AGENDA RENO-TAHOE AIRPORT AUTHORITY FINANCE & BUSINESS DEVELOPMENT COMMITTEE MEETING

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1 BOARD OF TRUSTEES PRESIDENT/CEO ** Lisa Gianoli, Chair Marily M. Mora, A.A.E. Jessica Sferrazza, Vice Chair EXECUTIVE VICE PRESIDENT/COO *** Richard Jay, Secretary Dean E. Schultz, A.A.E. Jenifer Rose, Treasurer GENERAL COUNSEL Nat Carasali Ann Morgan, Fennemore Craig **** Shaun Carey CLERK OF THE BOARD **** Carol Chaplin Claire Johnson *** Daniel Farahi Art Sperber * Chair of Finance and Business Development Committee ** Vice Chair of Finance & Business Development Committee *** Member of Finance and Business Development Committee **** Alternate on Finance and Business Development Committee AGENDA RENO-TAHOE AIRPORT AUTHORITY FINANCE & BUSINESS DEVELOPMENT COMMITTEE MEETING DATE & TIME: Tuesday, August 7, :00 a.m. LOCATION: Reno-Tahoe International Airport Administrative Offices, Conference Rooms A/B Reno, Nevada Items 2 and 5 are action items for the Committee to consider. The Committee may discuss a matter when it is brought up, but no action may be taken on it unless it has been specifically included on an agenda as an action item. AGENDA: 1. Roll Call 2. Approval of Meeting Minutes from June 12, Public Comment (Limited to 3 Minutes per Person) 4. Items Provided to the Finance & Business Development Committee for Information: a. Vanguard Car Rental USA, LLC Fiscal Year Audit Report b. Investment Portfolio Report for the Quarter Ended June 2018 c. Review of Operating Results through June 2018 d. Review of Budget Transfers (if any) e. Review of Contracts and Professional Service Agreements through July 2018 f. Review of Legal Expenses through June 2018 g. Review of Board Budget through June 2018 h. Review of Legislative Consultants Budget through June Items to be Presented to the Finance and Business Development Committee for Review and Recommendation to the Board: a. #18(08)-50 Authorization for the President/CEO to Exercise the First Two- Year Contract Extension Option to the Professional Services

2 Finance & Business Development Committee Meeting Agenda August 7, 2018 Page 2 of 2 Agreement for General Banking Services, with Wells Fargo Bank, N.A., in the Amount of Approximately $51,000 b. #18(08)-54 Authorization for the President/CEO to Execute a Right of Entry and Hold Harmless Agreement, Negotiate Final Terms and Execute a 50-Year Land Lease at the Southeast Corner of McCarran Boulevard and Airway Drive, with Dermody Properties, for an Estimated Contract Value of $50,500, Items to be Presented to the Finance & Business Development Committee for Approval: a. None. 7. Items to be Presented to the Finance & Business Development Committee for Discussion: a. None. 8. General Member Comments, Questions and Items for Future Committee Meetings 9. Public Comment (Limited to 3 Minutes per Person) 10. 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 Claire Johnson, Clerk of the Board, P.O. Box 12490, Reno, NV, or 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 or by calling (775) 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

3 *** 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 June 12, :00 a.m. In Attendance: Lisa Gianoli, Trustee* Richard Jay, Trustee* Daniel Farahi, Trustee** Carol Chaplin, Trustee** Art Sperber, Trustee Ann Morgan, Fennemore Craig Marily Mora, President/CEO Dean Schultz, Executive Vice President/COO Rick Gorman, Chief Financial Officer Tony Osendorf, Manager of Finance Leah Williams, Manager of Accounting Holly Luna, Manager of Purchasing & Materials Management Audelia Esquivel, Administrative Assistant II TOPICS DISCUSSED: 1. ROLL CALL Roll was called. * Denotes Finance Committee member ** Denotes Finance Committee alternate 2. APPROVAL OF MEETING MINUTES FROM MAY 15, 2018 A motion was made by Trustee Jay, seconded by Trustee Farahi, and the Committee unanimously approved the minutes from the May 15, 2018 Finance and Business Development Committee meeting. 3. PUBLIC COMMENT None. 4. ITEMS PROVIDED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR INFORMATION a. Review of Operating Results through April 2018 b. Review of Budget Transfers

4 RTAA Finance and Business Development Committee Minutes of June 12, 2018 Meeting Page 2 of 3 c. Review of Contracts and Professional Service Agreements through May 2018 d. Review of Legal Expenses through April 2018 e. Review of Board Budget through April 2018 f. Review of Legislative Consultants Budget through April 2018 The Committee had no questions regarding the reports outlined above. 5. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR REVIEW AND RECOMMENDATION TO THE BOARD a. #18(06)-41 AUTHORIZATION FOR THE PRESIDENT/CEO TO FINALIZE NEGOTIATIONS AND EXECUTE AN AIRLINE-AIRPORT USE AND LEASE AGREEMENT FOR A TERM OF TWO YEARS, WITH AN OPTION OF AN ADDITIONAL FIVE-YEAR EXTENSION, WITH JETBLUE AIRWAYS CORPORATION Staff gave a presentation recommending the Authorization for the President/CEO to Finalize Negotiations and Execute an Airline-Airport Use and Lease Agreement for a Term of Two Years, with an Option of an Additional Five-Year Extension, with JetBlue Airways Corporation. Trustee Gianoli asked if any of the signatory airlines have used their majority-ininterest (MII) right to dispute capital improvement projects over the years. Staff stated that before the recently adopted Fiscal Year (FY) Budget, the capital improvement projects in the airfield, terminal and baggage handling system (BHS) have not exceeded the dollar limits that would trigger an MII vote since at least In the current year, the FY Budget proposed capital projects for the airfield were in excess of the $1 million established threshold, which did trigger an MII consultation and vote. After review with the signatory airlines on May 2, 2018, the Reno-Tahoe Airport Authority (RTAA) did not receive any notice of disapproval. With the current agreement expiring on June 30, 2020, the current agreement does provide for an additional five (5) year option at the mutual agreement of both parties. Staff mentioned that the timing of the master plan project implementation including the concourse replacement and new Customs and Border Protection (CBP) facility may be a factor in discussions regarding any term extension under the option. Trustee Jay asked if the revenue figures indicated in the presentation were included in the FY Budget. Staff stated that the numbers in the budget reflect JetBlue as a signatory airline, since staff felt confident that the agreement would be approved and executed.

