REVISED - Reno–Tahoe International Airport...DATE & TIME: Tuesday, August 12, 2014 9:00 a.m. LOCATION: Reno-Tahoe International Airport Administrative Offices, Conference Rooms

BOARD OF TRUSTEES PRESIDENT/CEO Nat Carasali, Chair Marily M. Mora, A.A.E. *** Andy Wirth, 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 Cindy Riddell (Interim) Bob Larkin Adam Mayberry * Chair of Finance and Business Development Committee ** Vice Chair of Finance & Business Development Committee *** Member of Finance and Business Development Committee

**REVISED**

AGENDA

RENO-TAHOE AIRPORT AUTHORITY FINANCE & BUSINESS DEVELOPMENT

COMMITTEE MEETING DATE & TIME: Tuesday, August 12, 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 July 8, 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. Authorization for the President/CEO to Negotiate Final Terms and Execute a New 8-Year, 8-Month Commercial Lease Agreement Between Pro Bumper Repair and the Reno-Tahoe Airport Authority for 6,778 Square Feet of Commercial Space at the Warehouse Facility Located at 2890 Vassar Street

B. Authorization for the President/CEO to Execute the Second One-Year Renewal

Option of the Janitorial Services Agreement, with ABM Janitorial Services, for July 1, 2014 Through June 30, 2015, in the Amount of $181,671

IV. Items presented to the Finance & Business Development Committee for approval:

A. Audit Plan July 1, 2014 through June 30, 2015

V. Items presented to the Finance & Business Development Committee for discussion: A. General Aviation Customer Service and Marketing Program

Reno-Tahoe Airport Authority August 12, 2014 Finance & Business Development Committee Page 2

VI. Items presented to the Finance & Business Development Committee for information: A. Investment Portfolio Report for the Quarter ended June 2014 B. Review of Operating Results through June 2014 C. Review of Budget Transfers (if any) D. Review of Contracts and Professional Service Agreements through July 2014 E. Review of Legal Expenses through June 2014 F. Review of Board Budget through June 2014 G. Review of Legislative Consultants Budget through June 2014

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, 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 July 8, 2014

9:00 a.m.

In Attendance: Adam Mayberry, Chairman*

Dr. Kosta Arger, Trustee** Steve Katzmann, Trustee* Rick Murdock, Trustee *

Jerry Hall, Trustee Bob Larkin, Trustee Marily 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 James McCluskie, VP of Planning, Engineering & Environmental Management Leah Williams, Manager of Accounting Tony Osendorf, Manager of Budget & Finance Laurie Weeks, Manager of Concessions Joyce Humphrey, Manager of Purchasing & Materials Patrick North, Senior Internal Auditor Julie Sternberg, Senior Benefits Specialist David Pittman, Director of Facilities & Maintenance Randy Whitworth, Building Maintenance Superintendent Bill Heath, Building Maintenance & Services Supervisor Lois O’Neil, Economic Development Specialist Ken Moen, Project Technician Chrissy Gonzales, Administrative Assistant II Elizabeth Fielder, Fennemore Craig Jones Vargas Lloyd Barnes, L.P. Insurance Dennis Wenner, Elite Line Services Alby Redick, Aviation Classics Rick Eaton, Aviation Classics * Denotes Finance Committee member ** Denotes Chair of Finance and Business Development Committee

TOPICS DISCUSSED:

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I. REVIEW OF MEETING MINUTES FROM JUNE 10, 2014 A motion was made by Trustee Mayberry, seconded by Trustee Murdock, and the Committee unanimously approved the minutes from the June 10, 2014 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(07)-31 AUTHORIZATION FOR THE PRESIDENT/CEO TO REVISE THE RENO-TAHOE AIRPORT AUTHORITY T-HANGAR LEASING GUIDELINES TO ALLOW THE LEASING OF GENERAL AVIATION WEST T-HANGARS AT RENO-TAHOE INTERNATIONAL AIRPORT THROUGH DECEMBER 31, 2020 AND REVISE THE GA WEST T-HANGAR LEASE RATE ADJUSTMENT METHODOLOGY

Staff gave a presentation requesting authorization for the President/CEO to revise the Reno-Tahoe Airport Authority (RTAA) T-Hangar Leasing Guidelines to allow the leasing of General Aviation (GA) West T-Hangars at Reno-Tahoe International Airport (RTIA) through December 31, 2020 and revise the GA West T-Hangar lease rate adjustment methodology. Trustee Arger asked for clarification on the InterVistas study regarding the potential demand for ten (10) T-Hangars and how it was stated in the InterVistas studies. Staff responded that ten (10) out of the sixteen (16) or 63% of the total question respondents indicated there was demand for additional T-Hangars. The survey population was comprised of tenants and other users of the RTIA. Trustee Arger asked for occupancy levels at the North Air Cargo Ramp and whether there is additional room to expand the north cargo ramp at this point. Staff stated that the air cargo building is near 100% occupancy with the addition of new service by Amerijet International. President/CEO Marily Mora also stated the RTAA will use the southwest quadrant of the airfield for future cargo development. Trustee Hall inquired about the outcome of the study from InterVistas. President/CEO stated that the final version from InterVistas studies will be available sometime in August 2014. Staff stated that there are existing box hangar leases at GA West through 2020. As a result, revising the leasing guidelines for GA West T-Hangars through 2020 does not change any plans for the development of the southwest quadrant.

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Trustee Hall asked for clarification as to whether or not the RTAA will be relocating the entire cargo facility from the north cargo ramp to the southwest quadrant. Staff stated no, the expansion to the southwest quadrant would be to accommodate new cargo operations. Marily Mora, President/CEO, also stated that there will need to be an interested party before the RTAA would start to develop the southwest quadrant for cargo. Staff stated the existing Board policy provides a Consumer Price Index (CPI) rate adjustment annually with a 3% cap along with a market to market appraisal on year five (5) for T-Hangars at GA East. With the initial lease term of T-Hangar leases at GA West not going beyond five (5) years, no provision for the market to market appraisal was provided in the Board policy. For the RTAA to be fair to all tenants, the requested revision to the policy would apply the same methodology to GA West. Trustee Katzmann expressed concern about the recent CPI increase to T-Hangar rents may be unfair to GA West tenants that derive no services. A motion was made by Trustee Katzmann, seconded by Trustee Murdock, and the Committee recommended this item [#14(07)-31] to the Board for information, discussion and possible action at the upcoming Board meeting. Trustee Mayberry voted to not recommend this item for Board discussion and possible action.

B. #14(07)-32 AUTHORIZATION FOR THE PRESIDENT/CEO TO RELEASE

SEVEN T-HANGARS (W27-W33) LOCATED AT GENERAL AVIATION WEST AT THE RENO-TAHOE INTERNATIONAL AIRPORT AND TO EXECUTE CONTRACTS TO BOTH REHABILITATE AND REPAIR REQUIRED PAVEMENT AND T-HANGARS

Staff gave a presentation requesting the authorization for the President/CEO to release seven (7) T-Hangars (W27-W33) located at General Aviation (GA) West at the Reno-Tahoe International Airport (RTIA) and to execute contracts to rehabilitate and repair both pavement and T-Hangars. Trustee Katzmann inquired how long it would take to complete the rehabilitation and repairs to the pavement and T-Hangars. Staff stated that the rehabilitation and repairs would take about sixty (60) days. The T-Hangar rehabilitation work would be performed by RTAA staff, while the pavement and fence work would be contracted out. Trustee Katzmann stated his concern the RTAA should enhance its marketing and advertising efforts to fill the existing nine (9) vacant T-Hangars before spending additional funds. With this project, the total number of T-Hangars available and on the market would increase to sixteen units.

