbursement of Authority provided services. Overall, non-airline operating revenues registered $14.804 million. This represents an increase of approximately $472,000 or 3.3% over budget. Approximately 94% of this increase is due to $442,000 in higher than budgeted revenue from public parking operations. The balance of the increase is primarily from $149,000 in higher rental car concession fees and $65,000 in higher reimbursed services. These increases are partially offset by lower terminal concession revenues of $17,000, which primarily reflect lower gaming revenue. Enplaned passenger traffic for the first six months of FY 2013-14 is 849,809, a decrease of 4.4% below last year and a modest increase of 1.8% increase above the straight-lined budget. Further detail on passenger traffic results is provided in the Key Benchmarks section of this summary. NON-OPERATING REVENUE Non-Operating revenues of approximately $898,000, which are primarily comprised of interest income, aviation fuel tax, and rental car customer facility charges, are $65,500 or 7.9% above budget.


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OPERATING EXPENSES On the expenditure side, operating expenses for the six month period of $17.741 million ending December 31, 2013 are 4.5% or approximately $829,000 below budget. The savings include approximately $526,500 in lower than budgeted Personnel costs and $393,000 in lower Purchased Services. This savings is partially offset by higher than budget expenses of $66,000 in higher utilities, $13,000 in higher supplies and materials, and $11,800 in higher Administrative expenses. The chart below is based on the actual operating expenses through December 2013 as compared to the year-to-date budget amount.

DEBT SERVICE Net debt service payments, after the application of Passenger Facility Charges, of approximately $2.398 million are lower than budget by approximately $5,000 or 0.2%. This decrease is primarily due to the modestly lower than forecasted interest rates on the $5.35 million of Subordinate Lien Revenue Variable Rate Notes. KEY BENCHMARKS The following are key benchmarks and ratios used to measure financial activities and monitor the financial health and condition of the Authority:


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Enplaned Passengers Passenger Activity is a significant factor driving non-airline revenues such as terminal concessions, public parking, and gaming. For the six month period ending December 31 2013, enplaned passengers were 849,809, a 1.8% increase compared to the straight-line budgeted annual passenger traffic of 1,670,248 divided equally by 12 months. This result is 4.4% below passenger traffic levels posted last year for the same period. The December 2013 Flight Schedule at the Reno-Tahoe International Airport (RNO) provides 57 peak nonstop departures to 14 destinations with 169,582 total scheduled departing seats. This compares with 57 peak daily departures to 15 destinations and 180,443 scheduled departing seats in December 2012. The December 2013 Flight Schedule reflected a 6.0% decrease in monthly seat capacity as compared to December 2012, while the number of flights was down 4.4% for the same period. These numbers align with overall RNO trends, which is a reduction of 6.4% in scheduled flights and 7.0% in scheduled capacity for 2013 compared to last year. Airlines in the U.S. continue to evaluate each and every route, eliminating less profitable routes and down-gauging aircraft size on certain routes to align it more closely with passenger demand. Southwest Airlines saw the largest drop in total passengers, carrying 57,021 fewer enplaned passengers in the first six months of the current fiscal year than last year. This reduction was due to the termination of service to Oakland and Salt Lake City along with service reductions to Portland and Chicago-Midway. Partially offsetting this decrease are increases for the first six months of FY 2013-14 by Allegiant, American, and United in the amount of 22,889 combined total enplaned passengers. A table and chart enclosed in this package provides a comparison of enplaned passenger traffic and market share by airline for the six month period ending December 31, 2013 as compared to previous year results.

Y E A R T O D A T E (December 31, 2013 )50.0% Of Fiscal Year

CURRENT PRIOR Y-T-DKey Statistics / Benchmarks YEAR YEAR VARIANCE % BUDGET VARIANCE %

Enplaned Passengers 849,809 889,271 (39,462) -4.4% 835,124 14,685 1.8% Airline Cost Per Enplaned Passenger 6.96$ 6.39$ 0.57$ 9.0% 7.85$ (0.89) -11.3% Non-Airline Revenues per EPAX (a) 16.09$ 15.49$ 0.60$ 3.9% 15.90$ 0.18 1.2% Operating Ratio 80.5% 75.8% 4.7% 6.2% 86.8% -6.3% -7.3% Debt Service Coverage Ratio 1.92 2.74 (0.82) -29.9% 1.38 0.55 39.9% Days Cash On Hand 434.1 438.3 (4.2) -0.9% 373.7 60.4 16.2%

(a) Excludes cost reimbursement for the Baggage Handing System (BHS) paid by the airlines.