5 RTAA Finance and Business Development Committee Minutes of June 12, 2018 Meeting Page 3 of 3 On motion by Trustee Farahi, seconded by Trustee Jay, the Committee unanimously recommended this item [#18(06)-41] go to the Board for adoption at the June 14, 2018 Board meeting. 6. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR APPROVAL None. 7. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR DISCUSSION None. 8. GENERAL MEMBER COMMENTS, QUESTIONS AND ITEMS FOR FUTURE COMMITTEE MEETINGS None. 9. PUBLIC COMMENT None. 10. ADJOURNMENT The meeting was called to order at 9:01 a.m. and was adjourned at 9:14 a.m. LG: RG/ae ** These draft minutes have not yet been approved and are subject to revision at the next regularly scheduled meeting. ***

6 Administrative Report Reno-Tahoe Airport Authority Date: August 1, 2018 Administrative Report # To: Finance and Business Development Committee Thru: Marily Mora, A.A.E., President/CEO From: Paula Murphy, Internal Auditor Subject: VANGUARD CAR RENTAL USA, LLC AUDIT REPORT FOR FISCAL YEAR As part of the Reno-Tahoe Airport Authority s ongoing review of License compliance, the Internal Audit Department has completed an audit of Vanguard Car Rental USA, LLC dba National Car Rental and Alamo Rent A Car operations at the Reno-Tahoe International Airport. The audit included Rental Car revenues, Customer Facility Charges (CFCs), Concessionable Airport revenue, and Concession Fees paid, as well as reporting and compliance with other items found within the Nonexclusive Vehicle Rental Concession Lease for fiscal year This audit had been scheduled as a result of our annual internal audit planning process. The attached report will be presented to the Finance and Business Development Committee on August 7, MMM/pm/cj

7 Internal Audit Report Vanguard Car Rental USA, LLC dba National Car Rental and Alamo Rent A Car Audit at Reno-Tahoe International Airport Fiscal Year Reno-Tahoe Airport Authority Internal Audit May 29, 2018

8 Executive Summary of Audit Vanguard Car Rental USA, LLC dba National Car Rental and Alamo Rent A Car (Vanguard) was found in compliance with its lease and concession agreements. The Monthly Concession Fee Reports and payments for July 2016 through June of 2017 were submitted on a timely basis and in the amounts due. Vanguard s monthly State of Nevada Sales Tax Reports supported the Monthly Concession Fee Reports submitted to the Reno-Tahoe Airport Authority (RTAA). Also, the audited September 2016 Closed Ticket Detail Report agreed with the Monthly Concession Fee Report. Customer Facility Charges (CFC) were accurately calculated, collected, and paid. Land and Structure Lease payments were paid in the proper amount and in a timely manner. Insurance certificates are current and correct. Vanguard complied with operational Lease requirements. Background Vanguard provides vehicle rental services at the Reno-Tahoe International Airport (RTIA). Vangard is a limited liability company organized under the laws of the State of Delaware. It is a privately held company that is owned by Enterprise Holdings, Inc. that also owns Enterprise- Rent-a-Car. It has two nationally recognized car rental agencies: National Car Rental (National) and Alamo Rent A Car (Alamo). Vanguard has two agreements with the RTAA: a Nonexclusive Vehicle Rental Concession Lease (Concession Lease) and a Nonexclusive Ready/Return, Quick Turnaround Facility and Service Facility Lease (Facility Lease). Both agreements have five year terms beginning July 1, 2010 and ending June 30, 2015 with three one-year extensions offered at RTAA s sole discretion along with holdover clauses. Effective July 1, 2015, Vanguard executed amendments to both leases to exercise and consolidate the three one-year extension options into one three-year extension. The terms now end on June 30, These agreements have been updated and extended to June 30, The Concession Lease requires the payment of concession revenue, CFC, and counter/office space rent. Concession fees are based on the greater of the Minimum Annual Guarantee (MAG) or 10% of gross revenues. The MAG is the amount Vanguard bid for its rental counter location, its vehicle pick-up location and access to operate at RTIA in accordance with a Request for Bids for Nonexclusive Vehicle Rental Concession Leases conducted in a public, competitive process to select providers of rental car services. The MAG is $1,200,162 and 1/12 th is paid on or before the 1 st of each month (or $100,013.50). By the 20 th of the month, Vanguard submits a Monthly Concession Fee Report listing concessionable revenues, where 10% of the 2

9 gross amount is compared with the MAG paid at the beginning of the month. If the 10% concession fee calculation is greater than the MAG, the amount over the MAG is due. If the concession fee calculation is less than the MAG, no additional payment is due. In addition, a CFC of $1.25 per day per rental car rented is remitted with the Monthly Concession Fee Report along with rent for the counter and office space used in the terminal building to conduct business. Rent is based on the square footage used and the rate reported in the Master Fee Resolution. The Facility Lease requires monthly rental payments based on parking spaces or square footage used. For Fiscal Year (FY) 2017, Vanguard leased 56 Ready spaces (where customers pick up cars) and 37 Return spaces (where customers return cars) in the parking garage; approximately 7,596 square feet in the Quick Turnaround (QTA) lot immediately north of and adjacent to the parking garage (where cars wait to be cleaned and refueled); one-fifth (1/5 th ) share of the QTA facility (where cars are washed and refueled) along with approximately 11,559 square feet of QTA facility common area; and, approximately 163,561 square feet of ground and 3,500 square feet of certain structures known as the Service facility (for storage and servicing cars) at Terminal Way and National Guard Way. The number of Ready/Return spaces and the size of the QTA lot leased are adjusted annually based on a market share allocation. Rental rates for the QTA lot, QTA facility, and Service facility are adjusted annually on July 1 st in accordance with the Consumer Price Index (CPI) published in June. The amount charged per parking space is fixed. Purpose, Objective and Scope The purpose of this audit is to provide assurance to the Finance and Business Development Committee and RTAA Management that Vanguard is in compliance with the terms and conditions of its Lease agreements. Objectives include confirming: Concession Revenues are properly calculated and paid; Monthly Reports are timely and complete; Monthly payments are timely; and, Overall compliance with Concession Lease and Facility Lease. The scope of the audit was for FY A review of all months and a detailed audit of the September 2016 Monthly Closed Ticket Detail report were made, using the General Ledger (G/L) chart of accounts, monthly Sales Tax Reports, and Monthly Concession Fee Reports. Rental payments were reviewed for payments made during the fiscal year. 3

10 Audit Results A. Concession Revenues are Properly Calculated and Paid Concession Revenues were found to be properly calculated and paid. Vanguard s Concession Revenues are derived exclusively from operations at the RTIA. Both Alamo and National do not have other locations within 5 miles of the RTIA that would be subject to paying concession revenues to the RTAA in accordance with the Concession Lease. Vanguard pays the RTAA a 10% Concession Fee on gross revenues, which includes all revenue not specifically excluded in the Concession Lease. Examples of revenue categories included are: Time and Mileage; Insurance products; Drop Fees and Accessories (i.e. child seats, ski racks, etc.); Wayfinding Accessories (i.e. GPS); Age Differential and Additional Driver; Gross Fuel Sales; Government Administrative Rate and Frequent Flier Surcharge; Vehicle License Fee; Concession Recovery Fee; Airport Concession Fee; and, Other Fees (i.e. Key Replacement, Overdue Charge, and Tolls). Excluded from Gross Revenues are: Vehicle Sales to wholesalers and Damage Repair Payments; Customer Facility Charges (CFCs); Washoe County Sales Tax; Stadium and Government Services Fees; and, Any other sales, excise, ad valorem, or other taxes by a separate taxing entity. Vanguard (like the other rental car companies) collects an 11.11% Concession Recovery Fee from the customer, which is included in gross revenue, since the fee itself is concessionable. Essentially, the rental car companies are having the customer pay the concession fee. For example, if $150 was paid for a rental car, there would be 11.11% concession recovery fee of $16.67 collected from the customer in addition to the car rental. The rental car and the concession recovery fee would total $ and, of this, 10% would be paid to the RTAA, or $16.67, the amount collected from the customer when they rented the car. To determine the monthly concession fee due, Vanguard prepares a Monthly Concession Fee Report that is submitted to the RTAA by the 20 th day of each month. An example is attached at the end of the report. It lists the type and amount of concession revenue collected for a given month and calculates the 10% concession fee. If it is greater than the MAG, an additional payment is due; if the calculation is less than the MAG, no additional concession fees are due. 4