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A motion was made by Trustee Katzmann, seconded by Trustee Mayberry, and the Committee unanimously recommended that this item [#14(07)-32] be tabled until a report is heard sixty (60) days from today at which time this Committee can then decide the next action to be undertaken. C. #14(07)-33 RECISSION OF OUTSTANDING ADVERTISING POLICIES AND

ADOPTION OF RESOLUTION NO.520 FOR A NEW ADVERTISING PROGRAM POLICY

Staff gave a presentation to request approval for the adoption of Resolution No. 520, for a new Advertising Program Policy for the Reno-Tahoe Airport Authority (RTAA). Trustee Katzmann inquired whether the proposed changes to Resolution No. 520 would impact any of the current advertisers. Staff stated that there are no changes or risks to current advertisers since all current advertising has been approved and is in compliance with the new policy. Trustee Larkin asked for clarification as to whether the advertising policy applied to outdoor billboards and banners on airport property. His concern was that inappropriate material would be displayed outside of the Reno-Tahoe International Airport (RTIA) terminal building. Staff indicated the new policy and its limits on inappropriate material would apply to both outdoor and indoor advertising on airport property. Trustee Hall asked Legal Counsel for clarification on the language stated in the Board Memorandum enabling editorial control by the Authority is consistent with language that has withstood court challenges in other circumstances. Legal Counsel stated “yes”, but that does not mean it will not be retested in the future. Legal Counsel believes this language is consistent with where the courts are today. A motion was made by Trustee Mayberry, seconded by Trustee Katzmann, and the Committee unanimously recommended this item [#14(07)-33] to the board for information, discussion and possible action at the upcoming Board meeting. D. #14(07)-34 AUTHORIZATION FOR THE PRESIDENT/CEO TO AWARD A

CONTRACT FOR IN-LINE BAGGAGE HANDLING SYSTEM OPERATIONS AND MAINTENANCE WITH ELITE LINE SERVICES, INCOPORATED (ELS) FOR AN INITIAL 10-MONTH CONTRACT TERM IN THE AMOUNT OF $702,138

Staff gave a presentation requesting authorization for the President/CEO to award a contract for in-line baggage handling system operations and maintenance with Elite Line Services, Incorporated (ELS) for an initial 10-month contract term in the amount of $702,138.

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Trustee Arger asked for clarification on how the cost recovery rate is established under the airline agreement and would the $1.42 per processed bag rate ever be raised to $1.50 for the Reno-Tahoe Airport Authority (RTAA) to make a profit, or is it always based on the absolute cost to make it revenue neutral. Staff stated that according to the airline use and lease agreement, RTAA can only recover direct and indirect costs assigned to the Baggage Handling System and that recovery rate has to be revenue neutral, which includes a year-end annual settlement calculation. Trustee Katzmann asked for clarification regarding the ten (10) month contract with ELS and why the Board Memorandum does not state anything about the next four (4) option years. Trustee Katzmann asked whether the companies submitting a Request for Proposals (RFP) were asked to quote pricing on a five (5) year basis. Staff stated that is correct that RTAA did ask for a quotes based on five (5) years. Legal Counsel stated that the motion is for four (4) one (1) year options following the ten (10) month term. With the ELS providing firm pricing over the four year and 10 month period, Trustee Katzmann indicated his preference to award the contract for the entire four year 10 month period to lock-in the pricing and avoid the requirement on staff that the contract be returned annually for Board consideration. Staff indicated the approach outlined was based on the large dollar amount of the contract and the historic preference by the Board to approved funding for such large dollar contracts in installments that corresponded with the annual budget cycle. However, the approach outlined by Trustee Katzmann would reduce the administrative burden on both staff and the Board going forward. Trustee Katzmann made a motion for the President/CEO to award a contract for in-line baggage handling system operations and maintenance with Elite Line Service for ten (10) months with four (4) one (1) year renewal options exercisable at the option of the Reno-Tahoe Airport Authority, seconded by Trustee Mayberry and the Committee unanimously recommended this item [#14(07)-34] to the board for information, discussion and possible action at the upcoming Board meeting. E. #14(07)-35 AUTHORIZATION FOR THE PRESIDENT/CEO TO EXTEND THE

ONE-YEAR FISCAL YEAR 2014-2015 CONTRACT FOR THE RENO-TAHOE AIRPORT AUTHORITY EMPLOYEE MEDICAL AND PRESCRIPTION INSURANCE WITH SAINT MARY’S HEALTH PLAN FOR AN ADDITIONAL SIX MONTHS IN THE AMOUNT OF $43,900 AND ADDITIONAL FUNDING OF MEDICAL SAVINGS ACCOUNTS IN THE AMOUNT OF $133,250

Staff gave a presentation requesting authorization for the President/CEO to extend the one-year fiscal year (FY) 2014-15 contract for the Reno-Tahoe Airport Authority (RTAA) employee medical and prescription insurance with Saint Mary’s Health Plan (SMHP) for an additional six months in the amount of $43,900 and additional funding of medical savings accounts in the amount of $133,250.

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Trustee Arger inquired as to if a catastrophic event should happen could SMHP raise the rates. Staff stated no, that the rates the RTAA has with SMHP are locked in for the entire eighteen month period. Trustee Larkin asked for clarification from Legal Counsel regarding RTAA doing a multi-year contract with SMHP since the Authority has not yet appropriated monies for the FY 2015-16. Would Board approval of this item be impacted by the State of Nevada Revised Statutes regarding local governments and budgetary requirements? Legal Counsel stated this item was not specifically reviewed for budget compliance and she would research the question and provide an answer prior to the Board meeting. Trustee Arger recused himself from the proposed action item due to a conflict of interest associated to his medical practice and business relationship with Saint Mary’s Health Plan. Trustee Arger turned the Chair over to Trustee Katzmann for discussion of the proposed selection of the health insurance provider and did not participate in the discussion regarding the proposed health care provider and committee vote. A motion was made by Trustee Larkin, seconded by Trustee Mayberry and the Committee unanimously recommended this item [#14(07)-35] to the Board for information, discussion and possible action at the upcoming Board meeting.

IV. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR APPROVAL

None

V. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT

COMMITTEE FOR DISCUSSION

A. T-HANGAR MANAGEMENT SERVICES PUBLIC COMPETITIVE PROCESS AND GA COMMERCIAL MINIMUM STANDARDS

Staff gave a presentation on the T-Hangar management services public competitive process and General Aviation (GA) Commercial Minimum Standards. Trustee Arger asked for clarification as to what the regulations are and the feasibility of having a fuel island versus a contractor with a fuel truck. Staff stated that there are defined standards for fuel islands, fuel trucks, and self-fueling at the Reno-Tahoe International Airport (RTIA). If the contractor can comply with the minimum standards and rules and regulations adopted for the Reno-Tahoe Airport Authority (RTAA), staff would entertain any proposed fueling options. Trustee Katzmann inquired as to whether there are any discussion on the feasibility of using the existing fuel farm at GA West and taking a truck to provide fueling. Staff

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indicated no such discussions have been held since the fuel farm at GA West is currently being leased to Atlantic Aviation for fuel storage.

VI. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT

COMMITTEE FOR INFORMATION A. REPORT ON FITCH RATING

Staff reported on the Fitch Rating.

