Metropolitan Airports Commission

Transcription

1 Metropolitan Airports Commission Finance Development and Environment Committee Regular Monthly Meeting Minutes Wednesday, May 04, :00 am

2 REPORTS A METROPOLITAN AIRPORTS COMMISSION FINANCE, DEVELOPMENT & ENVIRONMENT COMMITTEE REGULAR MEETING Wednesday,, 9:00 a.m. Room 3048A, Terminal 1-Lindbergh Minneapolis-St. Paul International Airport "CONSENT ITEMS" Call to Order A regular meeting of the Finance, Development and Environment Committee, having been duly called, was held Wednesday,, in Room 3048A, Terminal 1-Lindbergh, Minneapolis- St. Paul International Airport. Chair Geisler called the meeting to order at 9:00 a.m. The following were in attendance: Commissioners: Geisler, Peilen, Crimmins, Foster, Landy, Madigan, Williams, Deal, King, Monaco, Rehkamp, Chair Boivin Staff: J. Hamiel, D. Probst, T.W. Anderson, T.L. Anderson, J. Nielsen, B. Schauer, P. Hogan, G. Warren, R. Fuhrmann, S. Wareham, C. Leqve, R. Biddle, B. Rief, M. Willis, E. Johnson, B. Peters, L. Sorensen, K. Schaefer, T. Toscano, A. Sasse, M. Hagerty, P. Anderson, K. Lear, J. Felger Others: G. Hoff, MBAA; D. Kariya, T. Gustafson, Signature Flight Support; J. VandeBosche, R, Wittgren, BKD, LLP; R. Friskney, D. Saunders, SMAAC; P. Rebholz, Wells Fargo; P. Mogush, City of Minneapolis OPEN FORUM In response to concerns expressed by Bob Friskney, SMAAC, regarding the recent tornado in St. Louis, staff noted that MSP s Severe Weather Plan addresses his concerns. A1. REPORTS CF 802 a. 1 st Quarter Budget Variance Report b. Accounts Receivable Summary c. Investment Portfolio Report d. Air Carriers Passenger Facility Charges Report e. Commission Travel Report/January, February, March 2011 f. Change Management Policy and Project Status Report THESE REPORTS WERE INFORMATIONAL ONLY; NO COMMITTEE ACTION WAS REQUESTED.

3 Page 2 A2. FINAL PAYMENTS MAC CONTRACTS CF 803 The following final payments were submitted for consideration: a. Lindbergh & Humphrey Terminals Internally Illuminated Signage LED Lighting Upgrades Phase 1 MAC Contract Number: Contractor: Morcon Construction Co., Inc. Construction Budget: $825,000 Net Contract: $824, Final Payment: $49, b. MAC Passenger Screening Improvements MAC Contract Number: Contractor: Morcon Construction Co., Inc. Construction Budget: $115,000 Net Contract: $114, Final Payment: $16, c Valet Waiting Area Improvements MAC Contract Number: Contractor: CM Construction Company, Inc. Construction Budget: $225,000 Net Contract: $222, Final Payment: $13, d. Noise Mitigation Program: Asbestos Abatement MAC Contract Number: Contractor: EnviroBate, Inc. Construction Budget: $150,000 Net Contract: $34, Final Payment: $0.00 RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE WORK COVERED BY THE CONTRACTS FOR THE TOTAL CONTRACT AMOUNTS AS INDICATED AND THAT FINAL PAYMENTS TO THE CONTRACTORS IN THE AMOUNTS INDICATED BE AUTHORIZED, SUBJECT TO THE CONSENT OF THE CONTRACTORS SURETY COMPANIES. THE MOTION CARRIED BY UNANIMOUS VOTE.