11 In addition, the Monthly Concession Fee Report provides the number of days per rental car rented to determine the amount of CFCs to remit. This fee is to (1) annually fund the renewal and replacement improvements to the QTA facility and the Service Facility Area; (2) provide the on-going overhead and maintenance of the QTA; and, (3) pay an administrative fee to the RTAA. To assure that concession revenue is accurately reported and paid to the RTAA, we obtained Vanguard s general ledger (G/L) chart of accounts and monthly Sales Tax Reports for FY The chart of accounts includes the name of the G/L account and description of what is in the account. The chart of accounts was reviewed to identify accounts that should be included as concession revenue per their description and in accordance with the terms in the Concession Lease. The monthly Sales Tax Reports provides grand totals for each G/L account. Having identified the G/L accounts that were concession revenue sources, the monthly Sales Tax Reports were used to assure that the Monthly Concession Revenue reports accurately reported the same figures. To assure that the monthly Sales Tax Reports were reasonable, one month was randomly selected for a detailed audit. We obtained the Closed Ticket Detail Report (Closed Ticket Detail) for September The Closed Ticket Detail represents all transactions in a given month where a Rental Agreement (RA) was closed. RAs are uniquely coded contracts representing specific customer agreements which are opened when a car is picked up; and closed upon return. Some RAs closed during the month were for adjustments from prior periods where additional funds were collected or there was a reduction of fees for customer service reasons. The Closed Ticket Detail Report was compared with the monthly Sales Tax Report for September There were a few differences; however, reasonable explanations were provided for them. In two instances, they were attributed to reversing erroneous entries. In another two instances, rental car revenue included insurance and equipment changes that were recategorized to G/L accounts specifically for insurance and equipment changes. From the Closed Ticket Detail, 56 RAs were both randomly and judgementally selected (or 0.77% of the 7,299 RAs processed in the month). Of the sampled RAs, 40 were from Alamo and 16 were National. Each RA was compared with the Closed Ticket Detail to assure that the Closed Ticket Detail accurately reported what was shown on the RA. For the RA s issued by Alamo, there were 15 instances where the Closed Ticket Detail had figures that were higher than the RA, or 37.5%. According to Vanguard, certain rental agreements are processed by what it calls Tour Groups. Tour Groups include companies like Expedia and Travelocity, as well as travel agents. When funds are collected from Tour Groups, they are processed by Vanguard s corporate headquarters, and the funds are allocated to the appropriate account. According to Vanguard, as these funds are collected from multiple tour groups towards the rental of cars throughout the world, centralizing the collection of these revenues and allocating to individual RAs is the only practical way to account for them. In going through these RAs, the amounts reported on the Closed Ticket Detail were matched to certain items on the RA; while there were other revenue items that were not found on the RA (because they had been collected by the Tour Group and remitted to the corporate office). Per discussion 5

12 with the local manager, the local office is unable to determine these fees, as they were collected by the Tour Group. Vanguard explains that there are procedures in place to ensure that the money received is applied to the appropriate RA and to close out open receivables. For the RAs issued by National, there were no descrepencies between the RAs and the Closed Ticket Detail. There were no Tour Group rentals identified in the sample. The sampled RAs were also tested to assure that they were in compliance with the collection of state and county taxes and fees. For the period of review, the sales tax rate was 7.375%. There is also a Stadium Fee of 2% paid to Washoe County (for the Aces Ballpark) and a 10% Government Services Fee paid to the State of Nevada. Depending on the nature of the charges on the RA, some items are subject to a tax or fee; while others are not. For example, there are no Government Services Fees or sales taxes collected on insurance products; however, there is a Stadium Fee that is charged on these items. Attached to this report is a matrix indicating which line items are subject to fees, including what is concessionable revenue. During this review, there were two instances where there were adjustments made, one for Customer Satisfaction and another for a Coupon. The adjustments were greater than the rental car, resulting in a negative subtotal amount for the rental car. Because the basis of the cost of the rental car was negative, the 11.11% concession revenue surcharge resulted in a negative figure, along with the tax calculations. There were 2 instances noted where the combined adjustments totaled less than $2.00, so were not considered material (RA # and # ). In one instance, there was a Customer Satisfaction adjustment of $350 to apparently offset a $350 cleaning fee; unfortunately, when taxes and government fees were calculated, it was based on the base rent of the car less the $350 adjustment (and did not add the cleaning fee because no sales tax is charged on this fee), resulting in a negative basis for the tax calculations. Instead of paying $42 in government fees and taxes, the amounts calculated for sales taxes, government fees, and stadium fees were negative amounts totalling slightly more than $27. It did not impact concession revenues, because the concession fee calculation included the cleaning fee, resulting in the net amount of money earned on the rental (RA # ). B. Monthly Reports Monthly Reports were found to be timely and complete. Vanguard submits the Monthly Concession Fee Report by the 20 th of the following month. During the period of review, no reports were found to be late. In addition, the reports were found to be complete. C. Monthly Payments Monthly payments were found to be timely during the period of review. 6

13 Payments for the Ready/Return Spaces, QTA Lot, QTA Facility, and Service Facility Leaseholds are due on or before the first of each month. MAG, Counter and Office Premises are also due on or before the first of each month. The 10% Concession fee on the amount over the MAG and the CFC payments are due on or before the 20 th of each month. Payments were made and balances owed were brought to zero each month. No late or delinquent payments were identified. For the month of September 2016, Vanguard s Concessionable Gross Revenue was $1,539,861. The 10% Concession Fee was $153,987 which was greater than the MAG payment of $100,013, which resulted in an additional payment of $53,973. D. Concession and Facility Lease Compliance The insurance requirements for amounts and types were met, and the Certificate of Liability Insurance with RTAA as the Certificate holder was current for the period audited; however, the certificates on file expired in Before the end of the audit, management obtained an updated Certificate of Liability Insurance. Vanguard provided its Special Report prepared and audited by a Certified Public Accountant (CPA) in accordance to the Concession Lease. The report detailed the monthly gross revenues that coincided with the Monthly Concession Fee reports. For FYE 6/30/17, Vanguard s Concessionable Gross Revenue totaled $15,546,758, resulting in actual Concession Fee Revenue of $1,554,676, which was greater than the MAG of $1,200,162. Actual Concession Fee Revenue collected during the year was $1,574,957. During the annual reconciliation or True Up, Vanguard was refunded $20,281, which was the difference between what had actually been paid in excess of what was determined to be due: Concession Fee Revenue Owed Actual Concession Fee Revenue Collected Month Year July 2016 $153, $153, August 2016 $160, $160, September 2016 $153, $153, October 2016 $113, $113, November 2016 $79, $100, December 2016 $102, $102, January 2017 $122, $122, February 2017 $136, $136, March 2017 $154, $154, April 2017 $113, $113, May 2017 $113, $113, June 2017 $152, $152, Totals $1,554, $1,574, Annually, the RTAA is due 10% of the gross concessions or the MAG; therefore, because Vanguard actually paid more than the Concession Fee Revenue due, it was provided a credit. 7