B. REVIEW OF OPERATING RESULTS THROUGH MAY 2014

Staff reported on the Operating Results through May 2014. C. REVIEW OF BUDGET TRANSFERS None

D. REVIEW OF CONTRACTS AND PROFESSIONAL SERVICES AGREEMENTS THROUGH JUNE 2014 Staff reviewed the Administrative Award of Contracts pursuant to Resolution #462 through the month of June 2014. E. REVIEW OF LEGAL EXPENSES THROUGH MAY 2014

Staff reported the Legal Budget had expended 91.7% of the budget with 92% of the budget year expired. This result reflects the annual budget absorbing approximately $94,000 in prior-year legal costs associated with tragic accident at the National Championship Air Races. F. REVIEW OF BOARD BUDGET THROUGH MAY 2014 Staff reported the Board of Trustees had expended 63.1% of their budget with 92% of the budget year expired. G. REVIEW OF LEGISLATIVE CONSULTANTS BUDGET THROUGH MAY

2014 Staff reported the Legislative Consultants Budget had expended 87.7% of their budget with 92% of the budget year expired.

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

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Trustee Katzmann expressed his concern regarding the recent Consumer Price Index (CPI) increase to rents assessed to General Aviation T-Hangars and he would like staff to outline the justification for the Authority’s increase in hangar rents. Staff and the Trustees agreed that this item will be presented at the September 2014 Finance Committee meeting to order to give staff time to do some benchmarking.

In addition, Trustee Larkin asked for an analysis of the CPI adjustment during slow

economic periods, such as the recession of 2008-09, and whether this index would have resulted in lower T-Hangar rents if ownership resided with the Reno-Tahoe Airport Authority (RTAA) during this period. Staff stated that it will research this request and incorporate the results into the CPI presentation at the September Finance Committee meeting.

IX. PUBLIC COMMENT

Mr. Alby Redick from Aviation Classics stated from a pilot and General Aviation (GA) perspective he is pleased to see that the Reno-Tahoe Airport Authority (RTAA) is trying to accommodate general aviation. From a business prospective, Mr. Redick stated that the Consumer Price Index (CPI) increase over a short period of years would not hurt general aviation, but the long-term effect of using the CPI adjustment may double the rent over time. Mr. Redick also stated that from a business perspective, while the RTAA has a small, vocal GA group that the RTAA needs to consider their input, ultimately the RTAA has to make decisions based on business. Mr. Redick also stated that having a professional management business to manage the RTIA T-Hangars would be appropriate and in line with similar airports. Rick Eaton stated that before the RTAA releases those seven (7) T-Hangars at GA West, the RTAA should look into getting a professional management firm to manage the T-Hangars.

X. ADJOURNMENT

The meeting was called to order at 9:02 a.m. and was adjourned at 11:32 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: August 6, 2014 Memo #14(08)-36 To: Chairman and Board Members For: August 14, 2014 Board Meeting From: Marily Mora, A.A.E., President/CEO Subject: AUTHORIZATION FOR THE PRESIDENT/CEO TO NEGOTIATE FINAL

TERMS AND EXECUTE A NEW 8-YEAR, 8-MONTH COMMERCIAL LEASE AGREEMENT BETWEEN PRO BUMPER REPAIR AND THE RENO-TAHOE AIRPORT AUTHORITY FOR 6,778 SQUARE FEET OF COMMERCIAL SPACE AT THE WAREHOUSE FACILITY LOCATED AT 2890 VASSAR STREET

STAFF RECOMMENDATION Staff recommends that the Board authorize the President/CEO to negotiate final terms and execute a new 8-year, 8-month Commercial Lease Agreement between Pro Bumper Repair and the Reno-Tahoe Airport Authority (RTAA) for 6,778 square feet of commercial space at the warehouse facility located at 2890 Vassar Street. PURPOSE This action is in support of Priority Number Four of the Board adopted Fiscal Year (FY) 2014-2018 Comprehensive Strategic Plan to facilitate continued economic development for the RTAA and to ensure its financial growth and stability as a self-sustaining entity by maximizing non-airline revenue. BACKGROUND The property located at 2890 Vassar Street was acquired by the RTAA in 2001 as part of a land and building purchase and is a combination of commercial office and warehouse space. The building is approximately 37 years old and is in need of a certain amount of improvements to bring the spaces to a leaseable condition. The RTAA approved certain capital projects in the FY2013-14 and FY2014-15 budgets to address these required improvements and is currently installing a fire alarm system for the building at a cost of approximately $44,760.00 along with certain HVAC and heating unit installations for the proposed Pro Bumper Repair space at a cost of approximately $32,000.00. The warehouse spaces are concrete tilt-up construction with grade level roll-up doors. A majority of the warehouse spaces offer an office area and a restroom and some are also heated. Water and sewer are included in the rental rate for those spaces that have a restroom. Gas and electric utilities are separately metered and paid for by the tenant unless the unit is on house power under the RTAA’s name, in which case the power is billed back to the tenants based on square footage of the leased area. On-site lease and property staff are available during office business hours from 8:30 a.m. to 5:30 p.m. Monday through Friday, and from 8:30 a.m. to 5:00 p.m. Saturday and Sunday. The office is closed on posted holidays. The commercial spaces are leased for a minimum one-year term. DISCUSSION Pro Bumper Repair (also known as Pro Collision Center) is located at 1200 Terminal Way. Since 2013, Pro Bumper Repair has increased its operations and outgrown the current Terminal Way facility. In order to accommodate its growing business, the owner has expressed a desire to obtain additional warehouse space for auto body work preparation, vehicle storage and the restoration of

Pro Bumper Repair Lease Agreement #14(08)-36 August 14, 2014 Board Meeting Page 2 classic cars. The 6,778 square feet of space available at 2890 Vassar Street meets their current expansion requirements. The owner of Pro Bumper Repair is an excellent tenant and has met his financial obligations since he occupied the current Terminal Way building on May 1, 2013. The owner believes the proposed additional space at the 2890 Vassar Street location will be ideal for his required uses because of its size as well as its proximity to his current Terminal Way RTAA-leased building. COMPANY BACKGROUND Pro Bumper Repair was founded in Big Bear, California under the name Bear Mountain Collision Center by Tonia and Wayne Arriola in 2002. The Arriolas expanded the business into the northern Nevada market in 2013 at their current Terminal Way location with the RTAA. Wayne Arriola is the current owner of Pro Bumper Repair (also known as Pro Collision Center), who began leasing the RTAA-owned building located at the corner of 1200 Terminal Way and Vassar Street on May 1, 2013 (please see the attached Exhibit A). Pro Bumper Repair is a state-of-the-art body shop and collision center which also offers services to restore and refinish classic cars that are then often sold at the Barret-Jackson Auctions held in Reno. FISCAL IMPACT The RTAA’s commercial warehouse facility located at 2890 Vassar Street contains 44 units in 49,450 square feet of total building space with a current occupancy rate of 81%. With the proposed lease of six units totaling 6,778 square feet (14% of the total building space) to Pro Bumper Repair (see the attached Exhibit B), the occupancy rate for this facility will reach 95% with only one remaining vacancy. The 6,778 square feet intended to be leased by Pro Bumper Repair has been vacant for more than seven years. The FY2014 and FY2015 budgeted building improvements that the RTAA is currently installing are directly responsible for allowing the Pro Bumper Repair and remaining building space to now be in a leaseable condition. The proposed lease term is approximately 8 years, 8 months to coincide with the April 30, 2023 expiration date of Pro Bumper Repair’s 1200 Terminal Way lease. The proposed negotiated lease rates for Year-1 and Year-2 are fixed rates of $0.34 per square foot or $2,304.52 per month and $0.38 per square foot or $2,575.74 per month, respectively. The first year’s fixed rate is intended to help offset the tenant improvement costs and the second year’s fixed rate brings the rental rate to a competitive market level with an 11.8% increase over the first year’s rate. In addition, Staff proposes that the RTAA extend a rent credit to Pro Bumper Repair for the first six months as a signing incentive and to allow Pro Bumper Repair to install tenant improvements as listed below at an approximate tenant cost of $22,500.00. The six months of rent credit is valued at $13,827.12. Including this rent credit, the Year-1 rental revenue is projected to be $13,827.12 and $30,908.68 for Year-2. The first year’s reduced rental rate and rent credit are offset by the value of Pro Bumper Repair’s tenant improvements estimated at $22,500.00. The lease rate during the remaining 6 years, 8 months is proposed to be adjusted annually based on the Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (CPI-U) with a 3% cap. The annual financial summary table below outlines the projected annual cash flow to the RTAA from the proposed new Commercial Lease Agreement.