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Airline Cost per Enplaned Passenger This ratio represents airline payments for use of airport facilities (landing fees and terminal rents) in accordance with adopted rates and charges methodology as outlined in the lease agreement between the airport and airlines. The Authority targets to maintain a reasonable cost structure for the airlines to attract and maintain air service to our community. Due to operating expenses being 4.5% below budget through December 2013, the airline cost per enplaned passenger is estimated to be $6.96 as compared to budgeted cost per enplaned passenger of $7.85. The airline cost per enplaned passenger in FY 2012-13 registered $6.39. Non-Airline Revenue per Enplaned Passenger This ratio represents operating revenues derived from sources other than the airlines divided by enplaned passengers for the fiscal year. This financial ratio measures the Authority’s ability to generate terminal and rental car concession fees, public parking, land and building rents from non-airline facilities, interest income, and aviation fuel tax at both the Reno-Tahoe and the Reno-Stead airports. Revenues under this calculation exclude cost recovery collected from the airlines for use of the baggage handling system. For the six month period ending December 31 2013, non-airline revenue per enplaned passenger registered $16.09, an increase from the $15.49 registered in the prior year. This ratio is 3.9% higher than the same period last year, and it is 1.2% above the FY 2013-14 Budget of $15.90. With the slowly improving economy, these results primarily reflect a general increase in revenue per transaction in the two largest non-airline revenue sources (rental car concession and public parking) as compared to last year. In addition, concession revenues derived from food and beverage and merchandise per passenger are higher due to the completion of the Airport Gateway Project. Advertising and gaming revenue continues to be areas of concern with sales lower per passenger compared to last year and the adopted FY 2013-14 Budget. A detailed table enclosed in this package provides a comparison of non-airline revenues by source as compared to the adopted budget and the previous year results. Operating Ratio The Operating Ratio is calculated by taking operating and maintenance expenses and dividing by total operating revenues. This ratio indicates whether that level of operating expense as a proportion of operating revenues are consistent and tracking with the approved expenditures and revenues adopted in the FY 2013-14 Budget. Generally, a lower ratio of expenses to revenues is positive since it reflects an improvement in the net operating revenue available to pay debt service and generate additional cash flow.


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For the six month period ending December 31 2013, the ratio favorably registered 80.5% as compared to the adopted budget ratio for the first six months of the year of 86.8%. This result reflects lower operating expenses and higher operating revenues. Days Cash on Hand Day’s Cash on Hand is calculated by identifying unrestricted cash and investments divided by annual operating and maintenance expenditures multiplied by 365 days. The Authority’s cash and liquidity position is very strong with 434 days of unrestricted cash on hand to meet the Authority’s operating and maintenance requirements. The median average for airports nationwide in 2012 according to Moody’s Investor Services was 522. Per the rating agencies, a ratio lower than 300 days significantly increases the likelihood of a ratings downgrade. A chart enclosed in this package provides a comparison of liquidity balances and Days Cash on Hand as of December 31, 2013 compared to FY 2012-13 year-end results and forecasted year-end cash balances in the adopted FY 2013-14 Budget. Debt Service Coverage Ratio The Debt Service Coverage Ratio is the net revenue available for debt service (Operating Revenue less Operating Expenses) divided by annual debt service. This benchmark measures the ability of the Authority’s operations to generate sufficient funds to pay the annual debt service on both the senior lien bonds and the subordinate notes. The Authority targets to maintain a ratio no lower than 1.5 times more net revenue after operating expenses and is required under the bond indenture to maintain at least a ratio of 1.25. The Authority’s debt service coverage ratio of 1.92X for the six month period through December 2013 is strong with lender and bond holder protection higher than the FY 2013-14 Budget estimate of 1.38X and significantly above the minimum level of 1.25X established under the Authority’s Master Bond Indenture. This ratio is significantly above budget due to two primary factors: (1) higher operating revenues by $654,000 or 3.1% higher than budget and (2) significantly lower operating expenses of $829,000 or 4.5% as outlined above. The senior lien debt was issued to fund construction of the Parking Garage and the connector bridge. Public parking revenues are assigned to the payment of this debt. No debt service for either the Senior Bonds or the Subordinate Lien Notes is included in the cost recovery assigned to Airline Cost Centers. A table and chart are included in this package to outline the financial inputs used to calculate this ratio for December 2013 as compared to the same period last year and the Adopted FY 2013-14 Budget.