14 Conclusion Vanguard is adhering to the leases and made payments due the RTAA on time and in full. For the month that was audited in depth, the Closed Ticket Detail supported the amounts reported on the Concession Fee Report. Management and staff were very cooperative during the audit process. 8

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16 Certain fees and charges are subject to taxes and other governmental fees, while others are not. This matrix assists in navigating through what applies and what does not. Nevada & Washoe RTAA Nevada County Washoe County Concession Fee Governmental Service Fee 1 Sales Tax Stadium Fee Rent-A-Car (RAC) Revenue Matrix 10% 10% 8.265% 2% 1 Time and Mileage Included Included Included Included 2 All Insurance types (CDW, LDW, PAI, etc.) Included Excluded 2 Excluded Included 3 Accessories (infant seats, ski racks, GPS, etc.) Included Included Included Included 4 Drop charge and intercity fees Included Excluded Included Included 5 Leased to State/political subdivision representative Included Excluded Included Included 6 Fuel and Petroleum products Included Excluded Excluded Included 7 Age differential or additional driver fee Included Included Included Included 8 Late return fees or charges Included Included Included Included 9 Fees for maintaining, cleaning, or altering Included Included 2 Excluded Included 10 Reimbursed Promotional Discounts and/or Rebates Included Included Included Included 11 Frequent Flier Recovery Surcharge Included Included Included Included 12 3 Fees/Charges excluded from Gross Revenue 3 Included 3 Included 3 Included 3 Included 13 Damages paid by Lessee Excluded Excluded Excluded Excluded 14 4 Replacement Vehicle Included Included Included 4 Excluded 15 Concession Recoupment Fees Included Included Included Included 16 5 Vehicle License Recovery Surcharge ($1.40/day) Included 5 Excluded 5 Excluded 5 Excluded 17 Governmental Services Fee (10%) Excluded Excluded Excluded Included 18 Nevada State & Washoe County Sales Tax (8.275%) Excluded Excluded Excluded Excluded 19 Washoe County Stadium Project (2%) Excluded Excluded Excluded Excluded 20 Any Additional Fees 3 Included 3 Included 3 Included 3 Included 1 Effective 4/1/17: 4.60% towards Nevada general fund & 3.665% to Washoe County (previously 7.275%) 2 If seperately stated, not subject to sales tax 3 Revenue, excluding fees or taxes imposed by a government entity 4 If car rented temporarily in place of car owned while being repaired; stadium fee does not apply 5 Fees paid to the DMV are are treated as government fees; RAC can charge flat rate or percentage 10

17 Administrative Report Reno-Tahoe Airport Authority Date: August 1, 2018 Administrative Report # To: Finance and Business Development Committee Thru: Marily Mora, A.A.E., President/CEO From: Rick Gorman, Chief Financial Officer Leah Williams, Manager of Accounting Subject: INVESTMENT REPORT- EXECUTIVE SUMMARY FOR THE 4 TH QUARTER ENDED, JUNE 30, 2018 BACKGROUND Pursuant to the Reno-Tahoe Airport Authority (RTAA) investment policy, a quarterly investment report is to be submitted to the Finance and Business Development Committee reporting on the current portfolio status in terms of composition, maturity and rates of return. DISCUSSION It is the policy of RTAA to invest funds in a manner that will provide market rates of return with high standards of safety and liquidity. While meeting the daily cash flow needs of the Authority, investments must conform to all Nevada Revised Statutes and the Authority s investment policy governing the investment of public funds. The primary objectives, in order of priority are safety, liquidity, and yield. Attached is the Investment Report-Executive Summary prepared by Government Portfolio Advisors for the fourth quarter of FY ending June 30, 2018.

18 Executive Summary Quarter Ending 6/30/18 Prepared by: Government Portfolio Advisors (503)

19 Table of Contents Quarter End Commentary... 1 Account Summary... 2 Accrual Earnings and Activity Report... 3 Compliance Report... 4 Compliance Report... 5 Distribution Report... 6 RTAA Strategy... 7 Holdings Report... 9 Purchase and Sale Report Disclaimer SW Park Place Suite 100 Portland OR

20 Market Commentary Market Yields: The climb in interest rates moderated during the second quarter of Inflation remained tame and the labor markets continued to be strong. The Dow Jones mostly moved sideways, but the Nasdaq rose over 6% to new highs. Concerns over newly announced tariffs and the possibility of a trade war still contributed to stock market volatility. The 2-year Treasury increased 26 basis points and 5- year notes increased 18 basis points during the quarter. The 2-year to 5- year spread flattened from 29 basis points to 20 basis points. FOMC: As was anticipated the Fed raised rates by another 25 basis points from a range of 1.50% to 1.75% to a new fed funds target range of 1.75% to 2.00%. This is now the seventh tightening since December The median projection for the fed funds rate at the end of 2018 is now 2.40% but the median projection for the end of 2019 is still %. Expectations remain for a total of two additional hikes over the next three quarters. The decision to raise the fed funds rate was unanimous. GPA QUARTERLY OBSERVATIONS: ENDING JUNE 30, 2018 Market Outlook GDP: Real GDP increased at an QoQ% rate of 2.80% in Q and is estimated to increase to a final QoQ% rate of 3.40% in Q This is a significant increase and can be attributed to the stimulus provided by tax reform. The near term stimulus is expected to moderate during the remainder of Real GDP for 2018 is expected to reach 2.90% and weaken back to 2.40% in Fed Funds: Interest rate forecasts point to two more rate hikes this year. While the increase in the fed funds rate in June was a unanimous decision, some members have questioned continuing rate hikes while inflation remains muted. 2 year: The 2-year Treasury note is forecasted by over 80 economists contributing to Bloomberg to trade at yields of 2.67, 2.79, 2.91, and 2.99 for the end of each of the next four quarters. Current two year notes are yielding 2.53 so the rise is expected to be moderate and is mostly priced into the current yield curve. Employment: The unemployment rate moved to a new low of 3.80% at the end of the quarter, dropping from 4.10%. Employers are reporting difficulty in filling positions. Total nonfarm payrolls were strong during the quarter, however, wages remain stubbornly weak. Non-farm payrolls increased by 159,000, 223,000 and 213,000 during the quarter. For the first time in 20 years job openings are now exceeding job applicants. The condition of more jobs than applicants could eventually result in higher wages. Portfolio Positioning: GPA is recommending that portfolios adjust their portfolio durations to be closer to neutral versus their benchmark durations. The recommendation to move to a more neutral posture is due to the recent increase in two-year note yields to a ten year high along with a current pause in the rise in rates. While higher rates will eventually result in more attractive portfolio yields, we believe that the pace of the increase will be more moderate than the recent past. Quarterly Yield Change 9/30/17 12/31/17 3/31/18 6/30/18 Economist s Survey Projections Q3-18 Q4-18 Q1-19 Q2-19 Economist s Survey Projections for Rates Q3-18 Q4-18 Q1-19 Q month bill 2- year note 5 -year note Real GDP CPI (YOY%) Unemployment Fed Funds Year year year note Sources: Bloomberg