Pro Bumper Repair Lease Agreement #14(08)-36 August 14, 2014 Board Meeting Page 3 Pro Bumper Repair agrees to install the following tenant improvements at its own cost prior to occupancy including: (a.) replacement of warehouse ceiling insulation; (b.) replacement of four roll-up doors; (c.) replacement of three man doors; and (d.) demolition of a small office. The cost of these improvements is estimated to be approximately $22,500.00. Over the term of the lease, Pro Bumper Repair will be responsible for utility expenses as well as maintenance and repair of the premises, with the exception of major mechanical, structural and building envelope expenses which will remain the RTAA’s responsibility. Maintenance of the major mechanical, structural and building envelope components of just the Pro Bumper Repair portion of the building is estimated to cost the RTAA between $280.00 and $400.00 annually and is included in the annual financial summary table below. The RTAA will deliver the building to Pro Bumper Repair with all existing electrical, plumbing, roofing and structural components in working order. The proposed Commercial Lease Agreement has a total contract value of approximately $230,187.80 in gross revenue, including the proposed fixed lease rates for the first two years, the six-month rent credit, an annual CPI-U rental rate adjustment with a 3% cap for the following 6 years, 8 months, and operating expenses. In addition to gross revenue, the tenant improvements of approximately $22,500.00 will enhance the building exterior and the future profitability of the space.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 9

(8 months) Total

RTAA Lease Revenue* 27,654.24 30,907.68 31,525.83 32,156.35 32,799.48 33,455.47 34,124.58 34,807.07 23,668.81 281,099.50

Signing Incentive 6 Month Rent Credit -13,827.12 -13,827.12RTAA Budgeted CapitalImprovement Expenses -34,135.14 -34,135.14

RTAA Operating Expenses -280.00 -294.00 -308.70 -324.14 -340.34 -357.36 -375.23 -393.99 -275.79 -2,949.54RTAA Net Operating Income -20,588.02 30,613.68 31,217.13 31,832.22 32,459.14 33,098.11 33,749.35 34,413.08 23,393.01 230,187.70

Annual Financial Summary

*CPI Rent escalation assuming a 2% annual increase beginning Year 3. COMMITTEE COORDINATION This item is scheduled to be presented at the August 12, 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 authorize the President/CEO to negotiate final terms and execute a new 8-year, 8-month Commercial Lease Agreement between Pro Bumper Repair and the Reno-Tahoe Airport Authority for 6,778 square feet of commercial space at the warehouse facility located at 2890 Vassar Street.” MM/LW/cr

Exhibit A

2890 Vassar Street Vicinity Map

1200 Terminal Way

2890 Vassar Street

Exhibit B

2890 Vassar Street Building Map

PRO BUMPER REPAIR

6,778 square feet

Date: August 6, 2014 Memo #14(08)–37 To: Chairman & Board Members For: August 14, 2014 Board Meeting From: Marily M. Mora, A.A.E., President/CEO Subject: AUTHORIZATON FOR THE PRESIDENT/CEO TO EXECUTE THE

SECOND ONE-YEAR RENEWAL OPTION OF THE JANITORIAL SERVICES AGREEMENT, WITH ABM JANITORIAL SERVICES, FOR JULY 1, 2014 THROUGH JUNE 30, 2015, IN THE AMOUNT OF $181,671

STAFF RECOMMENDATION Staff recommends Board approval of the second one-year renewal option for the term of July 1, 2014 through June 30, 2015 for the Janitorial Services agreement, with ABM Janitorial Services, in the amount of $181,671, based on good past performance and reasonable pricing. PURPOSE This action requests authorization for the President/CEO to exercise the second one-year renewal option of the Janitorial Services agreement with the current contractor ABM Janitorial Services (Contractor) from July 1, 2014 through June 30, 2015. This proposed action is in support of Strategic Priority 5 – Provide a Positive Environment and Experience for All and the Guiding Principles of Safety and Security and Customer Service, as identified in the Reno-Tahoe Airport Authority Fiscal year (FY) 2014-2018 Comprehensive Strategic Plan. BACKGROUND The initial Request for Proposal was issued and advertised in the Reno Gazette-Journal on March 9, 2012 and posted on the RTAA’s website. To supplement legal advertising, staff directly notified four firms of the opportunity that had previously expressed interest. A total of five firms attended the pre-proposal meeting and walk through held on March 15, 2012. Proposals from ABM Janitorial and Qual-Econ were received in good order. Following this review, staff recommended the award to ABM Janitorial as the low, responsive, and responsible proposer at a monthly cost in the amount of $13,595. The award of contract with ABM Janitorial was approved by the Board at their May 12, 2012 meeting, with an agreement commencement date of May 1, 2012. The Agreement was for a fourteen-month period, at a monthly cost in the amount of $13,595 or $163,159 annually. The contract included three one-year renewal options to be exercised at the sole discretion of the Authority. The first one-year renewal option was approved by the Board at their July 11, 2013 meeting. DISCUSSION As the Contractor continues to perform to the satisfaction of the Airport Authority during both the initial service period and first optional year exercised, it has been determined by staff, that it is desirable to exercise the second one-year contract renewal option for July 1, 2014 through June 30, 2015.

Board Memorandum Reno-Tahoe Airport Authority

Janitorial Services Contract - Renewal 2014-15 #14(08)–37 August 14, 2014 Board Meeting Page 2 The approval of this item will exercise the second renewal option and provides labor, chemicals, materials, equipment, supervision, and support services for performing professional cleaning of carpet tiles and walk off carpeting installed in the RTIA’s terminal building as well as detailed cleaning and servicing of public restrooms. The Contractor performs daily vacuuming, spot and gum removal and dry foam or solvent bonnet cleaning of the high traffic areas; and monthly passenger boarding bridge extraction carpet cleaning. The restrooms are cleaned nightly. When the Board approved exercising the first one-year option of the agreement in July 2013, the carpeting at the checkpoint entrance/queuing area, art gallery, and children’s play area was added along with three new restroom facilities in the upstairs connecting concourse. Further, the addition of a high glass wall at the connector required specialized equipment to clean the exterior of the glass and this was added to the contract at that time as well. The contractor proposed an increased monthly charge of $1,542 or $18,512 annually for the increased service area that was also approved by the Board. There is no change to the monthly cost of $15,139 for this second one-year renewal option exercise. ABM has performed satisfactorily over the term of the contract and has met the Airport’s expectations for quality performance. COMPANY BACKGROUND ABM Janitorial Services has had offices located in the Reno area since 1997. They currently service 216 customers with 182 employees. ABM Janitorial has provided janitorial services to the Airport Authority for the past nine years. FISCAL IMPACT The recently adopted FY 2014-15 Budget for the Facilities and Maintenance Department included an estimated cost of $187,000 for these services. As a result, the amount of $181,671 to exercise the second one-year renewal option with ABM Janitorial Services will allow these services to be provided under the approved budget. COMMITTEE COORDINATION This item is scheduled to be presented at the August 12, 2014 Finance and Business Development Committee meeting. RECOMMENDED MOTION It is herby recommended that the Board adopt the following motion: “It is hereby moved that the Board approve the second one-year renewal option for July 1, 2014 through June 30, 2015 for the Janitorial Services agreement with ABM Janitorial Services in the amount of $181,671 and authorize the President/CEO or her designee to sign.” MMM/jah

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RENO-TAHOE AIRPORT AUTHORITY

INTERNAL AUDIT DIVISION

Audit Plan August 1, 2014

For the Period of July 1, 2014 through June 30, 2015

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Introduction This plan sets forth the scheduled activities of the Reno-Tahoe Airport Authority, Internal Audit Department for the period of July 1, 2014 through June 30, 2015. The purpose of the plan is to present the overall objective of the Internal Audit staff, identify areas of concern and potential risk, provide discussion of the audit approach, scope and objective, and establish the priority of audit activities for the 2014/2015 audit cycle.

