ANNUAL REPORT TO COUNCILS - Greenville, SC

ANNUAL REPORT TO COUNCILS South Carolina Technology & Aviation Center

Visit us online at www.sc-tac.com www.itic-sc.com

2 Exchange Street Greenville, SC 29605 Phone: 864-299-3152 Fax: 864-299-0797

ANNUAL REPORT TO COUNCILS

Dear Honorable Mayor, Chairman and Council Members,

Please find attached, copies of:

• FY 2019/2020 budget as adopted by the South Carolina Technology & Aviation Center (SCTAC) Board of Directors; and

• Auditor’s Letter related to the annual audit for FY 2019 as performed by Bradshaw, Gordon & Clinkscales, LLC.

If you would like to receive a copy of the full audit report, please contact Karen Gordon at (864) 451-5755 or [email protected].

I am also pleased to report SCTAC highlights of the past fiscal year, covering each of our four (4) programs of work:

1) Property Management

2) Donaldson Field

3) Economic Development

4) International Transportation Innovation Center (ITIC)

Please contact me directly should you have any questions or comments.

Regards,

Jody Bryson SCTAC President and CEO ITIC Executive Director

FY 2020 Operating Budget

Approved October 14, 2019

Revenues

Rentals $ 3,158,000

Airport Usage Fees 60,000

Fuel Flowage Fees and Other 107,000

Total Operating Revenues $ 3,325,000

Expenses

Compensation and Benefits $ 931,000

Maintenance, Fuel and Supplies 240,000

Utilities, Taxes and Insurance 715,000

Meals, Travel, Dues and Subscriptions 75,000

Governance and Compliance 136,000

Office Support 48,000

Marketing 110,000

Property Development 70,000

Non-Capitalized Improvements and Asset Purchases 150,000

Total Operating Expenses $ 2,475,000

Operating Income (before depreciation) $ 850,000

BRADSHAW, GORDON & CLINKSCALES, LLC CERTIFIED PUBLIC ACCOUNTANTS

Del L. Bradshaw, CPA/ABV, CFF Sandra L. Watkins, CPA, CFP ®

Dell Baker, CPA Ellison D. Smith, CPA

Peter C. Tiffany, CPA/ABV, CFF Brian M. Graham, JD

Mandy B. Satterfield James B. Starks, IV, CPA

Roger B. Clinkscales, CPA

1954-2014 Roger R. Duncan, CPA

1956-2011

April 9, 2020

To Jody Bryson, President & CEO

and the Board of Directors South Carolina Technology & Aviation Center

We have audited the financial statements of the business-type activities and discretely presented component unit

of South Carolina Technology & Aviation Center (“SCTAC”) for the year ended September 30, 2019.

Professional standards require that we provide you with information about our responsibilities under generally

accepted auditing standards, as well as certain information related to the planned scope and timing of our audit.

We have communicated such information in our letter to you dated January 7, 2020. Professional standards also

require that we communicate to you the following information related to our audit.

Significant Audit Findings

• Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant

accounting policies used by SCTAC are described in Note 1 to the financial statements.

Accounting estimates are an integral part of the financial statements prepared by management and are based

on management’s knowledge and experience about past and current events and assumptions about future

events. Certain accounting estimates are particularly sensitive because of their significance to the financial

statements and because of the possibility that future events affecting them may differ significantly from those

expected. The most sensitive estimate affecting the business-type activities and the discretely presented

component unit financial statements was:

Management’s estimate of the depreciation expense is based on the expected useful lives of

capital assets and the method of depreciation used. When formulating this estimate, management

considers such factors as historical asset lives realized, technological advances and

obsolescence, and the expected rate of depreciation. We evaluated the key factors and

assumptions used to develop the depreciation estimate in determining that it is reasonable in

relation to the financial statements taken as a whole.

Management’s estimate of the allowance for uncollectible rental revenue is based on historical

collection rates and an analysis of the collectability of individual tenants. We evaluated the key

factors and assumptions used to develop the allowance in determining that it is reasonable in

relation to the financial statements taken as a whole.

The financial statement disclosures are neutral, consistent, and clear.

630 E. Washington Street • P.O. Box 16389 • Greenville, SC 29606 • P 864.233.0590 • F 864.271.6762

Members: American Institute of CPAs, South Carolina Association of CPAs, North Carolina Association of CPAs

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• Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our

audit.

• Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the

audit, other than those that are clearly trivial, and communicate them to the appropriate level of management.

The attached Schedule 1 summarizes misstatements detected as a result of audit procedures related to pension

accounting, which were corrected by management in the basic financial statements. The adjusting entry is

material to the financial statements as a whole.

• Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing

matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the

auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

• Management Representations

We have requested certain representations from management that are included in the management

representation letter dated April 9, 2020.

• Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting

matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of

an accounting principle to SCTAC’s financial statements or a determination of the type of auditor’s opinion

that may be expressed on those statements, our professional standards require the consulting accountant to

check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such

consultations with other accountants.

• Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing

standards, with management each year prior to retention as SCTAC’s auditors. However, these discussions

occurred in the normal course of our professional relationship and our responses were not a condition to our

retention.

Other Matters

We applied certain limited procedures to the Schedule of SCTAC’s Proportionate Share of the Net Pension

Liability – South Carolina Retirement System, and the Schedule of the SCTAC’s Contributions – South Carolina

Retirement System, which are required supplementary information (RSI) that supplements the basic financial

statements. Our procedures consisted of inquiries of management regarding the methods of preparing the

information and comparing the information for consistency with management’s responses to our inquiries, the

basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.

We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were not engaged to report on the Schedule of Revenues and Expenses – Budget and Actual – Proprietary

Fund, which accompany the financial statements but are not RSI. We did not audit or perform other procedures

on this other information, and we do not express an opinion or provide any assurance on it.

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Restriction on Use

This information is intended solely for the use of the Board of Directors and management of SCTAC and is not

intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,

Bradshaw, Gordon & Clinkscales, LLC

Longtime DCFD Chief Retires; New Chief Announced Chief J.R. Boyce announced his retirement, following 45 years of service with the Donaldson Center Fire Department. Chief Boyce was honored by the SCTAC Board of Directors and staff at the December 16, 2019 Annual Joint Councils luncheon and report. Assistant Chief Mike Stadler was sworn-in as the new Chief in August. Workforce Survey Results Announced The results of a “Workforce Survey” conducted by the Greenville Chamber of Commerce, Appalachian Council of Governments, Greenville Area Development Corporation and SC Works Greater Upstate were announced in March. Of note, 64% of SCTAC businesses are manufacturing, 48% have more than 100 employees, and 76% plan to increase their headcount within the next two years.

PROPERTY MANAGEMENT

SCTAC Expands Portfolio with New Property Purchase SCTAC purchased a 10,000 sq. ft. property with a small office space and loading docks at 316 Echelon Drive. The property is being readied for leasing.

Infrastructure Improvements Made at Headquarters The roof and HVAC system have been replaced at SCTAC’s office located at 2 Exchange Street. The roof and HVAC were approximately 30 and 15 years old, respectively. The new roof has a 15-year warranty and the new HVAC system is energy-efficient.

Pesticide Qualification Earned The Property Management division of SCTAC earned a qualification as a certified purchaser and applicator of restricted use pesticides in accordance with the South Carolina Pesticide Control Act. Property Management Achievement SCTAC was awarded the South Carolina Chamber of Commerce Safety Award for the eighth consecutive year.


DONALDSON FIELD

F-16 Arrestor System Project Underway SCTAC began working with Lockheed Martin representatives to select an arrestor system for the F-16. A BAK-14 retractable hook cable system will be deployed below the runway surface to prevent damage to the cable, taxiing aircraft and the runway surface during normal runway operations. The project will continue into 2020.

SCTAC Welcomes VP Pence In August, SCTAC welcomed Vice President Pence on Air Force Two. Several SCTAC staff were instrumental in the successful arrival to and departure from Donaldson Field in August.

New Airfield Signs Installed New airfield signs made by the South Carolina Department of Corrections were installed by SCTAC staff. Thirty-three (33) new signs were obtained free-of-charge through South Carolina Aeronautics. SCTAC Successfully Completes FAA Part 139 Certification In November, SCTAC successfully passed the FAA’s annual Part 139 Inspection with no major issues cited. This federal inspection process consists of a 100-point checklist and review of manuals and records maintained by SCTAC. New airfield driver training and testing, along with the creation of an in-vehicle card were also accomplished as part of this process.