21 Account Summary RTAA Total Funds 6/30/2018 Weighted Averages Book Yield 1.68 Maturity 0.85 Coupon 1.53 Moody Aaa S&P AA+ Fixed Income Allocation Fixed Income Totals Par Value 85,208,753 Market Value 84,664, Amortized Book Value 85,047, Unrealized Gain/Loss -383, Estimated Annual Cash Flow 1,307, Security Type Market Value % Assets US Agency (USD) 32,849, US Treasury (USD) 24,379, LGIP State Pool (USD) 7,407, Bank or Cash Deposit (USD) 17,895, County Pool (USD) 2,132, Fixed Income Total 84,664,

22 RTAA Total Funds Accrual Earnings and Activity US Dollar 6/30/2018 Cost Basis Summary Quarter to Date Ending 6/30/2018 Fiscal Year-to-Date Ending 6/30/2018 Beginning Amortized Cost 78,806, ,110, Accrual Earnings Summary Quarter to Date Ending 6/30/2018 Fiscal Year-to-Date Ending 6/30/2018 Investment Purchases 6,102, ,912, Investment Maturities/Sells/Calls (9,480,000.00) (27,978,000.00) Amortization 31, , Change in Cash Equivalents 9,586, (12,063,001.01) Realized Gains / Losses Ending Amortized Costs 85,047, ,047, Amortization/Accretion 31, , Interest Earned 278, , Realized Gain (Loss) Total Income 309, ,032, Average Portfolio Balance 80,936, ,202, Earnings Yield 1.54% 1.34% MarketValue Summary As of 6/30/2018 Ending Market Value 84,664, Unrealized Gain/Loss (383,124.20) Interest Earnings Summary Quarter to Date Ending 6/30/2018 Fiscal Year-to-Date Ending 6/30/2018 Beginning Accrued Interest 168, , Coupons Paid 231, , Purchased Accrued Interest (24,521.00) (208,412.43) Sold Accrued Interest 34, , Ending Accrued Interest 206, , Interest Earned 278, ,

23 RTAA Total Funds Compliance Report Policy /30/2018 Investment Policy Compliance Overview Policy % of Total Portfolio Within Limits S&P Moodys Requirement Accumulated Allocation Under 30 days 10% 31% $ 26,053,882 Yes Muni's AA Aa2 AA Under 1 year 25% 64% $ 54,051,080 Yes MMkt AA Aa2 AA Under 5 years 100% 100% $ 84,664,404 Yes C P A-1 P-1 F1 0% $ - Maximum Weighted Average Maturity Yes Maximum Callable Securities 25% 10% $ 8,437,741 Yes Maximum Single Maturity 5 Years 4.24 Yes Policy states ONE rating meets requirement Maximum Policy Percentage of % Within Asset Allocation Diversification Issuer Constraint Market Value Allocation Portfolio Limits US Treasury Securities 100% 28.80% $ 24,379,230 Yes US Agency Primary Securities 100% 38.80% $ 32,849,134 Yes FHLB 35% 13.11% $ 11,101,227 Yes FNMA 35% 2.33% $ 1,969,649 Yes FHLMC 35% 19.16% $ 16,221,947 Yes FFCB 35% 4.20% $ 3,556,311 Yes US Agency Secondary Securities 10% 5% 0.00% $ - Municipal Bonds 30% 5% 0.00% $ - Ratings Compliance Issuer Compliance Certificates of Deposit 50% 10% 0.89% $ 749,287 Yes Yes Yes Commercial Paper 20% 5% 0.00% $ - Bankers Acceptances 20% 5% 0.00% $ - Demand Deposit/Savings 50% 20.25% $ 17,146,567 Yes Yes Yes Money Market Mutual Funds 50% 25% 0.00% $ - Local Government Investment Pool 50% 8.75% $ 7,407,315 Yes ** ** Washoe County Investment Pool 50% 2.52% $ 2,132,871 Yes ** ** Total 100% $ 84,664,404 * FDIC or collateralized ** Ratings & Issuer restrictions do not apply to pool funds 4

24 RTAA Total Funds Compliance Report Policy /30/2018 Strategy Compliance Overview Total Adjusted Yield At Name Par Amount Market Value Unrealized Gain/Loss Eff Dur Bench Dur Benchmark Cost Cost RTAA-CFC $ 5,705,282 $ 5,700,792 $ 5,698,889 $ (1,904) BofA Merrill 0-2 Year Treasury RTAA-Consent $ 1,003,638 $ 998,439 $ 998,138 $ (301) BofA Merrill 0-2 Year Treasury RTAA-Debt Service $ 2,016,751 $ 2,016,751 $ 2,016,751 $ Cash RTAA-Fuel Tax $ 312,609 $ 312,609 $ 312,609 $ Cash RTAA-General $ 34,252,005 $ 34,149,428 $ 33,955,447 $ (193,981) BofA Merrill 0-3 Treasury RTAA-O&M Reserve $ 7,253,581 $ 7,243,073 $ 7,156,259 $ (86,815) BofA Merrill 0-5 Treasury RTAA-PFC $ 16,698,629 $ 16,666,288 $ 16,599,852 $ (66,436) BofA Merrill 0-2 Year Treasury RTAA-Revenue $ 10,132,918 $ 10,132,918 $ 10,132,138 $ (780) Cash RTAA-R&R $ 786,933 $ 787,467 $ 777,279 $ (10,188) BofA Merrill 0-5 Treasury RTAA-Special $ 7,046,407 $ 7,039,764 $ 7,017,043 $ (22,720) BofA Merrill 0-3 Treasury 0 $ - $ - $ - $ TOTAL PORTFOLIO $ 85,208,753 $ 85,047,528 $ 84,664,404 $ (383,124)

25 Distribution Report RTAA Total Funds 6/30/2018 Distribution by Maturity % FI Average Average Average Maturity Number Market Value Holdings YTM Coupon Duration Under 1 Mth 5 26,053, % Mth - 12 Mths 30 27,997, % Mths - 24 Mths 25 22,295, % Mths - 36 Mths 8 6,658, % Mths - 60 Mths 3 1,659, % 3.5 Distribution by Duration % FI Average Average Average Duration Number Market Value Holdings YTM Coupon Duration Under 1 Yr 36 54,544, % Yr - 2 Yrs 24 21,801, % Yrs - 3 Yrs 8 6,658, % Yrs - 5 Yrs 3 1,659, % 3.5 Distribution by S&P Rating % FI Average Average Average S&P Rating Number Market Value Holdings YTM Coupon Duration AA ,228, % 1.1 N/A 8 27,436, % 0.3 Distribution by Moody Rating % FI Average Average Average Moody Rating Number Market Value Holdings YTM Coupon Duration Aaa 63 57,228, % 1.1 N/A 8 27,436, % 0.3 6