4 Page 3 A3. BIDS RECEIVED MAC CONTRACTS CF 804 The following bids were submitted for Committee consideration (see the Committee package for details): a. Runway 12R/30L Tunnel Fans - Dampers RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE LOWEST RESPONSIBLE BID FROM CORVAL CONSTRUCTORS, INC. IN THE AMOUNT OF $1,727, FURTHER, AUTHORIZE THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS AND ESTABLISH A PROJECT BUDGET OF $1,825,000. THE MOTION CARRIED BY UNANIMOUS VOTE. b Pavement Reconstruction C Concourse Apron RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE LOWEST RESPONSIBLE BID FROM SHAFER CONTRACTING CO., INC., IN THE AMOUNT OF $1,681, FURTHER, AUTHORIZE THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS AND ESTABLISH A PROJECT BUDGET OF $1,750,000. THE MOTION CARRIED BY UNANIMOUS VOTE. c Multiple Building Roof Replacements RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE LOWEST RESPONSIBLE BID FROM PALMER WEST CONSTRUCTION COMPANY IN THE AMOUNT OF $2,943, FURTHER, AUTHORIZE THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS AND ESTABLISH A PROJECT BUDGET OF $3,100,000. THE MOTION CARRIED BY UNANIMOUS VOTE. d. Dual Ring Fiberoptic Cable Upgrade RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE LOWEST RESPONSIBLE BID FROM KILLMER ELECTRIC CO., INC. IN THE AMOUNT OF $2,463, FURTHER, AUTHORIZE THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS AND ESTABLISH A PROJECT BUDGET OF $2,600,000. THE MOTION CARRIED BY UNANIMOUS VOTE. A4. REQUEST FOR QUALIFICATIONS FOR THE SELECTION OF PROFESSIONAL SYSTEM INTEGRATOR PROJECT CONSULTANT SERVICES MSP CLOSED CIRCUIT TV (CCTV) IMPROVEMENTS CF 805 MAC s current policy regarding the Use, Selection, Monitoring and Payment of Consultants requires that a competitive selection process be undertaken for the selection of project specific consultant services. A project consultant is a consultant selected to complete a specific project or task, which may exceed $50,000 a year and may extend over multiple years.

5 Page 4 The CIP approved by the Commission in December 2010 included funds each year for the upgrade, expansion and integration of the existing CCTV system. The MAC has a significant investment in the existing CCTV system, which includes the network and supporting systems and facilities. The system has grown from 16 cameras in 1994 to over 1,500 cameras today and likely will continue to grow over the next 5 10 years as the campus infrastructure expands as noted in the MSP LTCP. Its value becomes increasingly vital as a force multiplier for security, public safety, risk management, and in assisting to manage airport and airline operations. The role of the system integrator is to provide and install the technology portions of the CCTV system. These elements include the Video Management System, which is the software that controls the operation of the CCTV system; storage hardware for capturing and retaining the video streams; network equipment supporting the CCTV system and integration software and equipment required to link the CCTV system with the Access Control System and similar, existing MAC systems. MAC staff is requesting authority to initiate a selection process for MSP CCTV system integrator professional services. RECOMMEND TO THE FULL COMMISSION THAT STAFF BE DIRECTED TO PROCEED WITH A QUALIFICATIONS-BASED SELECTION PROCESS AS OUTLINED IN THE COMMITTEE PACKAGE FOR THE MSP CCTV SYSTEM INTEGRATOR PROFESSIONAL SERVICES AND THAT THE EXECUTIVE DIRECTOR OR DESIGNEE BE AUTHORIZED TO EXECUTE THE NECESSARY DOCUMENTS. THE MOTION CARRIED BY UNANIMOUS VOTE. A5. MSP ORGANICS COMPOSTING PROGRAM HENNEPIN COUNTY WASTE ABATEMENT INCENTIVE CF 806 The Metropolitan Airports Commission (MAC) is committed to establishing sound environmental practices that conserve resources while minimizing impacts on the natural environment and surrounding communities. With regard to waste management, emphasis is placed upon reduction, re-use and recycling. In May 2010, the MAC, in cooperation with HMS Host and ABM Janitorial, initiated a pilot organics composting program at Terminal 1-Lindbergh. Food waste and other organic materials are diverted from the solid-waste stream at Rock Bottom Brewery, Ike s and the French Meadow Bakery. The separated material is transported to a composting site in Rosemount, MN. The composting process converts organic waste material to a valuable soil amendment, which is sold to private citizens, landscape contractors and public works entities. To date, 53% of the total waste generated by the three locations mentioned above has been diverted for recycling for composting. The Organics Composting Project Team is in the process of expanding the program at other locations in Terminal-1 Lindbergh. It is anticipated that the program will be extended to Terminal-2 Humphrey by the end of Expansion of the program includes additional costs for recycling and composting containers, compostable bags and material hauling and processing.