Date: February 5, 2014 Administrative Report #08-14 To: Chairman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: ADMINISTRATIVE AWARD OF CONTRACTS PURSUANT TO

RESOLUTION NO. 462 FOR THE MONTH OF JANUARY 2014 BACKGROUND At the January 19, 2006 meeting of the Board of Trustees of the Reno-Tahoe Airport Authority, the Board approved Resolution No. 462 authorizing the President/CEO to award contracts for budgeted goods, services (other than professional service agreements exceeding $50,000), materials, and supplies when the estimated amount to perform the contract is $100,000 or less, approve a contract change order (CO) on construction projects where the total net cost of a single change order does not increase the contract sum by more than $100,000, contract for a professional service agreement (PSA) when the estimated amount to perform the work is $50,000 or less, and approve an amendment to a professional service agreement where the total net cost of a single amendment does not increase the agreement amount by more than $50,000. DISCUSSION Resolution No. 462 requires that the President/CEO provide the Board of Trustees with an administrative report setting forth a list of contracts, professional service agreements, change orders, and amendments approved administratively as a result of the resolution to be given to the Board on a monthly basis. Appended hereto is the list for the month of January 2014. MMM/jah/jo

JANUARY 2014

#08-14

Date Name of Company Dollar Amount Description Funding Source Department/Division

1/6/14 Central Sanitary Supply

$86,588 Blanket PO#5406 for annual procurement of janitorial paper products/trash can liners on an as ordered as needed basis. This contract results from a formal competitive solicitation

Adopted FY 2013-14 Operating Budget Building Maintenance

Facilities and Maintenance

1/21/14 G&G Specialty Contractors, Inc.

$15,703 CO#1 to Phase 22.1 of the Sound Insulation Program for modifications made to the original scope of work due to unforeseen conditions discovered in the field by the contractor.

AIP Grant 3-32-0017-95

Planning

Key to abbreviations: CO = Change Order O&M = Fiscal Year 2013-14 Operating and Maintenance Budget PSA = Professional Service Agreement PFC = Passenger Facility Charge Program AIP = Airport Improvement Project *Contract signed by authorized designee – Executive Vice President/COO


Date: February 5, 2014 Administrative Report #09-14 To: Chairman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: FY 2013-2014 GENERAL COUNSEL’S BUDGET The following is a summary of the General Counsel’s budget for the six months of the 2013-2014 fiscal year. The summary shows the amounts “budgeted’’ compared to “actual” by the major account classifications. While December represents 50% of the budget year, actual costs are 36.4% of the total budget.

Account Classification YTD Actual

YTD Budget

Over (Under) Budget

% Variance

2013-14 Annual Budget

% of Annual Budget

Purchased Services Fennemore Craig Jones Vargas $ 149,203 $ 182,500 $ (33,297) -18.2% $ 365,000 40.9%

Specialty Area, Legal 21,607 42,500 (20,893) -49.2% 85,000 25.4% Other Purchased Services 243 7,600 (7,357) -96.8% 15,200 1.6% Administrative Expense

Books & Subscriptions 0 300 (300) -100.0% 600 0.0% Conference Registration 0 800 (800) -100.0% 1,600 0.0% Travel Expense

0 1,300 (1,300) -100.0% 2,600 0.0%

Total General Counsel $ 171,053 $235,000 $ (63,947) -27.2% $ 470,000 36.4% Legal fees of $158,841 incurred due to the Air Race accident, have been removed from the legal budget and placed in a receivable account. MMM/lw/jo


Date: February 5, 2014 Administrative Report #10-14 To: Chairman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: FY 2013-2014 BOARD OF TRUSTEE’S BUDGET The following is a summary of the Board of Trustee’s budget for the six months of the 2013-2014 fiscal year. The summary shows the amounts “budgeted’’ compared to “actual” by the major account classifications. While December represents 50% of the budget year, actual costs are 34.2% of the total budget.