26 7/31/2017 6/30/2018 7/31/2017 6/30/2018 Market Value Market Value Difference Book Yield Book Yield Difference RTAA-CFC 4,749,952 5,698, , RTAA-Consent 1,089, ,138-91, RTAA-Debt Service 744,767 2,016,751 1,271, RTAA-Fuel Tax 171, , , RTAA-General 29,645,708 33,955,447 4,309, RTAA-O&M 6,771,491 7,156, , RTAA-PFC 11,241,563 16,599,852 5,358, RTAA-Revenue 7,316,460 10,132,138 2,815, RTAA-R&R 788, ,279-11, RTAA-Special 7,254,053 7,017, , ,774,257 84,664,404 14,890,

27 Disclaimer This material is based on information obtained from sources generally believed to be reliable and available to the public; however, GPA cannot guarantee its accuracy, completeness, or suitability. This material is for purposes of observations and oversight and is the opinion of the author and not necessarily of GPA, LLC. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in this document is not an offer to purchase or sell any securities. Definition and Terms Investment Report: Provides of summary asset allocation and maturity distribution. The activity and earnings summary provides a high level overview of the total funds. Total Funds: This is the amount of the overall portfolio balances that are held in short term liquid investments to meet ongoing operational budgets and cash flows and investments held for longer periods. An annual assessment of the allocations to each component is evaluated through a cash flow process determining liquidity needs and District preferences, the Guideline Portfolio Strategy "GPS" is completed by Government Portfolio Advisors. Compliance Report: Provides a comparison of the portfolio positions to the investment policy. This report includes a breakout of the specific funds and each allocation to the liquidity and investments. Holdings Reports: Provides an overview by fund of portfolio distribution. Security Type: Allocates the investment to a specific issuer type. Par Value: The total face value of the investment at maturity. Security Name: Lists the specific name of issuer. Book Yield or Yield at Cost: Is the earning yield on each security at the time of purchase. The total is a weighting based on investment value. Market Value: The current market value of the security based on a third party pricing source. This price represents the value if the securities were sold on the pricing date. The market value changes with interest rates. Total Adjusted Cost: This may be referred to as book value and represents the cost basis to date after amortization of premiums or discounts since the purchase date. Unrealized gain or loss: This represents the difference between the market value and the adjusted cost at the time of the report. % of Portfolio: Represents the percent allocation dedicated to each security type in the fund. Effective Duration: Represents the duration based on the time between the report date and the maturity of the bond. Duration is similar to average maturity and is used to measure the price sensitivity of the portfolio given interest rate changes. 8

28 Administrative Report Reno-Tahoe Airport Authority Date: August 1, 2018 Administrative Report # To: Chairwoman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: FINANCIAL REPORTING PACKAGE JUNE 2018 PRELIMINARY EXECUTIVE SUMMARY Attached is the Fiscal Year (FY) Financial Reporting Package reflecting the preliminary results for the year ending June 30, These results are subject to final year-end adjustments by staff, the calculation of the airline year-end settlement, and the annual external audit. Upon completion of the external audit, staff will provide a final update to the Board of Trustees in conjunction with the proposed acceptance of the FY Comprehensive Annual Financial Report. Y E A R T O D A T E as of June 30, 2018 (In Thousands) 100.0% Of Fiscal Year CURRENT PRIOR Y-T-D YEAR YEAR VARIANCE % BUDGET VARIANCE % Operating Revenue Airline $ 13,801 $ 13,526 $ % $ 16,130 $ (2,329) -14.4% Non-Airline 36,576 34,263 2, % 34,233 2, % Total Operating Revenue 50,378 47,789 2, % 50, % Non-Operating Revenues 2,995 2, % 2, % Total Revenue 53,373 50,113 3, % 52, % Operating Expenses (39,617) (37,938) (1,679) 4.4% (42,100) 2, % Net Revenue Available for Debt Service 13,756 12,175 1, % 10,463 3, % Debt Service After PFCs (2,247) (3,576) 1, % (2,247) 0 0.0% Net Available Cashflow 11,508 8,599 2, % 8,216 3, % Based on preliminary actual results through June 30, 2018, net available cash flow, after funding debt service, is approximately $ million, an increase of approximately $3.292 million above the adopted FY Budget and $2.909 million above last year s results for the same period. 1

29 June 2018 Preliminary Financial Summary Administrative Report # August 1, 2018 Page 2 of 8 TOTAL OPERATING REVENUE The RTAA s total operating revenue of $ million is approximately $14,800 above budget. This modest increase reflects significantly lower airline cost recovery of $2.329 million due primarily to lower terminal building costs and higher than anticipated net revenue sharing. Offsetting these savings to the airlines are the significantly higher non-airline revenues of $2.344 million. The increase is primarily due to higher revenues from auto rental, parking, food and beverage concession and RNO and RTS building and land rent. The revenue results are discussed in more detail later in this report. The chart below reflects actual operating revenues for the fiscal year as compared to the budget amount. 2

30 June 2018 Preliminary Financial Summary Administrative Report # August 1, 2018 Page 3 of 8 AIRLINE Landing Fees The RTAA executed a five-year agreement with the airlines effective July 1, The formula for calculating landing fees consists of almost 100% cost recovery of airfield related operating and capital improvement expenses offset by other airfield derived revenues. Landing fees were budgeted and collected at $2.99 per 1,000 lbs. of landed weight. Based on preliminary results for the year ending June 30, 2018, landing fee revenues registered $8.165 million, which is approximately $403,400 or 4.7% under the adopted budget. The lower revenue reflects lower costs recovery from the Airfield Cost Center, or Net Requirement per the Airline Agreement, of 5.9% under budget. The estimated final landing fee rate is $2.89 per 1,000 lbs. of landed weight. This rate is impacted by lower than budgeted landed weight by Alaska and FedEx, partially offset by new service by Frontier and increases by Delta and United. 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 year ending June 30, 2018, airline terminal rental revenue registered $5.636 million, which is approximately $1.926 million or 25.5% under budget. The costs allocated to the Terminal Building Cost Center, or Net Requirement per the Airline Agreement, are 2.2% below the adopted budget based on preliminary actual results through June 30, In addition, the net revenue sharing of $4.415 million, applied as a credit or rent reduction to terminal rents, is approximately $2.167 million above the adopted budget. The budgeted average signatory rental rate is $54.95 per sq. ft. per annum, which was lowered to $45.57 effective on January 1, Due to lower terminal cost recovery and increase in the airline revenue sharing credit, the average terminal rental rate is estimated to be $34.93 per sq. ft. per annum in FY 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 RTAA to meet other operating costs and to generate internal funds for equipment and capital projects that do not directly benefit the airlines. 3