6 Page 5 In an effort to assist with this program s continued growth, MAC staff submitted an application to the Hennepin County Waste Abatement Incentive Fund Program. Hennepin County has reviewed and approved a grant in the amount of $40,000. If approved by the Commission, this funding could be used to offset the costs associated with the composting efforts. RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE PROPOSED HENNEPIN COUNTY WASTE ABATEMENT INCENTIVE FUND PROGRAM GRANT, AUTHORIZE STAFF TO ENTER INTO THE FINAL AGREEMENT WITH HENNEPIN COUNTY AND AUTHORIZE THE EXECUTIVE DIRECTOR OR DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS. THE MOTION CARRIED BY UNANIMOUS VOTE. A6. MSP NORTH SIDE STORM SEWER IMPROVEMENTS AND RUNWAY 30R APPROACH LIGHTING SYSTEM ENVIRONMENTAL ASSESSMENT PUBLIC HEARING CF 807 In December 2010, the Metropolitan Airports Commission (MAC) approved the Capital Improvement Program which includes the North Side Storm Sewer Improvements and the Runway 30R Approach Lighting System project. The North Side Storm Sewer Improvements will improve the water quality associated with storm water flows from the north side of the airport property. A 2004 Feasibility Report identified a number of improvements necessary to reduce the frequency and volume of storm water discharges into Snelling Lake from MSP Pond 3 and to improve Snelling Lake water quality. The proposed modifications include removing accumulated sediment and adding automated slide gate outlet structures to both MSP Pond 3 and MSP Pond 4. A new submerged outlet structure will be installed at the Minnesota River and increased flow capacity will be installed from the river to MSP Pond 4 and between MPS Pond 4 and from MSP Pond 3 to reduce the frequency and volume of storm water discharges to Snelling Lake. The Runway 30R Approach Lighting System provides for the installation of the Medium- Intensity Approach Lighting System with Sequenced Flashers (MALSF) which consists of seven centerline light bars spaced at 200-foot intervals beginning at the runway threshold and extending out 1,400 feet. The MALSF improves safety for approaching aircraft by providing runway alignment information over steep terrain and Highway 5, with the goal of reducing missed approaches during reduced visibility conditions. The Draft Environmental Assessment (EA) for the North Side Storm Sewer Improvements and Runway 30R Approach Lighting System was prepared by the MAC for the Federal Aviation Administration (FAA) in accordance with Order B, National Environmental Policy Act (NEPA) Implementing Instructions for Airport Actions and Policies and Procedures for Considering Environmental Impacts. Staff is recommending the MAC hold a public hearing to take public comment regarding the project. Accordingly, staff is requesting authority to hold a public hearing at the July 6, 2011, Finance, Development and Environment Committee meeting.

7 Page 6 The Draft EA is complete and staff plans on publishing the Notice of Public Hearing in local newspapers and the EQB Monitor, and make the Draft EA available for public review and comment. RECOMMEND TO THE FULL COMMISSION THAT A PUBLIC HEARING BE HELD TO CONSIDER THE ENVIRONMENTAL IMPACTS ASSOCIATED WITH THE NORTHSIDE STORM SEWER IMPROVEMENTS AND RUNWAY 30R APPROACH LIGHTING SYSTEM, THAT THE FINANCE, DEVELOPMENT AND ENVIRONMENT COMMITTEE BE DESIGNATED AS HEARING OFFICERS FOR THE PUBLIC HEARING TO BE HELD AT THE JULY COMMITTEE MEETING AND AUTHORIZE THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS. THE MOTION CARRIED BY UNANIMOUS VOTE. A8. PROJECT BUDGET ADJUSTMENT CF 809 Gary Warren, Director of Airport Development, reviewed the proposed project budget adjustment for the Terminal 1-Lindbergh, S. Baggage Screening (BP #3) - Baggage Handling System project. The 2010 Capital Improvement Program (CIP) included $33.5 million for the replacement of the semi-automated Checked Baggage Inspection System (CBIS), which was placed in service following the events of September 11, It is being replaced with nine CTX 5500 screening devices and three high-throughput CTX 9800 devices, being constructed in the lower level of the G Concourse. The MAC has an agreement with the Department of Homeland Security Transportation Security Administration (TSA) for reimbursement of 90% of the eligible costs of the installation. This complex project was divided into separate bid packages including bid package three (BP#3) which involves the installation of the baggage handling system. In November 2010 the Commission awarded the contract for the baggage handling system to Siemens Industry, Inc. in the amount of $9,207, and established a project budget of $10,000,000. As part of the comprehensive effort to install the CBIS in T1, staff has been working with TSA, Delta Air Lines, and other stakeholders to improve the operation of the CBIS by providing temporary space and modifications at ticket counter 4. The goal has been to provide a temporary tie-in to the existing conveyor system and to modify the TSA Oversize Screening area to accommodate the short-term needs of the airlines, (including Continental/United Airlines as a result of their merger), and TSA screening needs. This will allow checked baggage in this area to be routed to the West CBIS. The cost of these improvements is estimated to be $400,000 and is proposed to be added by change order to the South Baggage Screening project. TSA is currently processing an additional Other Transaction Agreement (OTA) to reimburse the MAC for 90% of the eligible costs for this modification.