YTD Budget

Over (Under) Budget

% Variance


% of Annual Budget

Personnel Services Trustee Stipend $ 30,240 $ 30,240 $ 0 0% $ 60,480 50.0% Personnel Services 22,004 19,750 2,254 11.4% 39,500 55.7% Purchased Services 1,029 5,350 (4,321) -80.8% 10,700 9.6% Materials and Supplies 1,336 3,000 (1,664) -55.5% 6,000 22.3% Administrative Expense Membership Dues 0 250 (250) -100.0% 500 0.0%

Conference Registration & Training 1,175 2,700 (1,525) -56.5% 5,400 21.8%

Meeting Expenses 2,510 5,000 (2,490) -49.8% 10,000 25.1% Travel and Reimbursed Expense 2,566 5,250 (2,684) -51.1% 10,500 24.4% Relocation Expense *

0 17,500 (17,500) -100.0% 35,000 0.0%

Total Board $ 60,860 $ 89,040 $ (28,180) -31.6% $ 178,080 34.2%

* With the adoption of the 2013-14 budget prior to execution of the new contract with the President/CEO,

relocation expenses were paid in the 2012-13 fiscal year. MMM/lw/jo


Date: February 5, 2014 Administrative Report #11-14 To: Chairman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: FY 2013-2014 LEGISLATIVE CONSULTANT’S BUDGET The following is a summary of the Legislative consultant’s budget for the six months of the 2013-2014 fiscal year. The summary shows the amounts “budgeted’’ compared to “actual” by the major account classifications. While December represents 50% of the budget year, actual costs are 47.7% of the total budget.


YTD Budget

Over (Under) Budget

% Variance


% of Annual Budget

State and Local Governmental Relations $ 36,270 $ 40,250 $ (3,980) -9.9% $ 80,500 45.1% Legislative Consultant Washington, D.C. 44,782 44,750 32 0.1% 89,500 50.0%

Total Governmental Relations $ 81,052 $ 85,000 $ (3,948) -4.6% $ 170,000 47.7% MMM/lw/jo


Date: February 5, 2014 Administrative Report #12-14 To: Chairman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: HANGAR LEASE EXECUTION STATUS BACKGROUND Resolution No. 502, authorizes the President/CEO to approve and execute Reno-Tahoe Airport Authority (Authority) General Aviation (GA) aircraft hangar lease agreements where the estimated total revenue amount is $100,000 or less over the hangar lease term, including any extension year. This Resolution further requires that the President/CEO provide the Board of Trustees with an Administrative Report setting forth a list of hangar lease agreements executed as a result of this Resolution. This Administrative Report shall be given to the Board on a monthly basis. At the May 17, 2012 meeting of the Board of Trustees, the Board approved the phased release of twenty-three (23) additional T-Hangars at GA West, based on market demand, ultimately bringing the total GA West inventory to thirty-one (31) T-Hangars. In the first release phase, eight (8) additional T-Hangars were made available for lease. Effective October 18, 2012, the Reno-Tahoe Airport Authority transferred the management of the T-Hangars to the Reno-Tahoe International Airport’s (RNO) Fixed Base Operator, Atlantic Aviation, which is now the point of contact for the RNO T-Hangar tenants, including leasing, maintenance and repair, and fueling services. Atlantic Aviation is responsible for management and marketing of the vacant T-Hangars at both GA West and GA East. At the February 14, 2013 Board meeting, the Board voted to waive the monthly $102 Pavement Rehabilitation Fee previously approved for all GA West T-Hangar tenants. This became effective March 1, 2013. The Board further agreed to place a hold on additional expenditures for Pavement Rehabilitation until demand is evident. LEASING STATUS: COMMERCIAL & BOX HANGARS Airport Authority staff continues to administer box and commercial hangar leases. GA West inventory consists of five (5) box/commercial hangars and one (1) Fixed Base Operator (FBO) office. Effective February 1, 2014, Hangar 8 was leased which decreased vacancies at GA West from three vacancies to two. Commercial box hangars available for lease are Hangar 2 and 10. Atlantic Aviation and Airport Authority staff continues to market and show the facilities to prospective GA tenants. GA East inventory consists of one (1) FBO office and six (6) box/commercial aircraft hangars. Atlantic Aviation took temporary occupancy of the FBO Office on May 1, 2013 while they construct a new FBO Office and attached Hangar on their long-term premises. Effective February 1, 2014, Hangar E was leased which decreased vacancies at GA East decreased from one to none. All commercial/box hangars are leased at GA East.