Objective of the Internal Audit Department The objective of the Internal Audit function is to assist the President/CEO and management staff in the effective execution of their responsibilities by providing independent, objective appraisals, analysis, recommendations and other pertinent information relative to the Airport Authority’s needs and activities in order to protect physical and good will assets.

Scope of the Internal Audit Department

The Internal Audit Department is responsible for:

Determining compliance with the Airport Authority's fiscal policies and regulations regarding revenue, expense, budgets, contract and lease compliance;

Evaluating the efficiency, effectiveness and economy of Airport Authority division operations including the safeguard of Airport Authority assets;

Reviewing internal control structure to ensure compliance with management policies, procedures, laws and regulations;

Participating in the review of planning, design and development of accounting controls;

Providing the President/CEO and Finance and Business Development Committee with timely reports of audit findings, analysis and recommendations designed to strengthen and improve internal control and performance results; Surveying department heads and leaders to determine risk thresholds to help develop an inclusive Audit Plan in subsequent years; and,

Performing special assignments as needed.

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Audit Plan: Hourly Detail

Sr. Int.

Internal

Auditor

Auditor

Audit Assignments Hours Available Per Year 2080

2080

Routine Audit Assignments

Parking Operations and Revenue 300

880

Development, Testing, & Implementation 100

184

(New PARCs)

Terminal Display Monitoring 12

12

The Younger Agency 100

General Aviation (Utilities & Insurance) 40

In Motion

30

Best Buy Express

40

SSP (Food & Beverage Concession)

Wild Garlic (2) 40

Tahoe Taphouse 40

Emerald Bay Taphouse 40

Monthly Rental Car Income Review 30

10

Total Routine Audit Assignment Hours 732

1126

Internal Review

Alternative Ground Transportation Review 12

Firehouse: Current Scheduling 40

Construction Control Review 40

20

Utility Assignment Review 120

40

Performance Auditing - Purchasing 80

24

Risk Analysis 160

100

Special Assignments 100

20

Administrative Control Audits

In-Terminal Advertising Inventory List 12

Curbside Ticket Review

32

Accounts Payable Review 64

32

Purchase Card Transaction Review 40

10

Select Travel Expense Reports 30

10

Budget Preperation & Presentation:

Internal Audit 20

20

Legal Counsel 10

28

Total Internal Review & Adm Control Hours 728

336

Total Audit Assignment Hours 1460

1462

- 4 -

Audit Plan: Hourly Detail (continued)

Sr. Int.

Internal

Auditor

Auditor

Adminstrative Assignments

Monthly Meetings

Management Meetings 4

4

Finance & Business Development Committee 3

3

Department Meetings 2

2

Total Monthly Meeting Hours 9

9

Total Annual Hours 108

108

Monthly Routine Duties

Correspondence Review & Response 3

4

General Administration 4

4

Internal Committee Participation 3

6

Total Monthly Routine Duty Hours 10

14


168

Annual Vacation & Sick Leave Estimate

Holidays (13) 104

104

Vacation

168

144

Sick Leave 24

24


272

Annual Conference Hours

AAIA Attendance 16

0

Total Hours 16

0

Annual Training Hours

Professional Development (i.e. CPA CPUs) 20

40

In-House Training 30

30

Management Roundtable 30

Total Hours 80

70

Total Administrative Assignments 620

618 Total Hours for Annual Audit Plan 2080

2080

- 5 -

Audit Plan

The scope of the Internal Audit Department’s work is set forth each year in the Audit Plan. The Audit Plan is approved by the Finance and Business Development Committee, in accordance with Resolution No. 426. The continuing focus for this critical revenue source this fiscal year will be to evaluate, test, and implement an audit program for the upgraded Parking and Revenue System into the daily cycle. Other audits, internal reviews and control reviews are also included in the scope of the annual Audit Plan.

Access to Information

The Internal Audit Department is given specific authority by the President/CEO to access all records, personnel and property of the Airport Authority, in accordance with established procedures for such access.

Audit Reports

Audit activities are reported to the President/CEO and the Finance and Business Development Committee in verbal and written formats, during and following the conclusion of an audit activity. Interim or verbal updates are issued as needed. The Senior Internal Auditor reports directly to the President/CEO to facilitate timely reporting and expedited action whenever it becomes necessary. Independence and objectivity are maintained by the dotted line on the Organizational Chart to the Finance and Business Development Committee, allowing the Internal Auditors to report directly to the Committee if circumstances warrant such reporting, and to report on a regular basis at the monthly Finance and Business Development Committee meetings as needed.

External Audits

In addition to audits performed by the Internal Audit Department, the Reno-Tahoe Airport Authority’s Financial Statements are audited by an independent qualified firm of Certified Public Accountants. These audits are to be performed in accordance with generally accepted auditing standards as well as Federal, State, Local and Revenue Bond Resolution Requirements. The Authority is also audited to ensure its compliance with Federal Grant Assistance Programs and the Passenger Facility Charge Program. The audit standards are set forth through standards and guidance provided by the General Accounting Office’s (GAO) Government Auditing Standards, the provisions of the Federal Single Audit Act of 1984 and Amendments of 1996, and U.S. Office of Management and Budget (OMB) Circular A-133. Occasional audits are performed or specific information is delivered by specialists working with the Internal Auditor to provide industry or performance expertise in a specific field, providing assurance that all relevant risks are being examined.

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Administrative Report Reno-Tahoe Airport Authority

Date: August 7, 2014 Administrative Report # 49-14 To: Chairman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: FINANCIAL REPORTING PACKAGE – JUNE 2014 EXECUTIVE SUMMARY Attached is the Fiscal Year 2013-14 Financial Reporting Package reflecting the preliminary results for the fiscal year ending June 30, 2014. The results are preliminary and subject to final year-end review by staff, the calculation of the airline year-end settlement, and the external audit. AIRLINE COST PER ENPLANED PASSENGER Due to operating expenses being 3.4% below budget, the airline cost per signatory enplaned passenger, based on preliminary actual results for the fiscal year ending June 30, 2014, is $7.56 as compared to budgeted cost per enplaned passenger of $7.85. Based on preliminary actual results through June 30, 2014, net available cash flow, after funding debt service, is $4.123 million, an increase of $1.610 million above the adopted FY 2013-14 Budget.

Y E A R T O D A T E as of June 30, 2014 (In Thousands)100.0% Of Fiscal Year

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

Operating Revenue Airline 13,899$ 12,361$ 1,538$ 12.4% 14,130$ (230)$ -1.6% Non-Airline 29,157 29,052 105 0.4% 28,664 493 1.7%

Total Operating Revenue 43,056 41,413 1,643 4.0% 42,793 263 0.6%

Non-Operating Revenues 1,731 1,552 179 11.5% 1,665 66 3.9%

Total Revenue 44,787 42,965 1,822 4.2% 44,458 328 0.7%

Operating Expenses (35,869) (34,527) (1,341) 3.9% (37,140) 1,271 -3.4%

Net Revenue Available for Debt Service 8,918 8,437 481 5.7% 7,319 1,600 21.9%

Debt Service After PFCs (4,795) (3,661) (1,134) 31.0% (4,805) 10 -0.2%

Net Available Cashflow 4,123 4,776 (653) -13.7% 2,514 1,610 64.0%

June 2014 Financial Summary Administrative Report #49-14 August 7, 2014 Page 2

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TOTAL REVENUE The Authority’s total operating revenue of $43.056 million is approximately $263,000 or 0.6% above budget due to lower airline revenues by approximately $230,000 being more than offset by higher non-airline revenues of $493,000, which primarily reflects higher public parking and reimbursed services revenue. The Authority’s revenue results are discussed in more detail later in this report. The chart below reflects preliminary actual operating revenues for the fiscal year as compared to the budget amount.