8 Page 7 A project budget adjustment of $400,000 (revised total project construction budget of $10,400,000 or a 4.0% increase) is therefore being requested for bid package three to accommodate this change in project scope. The original bid for BP#3 was over $4 million under the CIP construction estimate so there are sufficient funds in the capital program to accommodate this change. COMMISSIONER PEILEN MOVED AND COMMISSIONER WILLIAMS SECONDED, TO RECOMMEND TO THE FULL COMMISSION THAT THE PROJECT BUDGET FOR THE TERMINAL 1-LINDBERGH, SOUTH BAGGAGE SCREENING (BP#3) - BAGGAGE HANDLING SYSTEM PROJECT BE INCREASED BY $400,000 TO $10,400,000. FURTHER, AUTHORIZE THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS. THE MOTION CARRIED BY UNANIMOUS VOTE. A9. AREA NAVIGATION (RNAV) BACKGROUND AND NOISE CRITERIA FOR CONSIDERATION BY FAA IN AIRSPACE-WIDE RNAV PROCEDURE DESIGN AND IMPLEMENTATION AT MSP CF 810 Chad Leqve, Manager Noise, Environment and Planning, reported that since 2007, the Noise Oversight Committee (NOC) has been reviewing possible air traffic procedures at MSP that could be pursued to reduce noise impacts. A critical element of this effort would be the use of Area Navigation (RNAV). This technology provides the capability for aircraft to fly a desired track in a manner that is reproducible and allows for more accurate concentration of aircraft overflights in a desired area. It also allows for more seamless transition to Required Navigation Performance (RNP) operations in the future, capitalizing on Global Positioning System (GPS) capabilities. All of these technologies are classified as Performance Based Navigation (PBN) applications. Mr. Leqve provided background information on noise abatement procedures and their enhancement with the use of RNAV technology and reviewed the PBN efforts underway at MSP and how this effort has lead to FAA s commencement of an airspace-wide PBN development initiative at MSP. He reported that in 2011, the NOC began the process of establishing procedure design noise criteria to be forwarded to the FAA for consideration in the airspace-wide PBN procedure development/implementation process at MSP and adopted the following criteria: Provide a noise analysis using the MSP 2010 actual noise data analyzing the effects of the procedures on the noise contours and other noise metrics that evaluate the time above impact and single event noise impacts along a given RNAV track at MSP Provide a public information program to inform the public Reduce the number of sensitive land use overflights (this could be done through increased Eagan-Mendota Heights Departure Corridor compliance, maximizing the concentration of westbound Runway 17 departures directly over the Minnesota River Valley, noise-sensitive departure tracks for operations east of runway heading off Runway 17, and evaluating the impacts of focusing operations to the northwest over major road corridors, where possible) Reduce aircraft arrival noise Maximize use of RNAV noise tracks as part of the Runway Use System (an example would be, during southeast operation flows, focusing easterly-bound departure operations on Runways 12L and 12R on Corridor Compliant RNAV