Hangar Lease Execution Status February 2014 #12-14 Page 2 of 2 LEASING STATUS: T-HANGARS As of February 1, 2014, a total of twelve (12) T-hangars at GA West are leased and four (4) are currently available for lease. The remaining fifteen (15) T-Hangars will be made available upon Board direction. To date, a total of fifty-five (55) T-Hangars at GA East are leased and one (1) is available for lease. There is an additional vacant T-Hangar that is currently non-leasable due to severely damaged doors and is not included in available GA East T-Hangars. In summary, out of a total of eighty-eight (88) T-Hangars owned by the Reno-Tahoe Airport Authority located at both the East and West General Aviation facilities, sixty-seven (67) T-Hangars are currently leased. The table below shows aircraft T-Hangar leasing and vacancy status as of February 1, 2014.

Airport Location Occupied Vacant

Available Pending Board

Directive

General Aviation West 11 4 15

General Aviation East 56 1 0

Appended hereto is the General Aviation aircraft hangar leasing status as of February 1, 2014. MMM/tf/jo

RNO HANGAR LEASES STATUS REPORT – February 1, 2014

#12-14 1

Commencement Date

Name of Tenant/Company Hangar Number Description Status Annual Value of Agreement

7/1/12 Padal, Inc. E01 T-Hangar East A $7,368 7/1/12 Mowbray Aviation E02 T-Hangar East A $7,368 2/1/13 Richmond, Richard E03 T-Hangar East A $7,368

12/10/12 Martin, James E04 T-Hangar East A $7,368 7/1/12 Reno Flying Service E05 T-Hangar East A $7,368 2/1/14 Reno Flying Service E06 T-Hangar East A 7/1/12 Vientos, LLC & Online Aerial Photo E07 T-Hangar East A $7,368 7/1/12 N9841X, LLC – Martin, Lyle E08 T-Hangar East A $7,368

RTAA Storage E09 Pocket Hangar East A 7/1/12 Barker Aviation E10 T-Hangar East A $10,932 7/1/12 Tahoe Aviation E11 T-Hangar East A $7,368 7/1/12 Fan Fi International E12 T-Hangar East A $7,368 7/1/12 Hoskins, Anthony & Berger Joyce E13 T-Hangar East A $7,368 7/1/12 FiveMikeCharlie, Inc E14 T-Hangar East A $7,368 12/1/13 *333 Ranch, LLC (Jim Boyer) E15 T-Hangar East A $7,368 7/1/12 SJR Properties E16 T-Hangar East A $8,105 7/5/13 Karsten Iverson E17 T-Hangar East A $7,368 2/13/13 O’Neal Management Group, LLC E18 T-Hangar East A $9,912 7/1/12 Petty, Bob & O’Connor, Michael E19 T-Hangar East A $6,922 7/1/12 Dillon, Ken E20 T-Hangar East A $6,922 7/1/12 Nash, Jeffrey E21 T-Hangar East A $6,922 9/1/12 Stanley Plecha E22 T-Hangar East A $6,922 7/1/12 Gold Digger Enterprises E23 T-Hangar East A $6,922 2/1/14 Starr-Ski, LLC E24 T-Hangar East A 7/1/12 Air 340 LLC E25 T-Hangar West A $6,922 3/1/14 Spalding Labs E26 T-Hangar East P

VACANT E27 T-Hangar East V 7/1/12 Davis, Richard/Mike Bussio E28 T-Hangar East A $6,922 7/1/12 Bryce Herndon E29 T-Hangar East A $6,922 7/1/12 Zubillaga, Phil E30 T-Hangar East A $7,614 7/1/12 Gunderson, Mark E31 T-Hangar East A $6,922


#12-14 2

Commencement Date


7/1/12 Korhonen, Aki E32 T-Hangar East A $6,922 7/1/12 Jochco Investments, LLC E33 T-Hangar East A $6,922 7/1/12 Advantage Flight Solutions E34 T-Hangar East A $6,922 7/1/12 Scolari, Joey E35 T-Hangar East A $6,922