ECONOMIC DEVELOPMENT

F-16 Production Underway Following a production line ribbon cutting ceremony in April, Lockheed Martin officially started producing the F-16 on November 11, 2019. The production of the F-16 will create approximately 400 new jobs with the first delivery scheduled for 2021. Lockheed Martin’s SCTAC site consists of 16 hangars, 276 acres, 1.1 million sq. ft. of covered space and 3 million sq. ft. of ramp space. SCTAC Honored in “Southern Business & Development” Magazine In an article entitled, “Best of the Aerospace Industry in the American South,” Southern Business &

Development magazine named SCTAC as one of the Best Industrial Sites in South Carolina Aerospace Manufacturing. SCTAC was also named one of South Carolina’s Best Assets for the Aerospace Industry.

Multi-Pack Solutions Arrives at SCTAC Multi-Pack Solutions, a contract packager and manufacturer, selected SCTAC for its relocation/expansion project, and located its new sales and production operations in a 125,000 sq. ft. facility on 21.33 acres at SCTAC. The $1.3 million investment will create 72 jobs.

3M Announces $60 Million Expansion In March, 3M announced a five-year plan to increase its manufacturing capacity and enhance its infrastructure at its SCTAC operations with an investment of $60 million. 3M’s mega-site has been in operation at SCTAC for 45 years and employs 500 people. SCTAC Hosts GADC Board SCTAC was selected to host the Greenville Area Development Corporation’s Board of Directors for their October meeting. Following a brief presentation, board members were treated to a “windshield” tour of SCTAC and ITIC. SCTAC Holds Economic Development Allies Appreciation Event In November, SCTAC held its first ever Economic Development Allies Appreciation Event. Key staff from the following organizations were in attendance: SCDOC, SCTAC Board of Directors, NEXT, Greenville Area Development Corporation, Upstate SC Alliance, SC Manufacturing Alliance, City of Greenville Economic Development Department and other corporate leaders.


ECONOMIC DEVELOPMENT (con’t)

SCTAC President & CEO Official Member of SCDOC Delegation to Sweden SCTAC President & CEO, Jody Bryson, served as an official member of the South Carolina Department of Commerce delegation to the FKG Scandinavian Automotive Supplier Association annual event held in October in Gothenburg, Sweden. Mr. Bryson gave a presentation regarding testing solutions for the automotive industry and attended a dinner hosted by the State of South Carolina delegation.

SCTAC Tours F-35 Production Line In November, staff toured Lockheed Martin Aeronautics’ F-35 production line in the Dallas/Fort Worth, Texas area, along with a delegation from the South Carolina Department of Commerce.

INTERNATIONAL TRANSPORTATION INNOVATION CENTER (ITIC)

ITIC Announces Upgraded Capabilities and Improvements

ITIC completed a restructuring of its business plan to include track rentals, events, consulting and grant research. In addition, a multi-user track design was created, tripling capacity on the test track. Finally, installation of a fast charging station, entry-control fencing, and track signage were completed in 2019.

Netflix’ “Fastest Car” Films on Test Track Filming of two episodes of Netflix’s Fastest Car took place on ITIC’s test track in February. The California-based cast and crew of 70 people were on-site for the production. The episodes are now available for viewing on Netflix.


INTERNATIONAL TRANSPORTATION INNOVATION CENTER (ITIC) (con’t)

CTO Creates Mobility Testing and Standardization Alliance The International Alliance for Mobility Testing & Standardization (IAMTS) was launched at the SAE (Society of Automotive Engineers) World Congress Experience in Detroit, Michigan in April. This group is the brainchild of ITIC’s Chief Technology Officer, Dr. Joachim Taiber, and its mission is to develop and grow an international portfolio of advanced mobility testbeds that meet the highest quality implementation and operational standards.

ITIC Partners with Clemson University ITIC partnered with Clemson University on a United States Department of Transportation grant application for an “Automated Driving System Demonstration” study. ITIC Welcomes Liz Griffith Liz Griffith was hired in October as ITIC’s Operations Director. Ms. Griffith oversees scheduling of the test track and marketing. 2019 Test Track Clients Announced ITIC’s test track welcomed the following repeat and new customers: Proterra, Volvo Trucks, Michelin, City of Greenville Police Department, Greenville County Sheriff’s Department, Clemson University/CU-ICAR, JTEKT, Driving Dynamics, Freightliner Custom Chassis and ZF.


Documents

ANNUAL REPORT TO COUNCILS - Greenville, SC