9 Page 8 tracks, while focusing southbound and westbound departures on Runway 17 on the River RNAV track) In consideration of the history to date and the need to ensure adequate consideration is given to airport noise issues of concern to the communities, staff is requesting that the Commission endorse the criteria developed by the NOC and that it be communicated to the FAA. A draft letter was contained in the Committee package for consideration. Mr. Leqve responded to questions and comments from Commissioners regarding the potential for noise reductions with PBN procedures in place, if there are impacts to arrival/departure rates, if changes in separation distances could occur, and if the procedures could be implemented at the reliever airports or if the scope looks exclusively at MSP. It was noted that the goal is not to impact capacity but rather enhance capacity in a way that is environmentally friendly and reduces the economic burden on carriers in terms of fuel burn; he also noted that the scope is to look at the system, not just MSP. It was suggested that FCM would be a good reliever airport to experiment with. COMMISSIONER PEILEN MOVED, AND COMMISSIONER LANDY SECONDED, TO RECOMMEND TO THE FULL COMISSION ENDORSEMENT OF THE RNAV NOISE CRITERIA DEVELOPED BY THE NOISE OVERSIGHT COMMITTEE AND AUTHORIZE THE CHAIR TO COMMUNICATE THE METROPOLITAN AIRPORTS COMMISSION SUPPORT TO THE FAA VIA THE LETTER CONTAINED IN THE COMMITTEE PACKAGE. THE MOTION CARRIED BY UNANIMOUS VOTE. A10. MAC PAYROLL PROCESS AUDIT REPORT CF 811 Mike Willis, Assistant Director Internal Audit, reported that an audit of the MAC Payroll Process has been completed. A copy of the audit report detailing the objectives and scope, background information and a summary of the audit results was contained in the Committee package as well as Management s response to the findings and recommendations. Mr. Willis reported that the audit procedures showed that MAC payroll disbursements were processed in accordance with applicable policies, laws and labor agreements however the following issues were identified: MAC s current process and internal control structure over payroll processing needs improvement. MAC controls in place to ensure that certain employees are paid for the appropriate number of hours are inadequate. MAC employees who process payroll have incompatible system access to adjust employee pay rates. MAC controls over electronically submitted time sheets are inadequate to ensure that submitted payroll hours are properly approved by employees and their supervisors.

10 Page 9 Mr. Willis reviewed the following audit recommendations: Evaluate the current processes in place over payroll and identify the related risks and inefficiencies. Research potential solutions such as scheduling and or time clock interfaces with the accounting system. Analyze the related costs and efficiencies of the potential solutions. Develop a comprehensive solution that addresses overall payroll process. Consider whether some issues such as the number of bargaining unit items affecting payroll as well as salary provisions affecting certain non-organized groups can be reviewed and minimized to help streamline the payroll process. MAC should either pay all hourly employees based on actual hours worked each pay period or implement a formal process to reconcile actual hours worked to actual hours paid on a regular basis. The process should include procedures to address any discrepancy between hours worked plus paid leave and hours paid. MAC should develop a report that captures only employee pay rates that have been overridden during payroll processing and assign the responsibility for reviewing the changes to someone independent of the payroll process. Configure the payroll module to, at a minimum, require either an employee or supervisor signature for payroll to process. Develop reporting to identify all electronic time sheets that do not have both required signatures or were approved by someone other than the employee s supervisor. Assign a staff person to monitor payroll signatures and ensure that all required employee and supervisor signatures are obtained in a timely manner. Jeff Hamiel, Executive Director, responded to the audit findings stating that the findings are consistent with what staff has been aware of. He noted the complexity involved with administering payroll with regards to the various labor agreements and discussed eliminating the pay differential concept that requires the hand compilation process. He also discussed how police and fire are paid based on their varying shifts. Mr. Hamiel noted that staff has also been looking at how other municipalities deal with these issues. Bob Schauer, Director of Finance, stated that Finance is anticipating a budget request in 2012 for an automated time entry system. Jan Nielsen, Deputy Executive Director Human Resources, stated that her department will continue to partner with Labor Relations and Payroll to streamline the process and improve the controls in place. Committee discussion followed and staff was encouraged to fully utilize the Enterprise One system and the technologies that are currently in place. COMMISSIONER MADIGAN MOVED AND COMMISSIONER CRIMMINS SECONDED, TO RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE MAC PAYROLL PROCESS AUDIT REPORT CONCLUSIONS AND RECOMMENDATIONS. THE MOTION CARRIED BY UNANIMOUS VOTE.