31 June 2018 Preliminary Financial Summary Administrative Report # August 1, 2018 Page 4 of 8 Non-airline operating revenues are primarily comprised of terminal and rental car concession revenues, public parking revenue, building/land rent, and reimbursement of RTAA provided services. The monthly budgets for concession revenues, public parking, and reimbursement of costs associated with the operation of baggage handling system reflect the seasonality of passenger traffic through RNO due to the direct correlation to passenger traffic. Overall, non-airline operating revenues registered $ million, an increase of approximately $2.344 million or 6.8% over budget. The increase is primarily due to $864,000 or 12.0% in higher auto rental revenues, $605,100 or 5.5% higher revenue from parking operations, $196,500 or 17.1% in higher food and beverage revenue, and $406,500 or 5.9% in higher RNO and RTS building and land rent. Enplaned passenger traffic in FY registered 2,064,968, an increase of 6.0% above the adopted budget and 8.2% above last year s results. Further detail on passenger traffic results is provided in the Key Benchmarks section of this summary. NON-OPERATING REVENUE Non-Operating revenues of approximately $2.995 million, which are primarily comprised of interest income, aviation fuel tax, and rental car customer facility charges, are approximately $794,600 or 36.1% above budget. This increase is primarily due to higher interest income of $405,400, realized gain on sale of fixed assets of $169,200 and higher Customer Facility Charge fees of $198,100 associated with the rental car activity. OPERATING EXPENSES Operating expenses of $ million, based on preliminary results for the fiscal year ending June 30, 2018, are 5.9% or approximately $2.483 million below budget and $1.679 million or 4.4% above last year s results. The savings as compared to budget include approximately $983,000 in lower Personnel costs, $46,500 in lower Utility costs, $867,900 in lower Purchased Services, and $612,700 in lower Administrative expenses. These savings are partially offset by $27,200 in higher Materials and Supplies expenses. 4

32 June 2018 Preliminary Financial Summary Administrative Report # August 1, 2018 Page 5 of 8 DEBT SERVICE Net debt service payments of $2.247 million, net of the application of Passenger Facility Charges (PFC), matches the FY adopted budget. KEY BENCHMARKS The following are key benchmarks and ratios used to measure financial activities and monitor the financial health and condition of the Authority: Y E A R T O D A T E (June 30, 2018 ) 100.0% Of Fiscal Year CURRENT PRIOR Y-T-D Key Statistics / Benchmarks YEAR YEAR VARIANCE % BUDGET VARIANCE % Enplaned Passengers 2,064,968 1,909, , % 1,948, , % Airline Cost Per Enplaned Passenger $ 5.50 $ 5.85 $ (0.35) -5.9% $ 7.23 (1.73) -23.9% Non-Airline Revenues per EPAX (a) $ $ $ (0.10) -0.6% $ % Operating Ratio 78.6% 79.4% -0.7% -0.9% 83.6% -5.0% -5.9% Debt Service Coverage Ratio % % Days Cash On Hand % % (a) Excludes cost reimbursement for the Baggage Handing System (BHS) paid by the airlines. 5

33 June 2018 Preliminary Financial Summary Administrative Report # August 1, 2018 Page 6 of 8 Enplaned Passengers Passenger Activity is a significant factor driving non-airline revenues such as terminal and rental car concessions and public parking. Based on preliminary results for FY enplaned passengers were 2,064,968 a 6.0% increase compared to the budgeted passenger traffic and an 8.2% increase as compared to the same period last year. American, Delta, Frontier, JetBlue, Southwest, and United reported 174,787 more passengers in the current fiscal year than the same period last year. These increases in passenger traffic were partially offset by the lower results reported by Alaska, Allegiant, and Volaris of 18,263. A table and chart enclosed in this package provide a comparison of enplaned passenger traffic and market share by airlines for FY as compared to the previous year. 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 RTAA targets to maintain a reasonable cost structure for the airlines to attract and maintain air service to our community. Due to operating expenses being 5.9% below budget and a higher than anticipated revenue sharing credit, the airline cost per enplaned passenger is estimated to be $5.50 as compared to the FY budget of $7.23. 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. Based on preliminary results for FY , non-airline revenue per enplaned passenger registered $16.52, an increase of 1.7% above the FY Budget of $16.24 and a decrease of 0.6% from the $16.62 registered in the prior year. The most significant increase in revenue per enplaned passenger is in the rental car and food and beverage concession revenues. 6

34 June 2018 Preliminary Financial Summary Administrative Report # August 1, 2018 Page 7 of 8 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 Budget. Generally, a lower ratio of expenses to revenues is positive since it reflects an improvement in the net operating revenue available to pay debt service and generate additional cash flow. Based on preliminary results for FY , the ratio favorably registered 78.6% as compared to the prior year actual ratio of 79.4% and the adopted budget ratio of 83.6%. This result as compared to budget reflects primarily the lower operating expenses and higher operating revenues for the fiscal year. Days Cash on Hand Days Cash on Hand is calculated by identifying unrestricted cash and investments divided by the daily operating and maintenance expenditure budget (annual operating and maintenance budget divided by 365 days). The RTAA s cash and liquidity position remains strong with 517 days of unrestricted cash on hand to meet budgeted operating and maintenance requirements. This is slightly higher than the forecasted year-end budget target of 457 days. The 2016 median average, as compiled by Moody s Investor Services, is 615 for all airports and 563 for small hub airports. The current RTAA ratio, while very strong, is below this industry average for all airports and similarly sized airports. In addition, the rating agencies indicate a ratio lower than 300 days is viewed negatively and may result in a ratings downgrade for the reporting airport. A chart enclosed in this package provides a comparison of liquidity balances and Days Cash on Hand as of June 30, 2018 compared to FY year-end actual results and forecasted yearend cash balances in the adopted FY 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 RTAA s operations to generate sufficient funds to pay the annual debt service on both the senior lien bond and the subordinate notes. The RTAA targets to maintain net revenue after operating expenses equal to or greater than 1.5 times annual debt service. Under the bond indenture, the RTAA is required to maintain at least a ratio of

35 June 2018 Preliminary Financial Summary Administrative Report # August 1, 2018 Page 8 of 8 The RTAA s debt service coverage ratio of 7.84X as of June 30, 2018 is strong with lender and bond holder protection higher than the FY Budget estimate of 5.46X and significantly above the minimum level of 1.25X established under the RTAA s Master Bond Indenture. The coverage ratio is significantly above budget primarily due to higher non-airline revenue and lower operating expenses resulting in net revenue available to pay debt service of $ million, an increase of $3.292 million or 31.5% above budget. 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 bond 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 2018 as compared to the same period last year and the adopted FY Budget. 8