VACANT (doors require extensive repair) E36 T-Hangar East V 11/1/12 Goode, Randall E37 T-Hangar East A $4,971 7/1/12 The Kaigan Corporation E38 T-Hangar East A $4,971 7/1/12 Buck, David E39 T-Hangar East A $5,468 7/1/12 Pezonella, Raymond E40 T-Hangar East A $4,971 7/1/12 Delta Victor Resources E41 T-Hangar West A $4,971 7/1/12 Baker, Gary E42 T-Hangar East A $4,971 7/1/12 Sweet, Kent E43 T-Hangar East A $4,971 7/1/12 Heinrich, Rolf & Gisler, Ron E44 T-Hangar East A $4,971 2/11/13 Aussieyank Air,LLC E45 T-Hangar East A $4,971 8/9/13 Silverado Land Management E46 T-Hangar East RE $4,971 10/1/13 Pilotinside.com, LLC E47 T-Hangar East A $4,971 9/1/13 Cirrus Air, LLC E48 T-Hangar East A $4,971 7/1/12 Civil Air Patrol E49 T-Hangar East A $4,971 7/1/12 Civil Air Patrol E50 T-Hangar East A $4,971 7/1/12 Riley, James E51 T-Hangar East A $4,971 11/1/13 Haisfield, Jeffrey E52 T-Hangar East A $4,971 7/1/12 Davis, Grant E53 T-Hangar East A $5,468 7/1/12 November Papa- Hegge, Thomas E54 T-Hangar East A $4,971 7/1/12 Pokey Airlines E55 T-Hangar East A $4,971 7/1/12 Resnik, Jeffery E56 T-Hangar East A $4,971 7/1/13 Mowbray, Jerry E57 T-Hangar East A $4,971 7/1/12 LVR (Dermody) Hangar F1 Box Hangar East A $29,903 7/31/12 Boardroom Aviation Hangar F2 Box Hangar East A $31,897 12/20/10 Sierra NV Holdings/Heli 1 Hangar F3 Box Hangar East A $29,903 7/1/12 Reno Flying Service Hangar B Box Hangar East A $87,033 2/1/14 Reno Flying Service Hangar E Box Hangar East A


#12-14 3

Commencement Date


7/1/12 Deeside Trading Hangar G Box Hangar East A $49,838 5/1/13 Atlantic Aviation FBO Office FBO Office East A $139,140

VACANT FBO Office FBO Office West V VACANT Hangar 2 Box Hangar West V

7/1/12 Caymus Vineyards Hangar 7 Box Hangar West A $23,923 2/1/14 Charles Chi Hangar 8 Box Hangar West A

11/29/10 Western Jet Hangar 9 Box Hangar West A $152,107 5/28/13 VACANT Hangar 10 Box Hangar West V

VACANT W01 T-Hangar West V VACANT W02 T-Hangar West V VACANT W03 T-Hangar West V VACANT W04 T-Hangar West V VACANT W05 T-Hangar West V VACANT W06 T-Hangar West V VACANT W07 T-Hangar West V VACANT W08 T-Hangar West V

7/1/12 Robertson Consulting W09 T-Hangar West A $8,142 VACANT W10 T-Hangar West V

7/1/12 John Howitt W11 T-Hangar West A $5,502 VACANT W12 T-Hangar West V VACANT W Heli Hangar Helicopter Hangar West V VACANT W14 T-Hangar West V

9/1/12 Intermountain Traffic, LLC W15 T-Hangar West A $5,502 7/1/12 Elliot, Mike W16 T-Hangar West A $6,052 9/1/12 VACANT W17 T-Hangar West V 7/1/12 C&J of Nevada W18 T-Hangar West A $4,621 8/1/12 Aero Investors, LLC W19 T-Hangar West A $4,621 9/1/13 Prioreschi, Gordon W20 T-Hangar West A $4,621 9/1/13 Cherokee Six, LLC W21 T-Hangar West A $4,621 9/1/13 Salinger, David W22 T-Hangar West A $4,974 9/11/12 Travis, Craig W23 T-Hangar West A $4,620


#12-14 4

Commencement Date


7/1/12 Garman, Jon W24 T-Hangar West A $4,621 2/1/14 NV Capital Aviation, LLC/Michael

Schnabel W25 T-Hangar West A

VACANT W26 T-Hangar West V VACANT W27 T-Hangar West V VACANT W28 T-Hangar West V VACANT W29 T-Hangar West V VACANT W30 T-Hangar West V VACANT W31 T-Hangar West V

A = Active Agreement HSC = Hangar Square Footage Change P = Pending Agreement V= Vacant T = Terminated Agreement New Activity for the Month RE = Relocated Tenant * New RNO T-Hangar Tenant

agenda reno-tahoe airport authority finance & … · 2018. 3. 29. · b. review of operating...

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