11 Page 10 A11. SIGNATURE FLIGHT SUPPORT AUDIT REPORT CF 812 Alan Sasse, IS Audit Coordinator, reported that an audit of Signature Flight Support concerning its compliance with the Fixed Base Operator Lease and Operating Agreement between MAC and Signature for the period of January 1, 2008 through December 31, 2010 has been completed. A copy of the audit report detailing the audit objectives and scope, background information and a summary of audit results was contained in the Committee package as well as Signature Flight Support s written response to the audit report. Mr. Sasse stated that no significant issues were discovered however there was one audit finding with regards to catering revenues as follows: In its monthly reporting of gross revenue, Signature deducted catering costs from gross catering revenue and paid the percentage rent on net catering revenue. Mr. Sasse reviewed the following audit recommendations: Signature should report and pay percentage rent on gross catering revenue instead of net catering revenue. MAC should pursue collecting the amounts owed from Signature as identified in the finding. The total amount owed to MAC is approximately $5,700. Dale Kariya, Signature Flight Support, stated they are pleased with the audit results however Signature disagrees with the finding as it appears they are paying a concession fee on ghost revenue. He noted that Signature incurs neither cost nor revenue from the catering itself and that one of the vendors they use regularly has an agreement with MAC and pays concession fees accordingly. Committee discussion followed regarding whether other leases have similar provisions and if the audit is rejected, what impact that may have on those leases. Tom Anderson, General Counsel, stated that there is a significant amount of commercial leases that charge a percentage of gross receipts rather than a percentage of net receipts. He noted that the question of double-dipping has been addressed in FBO leases at the reliever airports. It was suggested that staff consider including language in future leases similar to the language in the reliever airport leases and determine whether this is revenue or a cost reimbursement to ensure that all tenants are treated fairly. COMMISSIONER LANDY MOVED AND COMMISSIONER WILLIAMS SECONDED, TO RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE SIGNATURE FLIGHT SUPPORT AUDIT REPORT CONCLUSIONS AND RECOMMENDATIONS. THE MOTION CARRIED BY UNANIMOUS VOTE.

12 Page 11 A12. ALLOCATION OF 2010 UNDESIGNATED FUNDS CF 813 Each year since 1978, with the exception of 2001 through 2003, the Commission has transferred and designated funds available in the Operating Fund to the Special Construction Fund. Bob Schauer, Director of Finance, reported that at the conclusion of the 2010 financial audit, Staff determined that the Commission had $46,700,000 in funds that are available to be designated by the Commission. Staff s recommendation is to designate the $46,700,000 as follows: Year Special Construction Relievers Repair & Replacement 2010 $29,251,930 $565,438 $16,882,632 The money earmarked for the Reliever airports and the Repair and Replacement funds are amounts determined by MAC Ordinance No. 107 and the Airline Lease Agreement respectively. Based upon the Capital Improvement Program funding plan approved by the Commission in December 2010, staff has identified certain projects to be paid for using the Special Construction Fund during 2011 and early Some of the major projects are: Airport Noise Mitigation Program $10,200,000 Various Terminal Building Projects 11,000,000 Various Reliever Airport Projects 7.500,000 $28,700,000 COMMISSIONER CRIMMINS MOVED AND COMMISSIONER FOSTER SECONDED, TO RECOMMEND TO THE FULL COMMISSION DESIGNATION OF THE 2010 UNRESTRICTED CASH IN THE AMOUNT OF $46,700,000 AS FOLLOWS: 1. SPECIAL CONSTRUCTION FUND $29,251, RELIEVER AIRPORT CAPITAL SURCHARGE $ 565, REPAIR AND REPLACEMENT FUND $16,882,632 THE MOTION CARRIED BY UNANIMOUS VOTE. A AUDIT AND FINANCIAL STATEMENTS CF 814 Bob Schauer, Director of Finance, introduced Joe VandeBosche and Rick Wittgren, BKD, LLP, who gave a presentation regarding the results of the audit of the financial statements for Mr. Wittgren noted that there were no internal control or compliance issues with the 2010 financial statements. He reviewed the key financial highlights stating that total assets increased $79.6 million and total liabilities increased $54.5 million. He noted that the Statements in Revenues, Expenses, and Changes in Net Assets have remained consistent from year to year and reviewed the Significant Financial Statement Disclosures.