AIRLINE Landing Fees The RTAA executed a five-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. Based on preliminary results for the fiscal year ending June 30, 2014, landing fee revenues registered $6.613 million, which is approximately $56,800 or 0.9% above the adopted budget.


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The primary contributor to the increase was realized savings from lower air service incentives of approximately $71,300 as compared to the adopted FY 2013-14 budget of $150,000, a savings of $78,800 in lower revenue credits. This higher revenue was partially offset by lower costs being recovered in the Airfield Cost Center, or Net Requirement per the Airline Agreement, of 1.0% as compared to budget. Landing fees were budgeted and collected at $2.78 per 1,000 lbs. of landed weight. Based on preliminary results, the actual landing fee rate is estimated to be $2.80. This increase in rate reflects a combination of lower cost recovery being more than offset by a 1.0% decrease in landed weight as compared to the adopted budget estimate. The decrease in landed weight is driven by a 6.6% decrease in landed weight by Southwest Airlines, which is significantly offset by 26.9% higher than estimated activity by FedEx. 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. Based on preliminary actual results for the fiscal year ending June 30, 2014, airline terminal rental revenue registered $7.287 million, which is approximately $287,200 or 3.8% below budget. The costs allocated to the Terminal Building Cost Center, or Net Requirement, are 2.9% under budget based on preliminary actual results through June, 2014. The airline’s share of these savings is approximately $225,100. In addition the estimated airline portion of net revenue available for sharing is approximately $380,600 as compared to the budget estimate of $234,300, a larger credit to reduce terminal rental revenue of $146,300. The budgeted FY 2013-14 average signatory rental rate was $60.27 per sq. ft. per annum. Based on preliminary results, the actual terminal rental rate is estimated to be $57.25 per sq. ft. per annum. 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 $29.157 million. This represents an increase of approximately $493,000 or 1.7% over budget. This increase is due to $781,000 in higher than budgeted revenue from public parking operations. In addition, the Authority received $85,000 in higher reimbursed services and $36,000 in higher


4

auto rental revenues. These increases are partially offset by lower gaming and advertising revenue. Enplaned passenger traffic for FY 2013-14 is 1,658,187, a decrease of 5.6% below last year and a decrease of 0.7% below 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 $1.731 million, which are primarily comprised of interest income, aviation fuel tax, and rental car customer facility charges, are approximately $66,000 or 3.9% above budget. OPERATING EXPENSES Based on the preliminary actual results, operating expenses of $35.869 million for the fiscal year ending June 30, 2014 are 3.4% or approximately $1.271 million below budget. The savings include approximately $791,000 in lower than budgeted Personnel costs, $89,000 in lower Utilities and Communications, $498,000 in lower Purchased Services, and $45,000 in lower Materials and Supplies. These savings are partially offset by approximately $152,000 in higher Administrative expenses. The chart below is based on the preliminary actual operating expenses for fiscal year 2013-14 as compared to the budget amounts.


5

DEBT SERVICE Net debt service payments, after the application of Passenger Facility Charges, of approximately $4.795 million are lower than budget by approximately $10,000 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:

Enplaned Passengers Passenger Activity is a significant factor driving non-airline revenues such as terminal concessions, public parking, and gaming. For the 2013-14 fiscal year ending June 30, 2014, enplaned passengers were 1,658,187, a 0.7% decrease compared to the budgeted annual passenger traffic of 1,670,248. This result is 5.6% below passenger traffic levels posted last year for the same period. The June 2014 Flight Schedule at the Reno-Tahoe International Airport (RNO) provided 61 peak nonstop departures to 14 destinations with 188,481 total scheduled departing seats. This closely represents the June 2013 flight schedule that also had 61 peak daily departures to 14 destinations. The June 2014 Flight Schedule reflected a 4.4% decrease in monthly seat capacity as compared to June 2013, while the number of flights were up 0.3% for the same period. The flight increase can be attributed to American Airlines and Alaska Airlines adding flights into the summer schedule. 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 approximately 130,000 fewer enplaned passengers in the current fiscal year than last year. This reduction was due to the termination of service to Oakland, Salt Lake City, Portland and Seattle.

Y E A R T O D A T E (June 30, 2014 )100.0% Of Fiscal Year

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

Enplaned Passengers 1,658,187 1,756,471 (98,284) -5.6% 1,670,248 (12,061) -0.7% Airline Cost Per Enplaned Passenger 7.56$ 6.39$ 1.17$ 18.3% 7.85$ (0.29) -3.7% Non-Airline Revenues per EPAX (a) 16.26$ 15.35$ 0.91$ 5.9% 15.90$ 0.36 2.2% Operating Ratio 83.3% 83.4% -0.1% -0.1% 86.8% -3.5% -4.0% Debt Service Coverage Ratio 1.60 2.04 (0.44) -21.7% 1.38 0.23 16.4% Days Cash On Hand 408.0 456.8 (48.9) -10.7% 373.7 34.3 9.2%

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


6

Partially offsetting this decrease are increases registered this fiscal year by Allegiant, Alaska, American, United and US Airways in the amount of 37,399 combined total enplaned passengers. A table and chart enclosed in this package provides a comparison of enplaned passenger traffic and market share by airlines for the 2013-14 fiscal year as compared to previous year results. 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 3.4% below budget, the airline cost per enplaned passenger is estimated to be $7.56 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. Based on preliminary actual results, non-airline revenue per enplaned passenger registered $16.26, an increase of 5.9% from the $15.35 registered in the prior year and 3.1% above the FY 2013-14 Budget of $15.90. With the slowly improving economy, these results primarily reflect a general increase in sales 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 continue to be areas of concern with lower sales 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.


7

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. Based on preliminary results for the fiscal year ending June 30 2014, the ratio favorably registered 83.3% as compared to the adopted budget ratio of 86.8%. This result reflects primarily lower operating expenses. Days Cash on Hand Days 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 408 days of unrestricted cash on hand to meet the Authority’s operating and maintenance requirements. This compares to the year-end budget estimate of 374 days. 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 June 30, 2014 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 1.60X 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 significantly lower operating expenses of $1.271 million or 3.4% 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 June 2014 as compared to the same period last year and the Adopted FY 2013-14 Budget.


Date: August 7, 2014 Administrative Report #50-14 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 July 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 July 2014. MMM:jah/cr

JULY 2014

#50-14

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

6/4/14 Kone, Incorporated $92,856 Contract effective July 1, 2014 for preventative maintenance of elevators and escalators. This contract results from a formal bid awarded to the low, responsive, and responsible bidder.

FY 2014-15 O&M

Facilities and Maintenance

6/30/14 Lindell’s Painting Service

$37,283 Contract for exterior painting of four (4) rental car service facility buildings. This contract results from a formal bid awarded to the low, responsive, and responsible bidder.

Customer Facility Charge Revenues

Airport Economic Development - Outside Properties

7/8/14 ABC Fire and Cylinder

$31,574 PO 5910 for the annual and quarterly testing of the terminal fire sprinkler and fire alarm systems, portable fire extinguisher service, annual and quarterly testing of the fire suppression systems, 50 extinguisher hydro tests, and two kitchen hood extinguishing systems. In addition, this contract will provide maintenance of the system to protect Baggage Handling System Explosion Detection System equipment and 5-year testing of the parking structure’s standpipe system. This contract results from a formal bid awarded to the low, responsive, and responsible bidder.