13 Page 12 Mr. VandeBosche reviewed the Management Letter noting one material weakness in internal control over financial reporting and internal control of compliance with laws and regulations on Federal award programs. The Management Letter also includes the following suggestions: Implement an Anti-Fraud Program Contract payment limits with regard to Professional Service contracts and adoption of a formal conflict of interest policy for employees Designation of a Compliance Officer for Federal and State Grant Award Programs Development of a policy to update internal control documentation annually and recommend FD&E Committee periodically review the controls Future accounting, financial reporting and compliance considerations regarding TSA grants and salaries and wages charged to federal award programs Chair Geisler complimented staff and the auditors and stated that the audit went well and the comments are reasonable. COMMISSIONER LANDY MOVED AND COMMISSIONER CRIMMINS SECONDED, TO RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE 2010 FINANCIAL STATEMENTS, SINGLE AUDIT AND PFC AUDIT. THE MOTION CARRIED BY UNANIMOUS VOTE. A BUDGET TARGETS CF 815 Bob Schauer, Director of Finance, reported that in the development of the 2012 Budget Targets, staff has had numerous discussions among internal staff and outside consultants. Based on these conversations, staff developed the following 2012 Targets: 1. Maintain a coverage ratio of 1.4x on General Obligation Revenue and Senior General Airport Revenue Bonds 2. Maintain six month reserve in the Operating Fund 3. The Airline Cost/Enplaned Passenger will be in the lower one third of large hub airports 4. The Commission will have a balanced budget Mr. Schauer noted that in accordance with the policy on budget targets adopted by the Commission, approval of the targets will be requested at the June Commission meeting to allow for a one-month public comment period. A schedule of Committee involvement with the budget was contained in the Committee package. THIS WAS AN INFORMATIONAL ITEM ONLY; NO COMMITTEE ACTION WAS REQUESTED.

14 Page 13 A15. BKD INTERNAL CONTROL AND PROCESS REPORT UPDATE CF 816 Bob Schauer, Director of Finance, reported at the July 2010 FD&E committee meeting our auditors, BKD, LLP made a recommendation to management that the Commission consider developing a document that identifies and documents MAC s key accounting processes, accounting cycles and internal controls. This document would also identify missing internal controls and also make recommendations on strengthening existing internal controls and methods to establish and/or reinforce control ownership and accountability. As staff was determining the scope of this project, staff felt that in order to obtain the full benefit of this project, we would also have BKD, LLP look at the how the work load is distributed within the finance department and suggest any organizational structure changes and identify potential process improvements. In December 2010, BKD, LLP, presented their report to the FD&E Committee and at that time the FD&E Committee requested an update on the status of the report recommendations. Mr. Schauer provided an update on the Staff Resource Allocations noting that significant progress has been made, tasks have been reduced and streamlined, and increased staff in IS has assisted in developing tools and reports available in E1. He also provided an update on the Internal Control Recommendations. THIS WAS AN INFORMATIONAL ITEM ONLY; NO COMMITTEE ACTION WAS REQUESTED. The meeting was adjourned at 11:05 a.m.

15 REPORTS A METROPOLITAN AIRPORTS COMMISSION FINANCE, DEVELOPMENT & ENVIRONMENT COMMITTEE REGULAR MEETING Wednesday,, 9:00 a.m. Room 3048A, Terminal 1-Lindbergh Minneapolis-St. Paul International Airport "DISCUSSION ITEM" Call to Order A regular meeting of the Finance, Development and Environment Committee, having been duly called, was held Wednesday,, in Room 3048A, Terminal 1-Lindbergh, Minneapolis- St. Paul International Airport. Chair Geisler called the meeting to order at 9:00 a.m. The following were in attendance: Commissioners: Geisler, Peilen, Crimmins, Foster, Landy, Madigan, Williams, Deal, King, Monaco, Rehkamp, Chair Boivin Staff: J. Hamiel, D. Probst, T.W. Anderson, T.L. Anderson, J. Nielsen, B. Schauer, P. Hogan, G. Warren, R. Fuhrmann, S. Wareham, C. Leqve, R. Biddle, B. Rief, M. Willis, E. Johnson, B. Peters, L. Sorensen, K. Schaefer, T. Toscano, A. Sasse, M. Hagerty, P. Anderson, K. Lear, J. Felger Others: G. Hoff, MBAA; D. Kariya, T. Gustafson, Signature Flight Support; J. VandeBosche, R, Wittgren, BKD, LLP; R. Friskney, D. Saunders, SMAAC; P. Rebholz, Wells Fargo; P. Mogush, City of Minneapolis A7. RATIFICATION OF 2010 EXPENDITURES CF 808 Chair Boivin requested that this item be presented to the Full Commission at its May meeting. The meeting was adjourned at 11:05 a.m.