FY 2014-15 O&M Budget


7/8/14 Nachurs Alpine Solutions

$48,010 Blanket PO 5863 to exercise the first one-year renewal option incorporated in Bid 13/14-05 for liquid deicing fluid utilized on the Air Operations Area.


Airfield Maintenance

JULY 2014

#50-14


7/8/14 Johnson Controls $13,000 PO 5859 issued for the annual maintenance, calibration, and training on the Metasys building control system. Vendor also provides patches to maintain the most updated version of the software available. This is exempt from competitive bidding per NRS 332.115 as Johnson Controls is the manufacturer and sole source supplier.



7/8/14 Tennant Company $15,500 Blanket PO 5860 issued for annual preventative maintenance on Tennant power scrubbing equipment used for cleaning carpets, hard floors, and sidewalks. This is exempt from competitive bidding per NRS 332.115 as Tennant is the manufacturer and sole source supplier.



7/14/14 Gardner Engineering $27,927 PO 5906 for installation of three unit heaters and flue piping, one rooftop air conditioner unit and ductwork, necessary gas piping and permits for six terminal mini-storage warehouse spaces beginning with BB1. This contract is the result of an informal bid with the contract awarded to the low, responsive, and responsible bidder.

FY 2013-14 Capital Projects Budget Mini-Warehouse Building Improvements - $50,000

Airport Economic Development – Outside Properties

JULY 2014

#50-14


7/14/14 ABM Janitorial Services

$11,840 Blanket PO 5902 for weekly janitorial service, semi-annual interior window cleaning, quarterly exterior window cleaning, quarterly carpet extraction and bathroom floor scrubbing at Reno-Stead Airport. This contract was awarded to the current RTAA contracted janitorial service provider.


Reno-Stead Airport

7/14/14 ABC Fire and Cylinder

$4,740 PO 5894 for fire inspections and system servicing at the Reno-Stead Airport including Hangars 5 and 6, maintenance facility, and Freedom Flight terminal.


Reno-Stead Airport

7/21/14 Walker & Associates $50,000 PSA for air service development services in providing an advisory role to the Authority in working through strategies to make a compelling case for the airlines about new and or expanded service to Reno/Tahoe and providing support either on-site in Reno/Tahoe or at the airlines headquarters.


Air Service Development

Key to abbreviations: PO = Purchase Order CO = Change Order PSA = Professional Service Agreement PFC = Passenger Facility Charge Program AIP = Airport Improvement Project *Contract signed by authorized designee – Executive Vice President/COO


Date: August 6, 2014 Administrative Report #51-14 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 twelve months of the 2013-2014 fiscal year. The summary shows the amounts “budgeted’’ compared to “actual” by the major account classifications. While June represents 100% of the budget year, actual costs are 98.3% 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 $ 316,077 $ 365,000 $ (48,923) -13.4% $ 365,000 86.6%

Air Race Accident 93,841 0 93,841 0.0% 0 0.0% Specialty Area, Legal 51,753 85,000 (33,247) -39.1% 85,000 60.9% Other Purchased Services 194 15,200 (15,006) -98.7% 15,200 1.3% Administrative Expense

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

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

Total General Counsel $ 461,865 $470,000 $ (8,135) -1.7% $ 470,000 98.3% *Legal fees of $158,841 incurred due to the Air Race accident were placed in a receivable account. In April, a settlement agreement was reached to resolve this claim. RTAA has received a payment of $65,000 with the remaining balance of $93,841 expensed against purchased services. MMM/lw/cr


Date: August 6 2014 Administrative Report #52-14 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 twelve months of the 2013-2014 fiscal year. The summary shows the amounts “budgeted’’ compared to “actual” by the major account classifications. While June represents 100% of the budget year, actual costs are 68.3% of the total budget.


YTD Budget

Over (Under) Budget

% Variance


% of Annual Budget

Personnel Services Trustee Stipend $ 60,480 $ 60,480 $ 0 0% $ 60,480 100.0% Personnel Services 42,339 39,500 2,839 7.2% 39,500 107.2% Purchased Services 4,946 10,700 (5,754) -53.8% 10,700 46.2% Materials and Supplies 1,604 6,000 (4,396) -73.3% 6,000 26.7% Administrative Expense Membership Dues 0 500 (500) -100.0% 500 0.0%

Conference Registration & Training 1,775 5,400 (3,625) -67.1% 5,400 32.9%

Meeting Expenses 4,578 10,000 (5,422) -54.2% 10,000 45.8% Travel and Reimbursed Expense 5,858 10,500 (4,642) -44.2% 10,500 55.8% Relocation Expense *

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

Total Board $121,580 $178,080 $ (56,500) -31.7% $ 178,080 68.3%

*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/cr


Date: August 6, 2014 Administrative Report #53-14 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 twelve months of the 2013-2014 fiscal year. The summary shows the amounts “budgeted’’ compared to “actual” by the major account classifications. While June represents 100% of the budget year, actual costs are 95.5% of the total budget.


YTD Budget

Over (Under) Budget

% Variance


% of Annual Budget

State and Local Governmental Relations $ 73,154 $ 80,500 $ (7,346) -9.1% $ 80,500 90.9% Legislative Consultant Washington, D.C. 89,200 89,500 (300) 0.3% 89,500 99.7%

Total Governmental Relations $ 162,354 $ 170,000 $ (7,646) -4.5% $ 170,000 95.5% MMM/lw/cr

1


Date: August 6, 2014 Administrative Report #54-14 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. At the March 2014 meeting of the Board of Trustees, the Board voted to table the release of an additional eight (8) GA West T-Hangars and supporting capital improvements to explore alternative release and improvement options. At the July 2014 Board meeting, staff brought options forward and recommended the release of seven (7) GA West T-Hangars. The Board voted to table the release and associated capital improvements until the occupancy rate of the existing available T-Hangars was higher.

2

LEASING STATUS: T-HANGARS As of August 1, 2014, a total of thirteen (13) T-hangars at GA West are leased and three (3) are currently available for lease. The release of the remaining fifteen (15) T-Hangars will be made available pending direction from the Board. To date, forty-eight (48) T-Hangars at GA East are leased and nine (9) are available for lease. 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-one (61) T-Hangars are currently leased, twelve (12) are available for lease and fifteen (15) are pending Board release. Atlantic Aviation and Airport Authority staff continues to market and show the facilities to prospective GA tenants. A new marketing program for the current T-Hangar inventory will be presented to the Finance and Business Development Committee in August. The table below shows aircraft T-Hangar leasing and vacancy status as of August 1, 2014.

Airport Location Occupied Vacant Available

Pending Board Directive

Total T-Hangars (East

& West)

General Aviation West 13 3 15 31

General Aviation East 48 9 n/a 57

Total T-Hangars 61 12 15 88

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 August 1, 2014, the FBO office and Hangar 2 are now leased to Whisper Jet, Inc., a helicopter operator. Whisper Jet has a 1-year non-commercial lease and the RTAA expects to negotiate a long-term commercial lease within the next 12-months which will be brought before the Board for approval. Hangar 10 is vacant; however, the RTAA is currently in negotiations with a perspective new tenant. That new lease should be completed within the next 60 days. The remaining Box Hangars are leased, as of August 1, 2014. GA East inventory consists of one (1) FBO office and six (6) box/commercial aircraft hangars. The FBO East office will be part of the T-Hangar Management RFQ. All commercial/box hangars are leased at GA East. MMM/km

RNO HANGAR LEASES STATUS REPORT – August 1, 2014

#54-15 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 $7,515 7/1/12 Mowbray Aviation E02 T-Hangar East A $7,515 2/1/13 Richmond, Richard E03 T-Hangar East A $7,515

12/10/12 Martin, James E04 T-Hangar East A $7,515 7/1/12 Reno Flying Service E05 T-Hangar East A $7,515 2/1/14 Reno Flying Service E06 T-Hangar East A $7,515 7/1/12 Vientos, LLC & Online Aerial Photo E07 T-Hangar East A $7,515 7/1/12 N9841X, LLC – Martin, Lyle E08 T-Hangar East A $7,515

RTAA Storage E09 Pocket Hangar East V VACANT E10 T-Hangar East V

7/1/12 Tahoe Aviation E11 T-Hangar East A $7,515 7/1/12 Fan Fi International – Vacant as of 8/1/14 E12 T-Hangar East T $7,515

7/1/12 Hoskins, Anthony & Berger Joyce E13 T-Hangar East A $7,515 7/1/12 FiveMikeCharlie, Inc E14 T-Hangar East A $7,515 12/1/13 *333 Ranch, LLC (Jim Boyer) E15 T-Hangar East A $7,515 7/1/12 SJR Properties E16 T-Hangar East A $7,515 7/5/13 Karsten Iverson E17 T-Hangar East A $7,515 2/13/13 O’Neal Management Group, LLC E18 T-Hangar East A $10,110 7/1/12 Petty, Bob & O’Connor, Michael E19 T-Hangar East A $7,059 7/1/12 Dillon, Ken E20 T-Hangar East A $7,059 7/1/12 Nash, Jeffrey E21 T-Hangar East A $7,059 9/1/12 Stanley Plecha E22 T-Hangar East A $7,059 7/1/12 Gold Digger Enterprises E23 T-Hangar East A $7,059

VACANT E24 T-Hangar East V 7/1/12 Air 340 LLC E25 T-Hangar West A $7,059

VACANT E26 T-Hangar East V VACANT E27 T-Hangar East V

7/1/12 Davis, Richard/Mike Bussio E28 T-Hangar East A $7,059 7/1/12 Bryce Herndon E29 T-Hangar East A $7,059 7/1/12 Zubillaga, Phil E30 T-Hangar East A $7,765 7/1/12 Gunderson, Mark E31 T-Hangar East A $7,059


#54-15 2

Commencement

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

Agreement 7/1/12 Korhonen, Aki E32 T-Hangar East A $7,059 7/1/12 Jochco Investments, LLC E33 T-Hangar East A $7,059 7/1/12 Advantage Flight Solutions E34 T-Hangar East A $7,059 7/1/12 Scolari, Joey E35 T-Hangar East A $7,059

VACANT E36 T-Hangar East V 11/1/12 Goode, Randall E37 T-Hangar East A $5,070 7/1/12 The Kaigan Corporation E38 T-Hangar East A $5,070 7/1/12 Buck, David E39 T-Hangar East A $5,468 7/1/12 Pezonella, Raymond E40 T-Hangar East A $5,070 7/1/12 Delta Victor Resources E41 T-Hangar West A $5,070 7/1/12 Baker, Gary E42 T-Hangar East A $5,070 7/1/12 Sweet, Kent E43 T-Hangar East A $5,070 7/1/12 Heinrich, Rolf & Gisler, Ron E44 T-Hangar East A $5,070 2/11/13 Aussieyank Air,LLC E45 T-Hangar East A $5,070 8/9/13 Silverado Land Management E46 T-Hangar East A $5,070

VACANT E47 T-Hangar East RE 9/1/13 Cirrus Air, LLC E48 T-Hangar East A $5,070 7/1/12 Civil Air Patrol E49 T-Hangar East A $5,070 7/1/12 Civil Air Patrol E50 T-Hangar East A $5,070 7/1/12 Riley, James E51 T-Hangar East A $5,070 3/1/14 Starr-Ski, LLC E52 T-Hangar East RE $5,070

VACANT E53 T-Hangar East V 7/1/12 November Papa- Hegge, Thomas E54 T-Hangar East A $5,070 7/1/12 Pokey Airlines E55 T-Hangar East A $5,070 3/01/14 Spalding Fly, LLC E56 T-Hangar East A $5,070 7/1/13 Mowbray, Jerry E57 T-Hangar East A $5,070 7/1/12 LVR (Dermody) Hangar F1 Box Hangar East A $36,590 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-American Medflight Hangar E Box Hangar East A $18,690


#54-15 3

Commencement


Agreement 7/1/12 Deeside Trading Hangar G Box Hangar East A $48,000 5/1/13 VACANT FBO Office FBO Office East V 7/1/14 Whisper Jet, Inc. FBO Office FBO Office West A $78,654 7/1/14 Whisper Jet, Inc. Hangar 2 Box Hangar West A 7/1/12 Caymus Vineyards Hangar 7 Box Hangar West A $23,923 2/1/14 Charles Chi Hangar 8 Box Hangar West A $20,653

11/29/10 Western Jet Hangar 9 Box Hangar West A $139,500 Pending – 09/14 VACANT – Pending Five-Year Lease Hangar 10 Box Hangar West P $90,000

NOT AVAILABLE FOR LEASE W01 T-Hangar West NA NOT AVAILABLE FOR LEASE W02 T-Hangar West NA NOT AVAILABLE FOR LEASE W03 T-Hangar West NA NOT AVAILABLE FOR LEASE W04 T-Hangar West NA NOT AVAILABLE FOR LEASE W05 T-Hangar West NA NOT AVAILABLE FOR LEASE W06 T-Hangar West NA NOT AVAILABLE FOR LEASE W07 T-Hangar West NA NOT AVAILABLE FOR LEASE W08 T-Hangar West NA

7/1/12 Robertson Consulting W09 T-Hangar West A $8,304 VACANT W10 T-Hangar West V

3/21/14 John Parsons W11 T-Hangar West A $5,614 3/1/14 Global Distillation Services, LLC W12 T-Hangar West A $5,614

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 $5,614 9/1/12 John Howitt W16 T-Hangar West A $5,614 7/1/12 Elliot, Mike W17 T-Hangar West A $6,052 7/1/12 C&J of Nevada W18 T-Hangar West A $4,713 8/1/12 Aero Investors, LLC W19 T-Hangar West A $4,713 9/1/13 Prioreschi, Gordon W20 T-Hangar West A $4,713 9/1/13 Cherokee Six, LLC W21 T-Hangar West A $4,713 9/1/13 Salinger, David W22 T-Hangar West A $4,713 9/11/12 Travis, Craig W23 T-Hangar West A $4,713


#54-15 4

Commencement


Agreement 7/1/12 Garman, Jon W24 T-Hangar West A $4,713 8/1/14 78 Lance LLC W25 T-Hangar West P $4,713

NOT AVAILABLE FOR LEASE W26 T-Hangar West NA NOT AVAILABLE FOR LEASE W27 T-Hangar West NA NOT AVAILABLE FOR LEASE W28 T-Hangar West NA NOT AVAILABLE FOR LEASE W29 T-Hangar West NA NOT AVAILABLE FOR LEASE W30 T-Hangar West NA NOT AVAILABLE FOR LEASE W31 T-Hangar West NA

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 NA = Not Available for Lease

Documents

**REVISED** - Reno–Tahoe International Airport...DATE & TIME: Tuesday, August 12, 2014 9:00 a.m. LOCATION: Reno-Tahoe International Airport Administrative Offices, Conference Rooms

REVISED - Reno–Tahoe International Airport...DATE & TIME: Tuesday, August 12, 2014 9:00 a.m. LOCATION: Reno-Tahoe International Airport Administrative Offices, Conference Rooms