36 OPERATING STATEMENT RENO-TAHOE AIRPORT AUTHORITY For the Twelve Months Ending June 30, 2018 C U R R E N T M O N T H For the Twelve Months Ending June 30, % OF FISCAL YEAR CURRENT PRIOR CURRENT PRIOR Y-T-D YEAR YEAR VARIANCE % YEAR YEAR VARIANCE % BUDGET VARIANCE % REVENUES Landing Fees $ 476,313 $ 352,520 $ 123, % $ 8,165,292 $ 7,285,989 $ 879, % $ 8,568,704 $ (403,412) -4.7% Terminal Rent, Airline (1,328,070) (1,451,757) 123, % 5,635,877 6,240,043 (604,166) -9.7% 7,561,500 (1,925,623) -25.5% Aircraft Fees 89,818 81,789 8, % 1,070, ,933 71, % 969, , % Concession Revenue 430, , % 4,746,902 4,607, , % 4,461, , % Auto Rental 819, ,034 87, % 8,054,839 7,190, , % 7,190, , % Parking & Ground Transportation 1,059, ,342 70, % 12,009,874 11,316, , % 11,330, , % Reno-Tahoe Building/ Land Rents 599, ,694 1, % 7,289,832 6,807, , % 7,038, , % Reno-Stead Rents 122,311 43,946 78, % 769, , , % 612, , % Reimbursed Services 126, ,168 (114,756) -47.6% 2,467,869 2,531,223 (63,354) -2.5% 2,592,581 (124,712) -4.8% Miscellaneous 2,258 22,098 (19,839) -89.8% 166, ,024 (1,309) -0.8% 36, , % OPERATING REVENUE $ 2,398,302 $ 2,039,429 $ 358, % $ 50,377,524 $ 47,788,989 $ 2,588, % $ 50,362,735 $ 14, % EXPENSES Personnel Services $ 2,429,588 $ 2,362,400 $ 67, % $ 27,860,414 $ 26,672,375 $ 1,188, % $ 28,843,415 $ (983,001) -3.4% Utilities and Communications 232, ,529 44, % 2,694,655 2,337, , % 2,741,145 (46,490) -1.7% Purchased Services 613, , , % 4,863,679 4,595, , % 5,731,568 (867,889) -15.1% Materials and Supplies 272, ,411 73, % 1,977,060 1,753, , % 1,949,869 27, % Administrative Expense 254, ,198 25, % 2,221,486 2,579,040 (357,555) -13.9% 2,834,142 (612,656) -21.6% OPERATING EXPENSES $ 3,802,610 $ 3,364,693 $ 437, % $ 39,617,293 $ 37,938,147 $ 1,679, % $ 42,100,139 $ (2,482,846) -5.9% NET OPERATING INC. BEFORE DEPR. $ (1,404,308) $ (1,325,264) $ (79,044) 6.0% $ 10,760,231 $ 9,850,842 $ 909, % $ 8,262,596 $ 2,497, % Depreciation and Amortization 2,442,688 2,894,788 (452,100) -15.6% 31,094,911 34,462,715 (3,367,804) -9.8% 35,750,000 (4,655,089) -13.0% OPERATING INCOME $ (3,846,996) $ (4,220,052) $ 373, % $ (20,334,680) $ (24,611,873) $ 4,277, % $ (27,487,404) $ 7,152, % NON-OPERTING INCOME (EXPENSE) Interest Income $ 90,513 $ 159,401 $ (68,888) -43.2% $ 835,868 $ 577,434 $ 258, % $ 483, , % Passenger Facility Charge 348, ,367 (353,512) -50.3% 7,587,771 7,480, , % 7,351, , % Customer Facility Charge 167, ,826 12, % 1,692,038 1,481, , % 1,493, , % Jet Fuel Tax Revenue 21,000 35,402 (14,402) -40.7% 298, , % 276,400 21, % G/L on Sale of Capital Assets n.a. 169,209 13, , % - 169,209 n.a. Other Non-Operating Revenue (Expense) 0 (7,814) 7, % 0 (7,814) 7, % - 0 n.a. Interest Expense (40,609) (51,444) 10, % (487,308) (616,855) 129, % (487,300) (8) 0.0% Total $ 587,101 $ 992,737 $ (405,636) -40.9% $ 10,095,862 $ 9,225,925 $ 869, % $ 9,117,900 $ 977, % Net Income Before Capital Contributions $ (3,259,895) $ (3,227,315) $ (32,580) -1.0% $ (10,238,819) $ (15,385,948) $ 5,147, % $ (18,369,504) $ 8,130, % 9

37 OPERATING STATEMENT RENO-TAHOE AIRPORT AUTHORITY For the Twelve Months Ending June 30, 2018 C U R R E N T M O N T H YEAR TO DATE ANNUAL BUDGET ANNUAL ACTUAL BUDGET VARIANCE VARIANCE TOTAL BUDGET % ACTUAL BUDGET $ % $ % TO DATE REVENUES Landing Fees $ 476,313 $ 758,462 $ (282,149) -37.2% $ 8,165,292 $ 8,568,704 $ (403,412) -4.7% $ 8,568,704 95% Terminal Rent, Airline (1,328,070) 630,125 (1,958,195) % 5,635,877 7,561,500 (1,925,623) -25.5% 7,561,500 75% Aircraft Fees 89,818 80,750 9, % 1,070, , , % 969, % Concession Revenue 430, ,887 35, % 4,746,902 4,461, , % 4,461, % Auto Rental 819, , , % 8,054,839 7,190, , % 7,190, % Parking & Ground Transportation 1,059, ,225 73, % 12,009,874 11,330, , % 11,330, % Reno-Tahoe Building/ Land Rents 599, ,550 13, % 7,289,832 7,038, , % 7,038, % Reno-Stead Rents 122,311 51,004 71, % 769, , , % 612, % Reimbursed Services 126, ,158 (107,746) -46.0% 2,467,869 2,592,581 (124,712) -4.8% 2,592,581 95% Miscellaneous 2,258 3,058 (800) -26.2% 166,715 36, , % 36,700 0% OPERATING REVENUE $ 2,398,302 $ 4,327,095 $ (1,928,794) -44.6% $ 50,377,524 $ 50,362,735 $ 14, % $ 50,362, % EXPENSES Personnel Services $ 2,429,588 $ 2,383,618 $ 45, % $ 27,860,414 $ 28,843,415 $ (983,001) -3.4% $ 28,843,415 97% Utilities and Communications 232, ,727 11, % 2,694,655 2,741,145 (46,490) -1.7% 2,741,145 98% Purchased Services 613, , , % 4,863,679 5,731,568 (867,889) -15.1% 5,731,568 85% Materials and Supplies 272, , , % 1,977,060 1,949,869 27, % 1,949, % Administrative Expense 254, ,345 28, % 2,221,486 2,834,142 (612,656) -21.6% 2,834,142 78% OPERATING EXPENSES $ 3,802,610 $ 3,469,810 $ 332, % $ 39,617,293 $ 42,100,139 $ (2,482,846) -5.9% $ 42,100,139 94% NET OPERATING INC. BEFORE DEPR. $ (1,404,308) $ 857,285 $ (2,261,593) % $ 10,760,231 $ 8,262,596 $ 2,497, % $ 8,262, % Depreciation and Amortization 2,442,688 2,979,167 (536,479) -18.0% 31,094,911 35,750,000 (4,655,089) -13.0% 35,750,000 87% OPERATING INCOME $ (3,846,996) $ (2,121,881) $ (1,725,115) -81.3% $ (20,334,680) $ (27,487,404) $ 7,152, % $ (27,487,404) 74% NON-OPERTING INCOME (EXPENSE) Interest Income $ 90,513 $ 40,292 $ 50, % $ 835,868 $ 483,500 $ 352, % 483, % Passenger Facility Charge 348, ,617 (263,762) -43.1% 7,587,771 7,351, , % 7,351, % Customer Facility Charge 167, ,041 42, % 1,692,038 1,493, , % 1,493, % Jet Fuel Tax Revenue 21,000 23,033 (2,033) -8.8% 298, ,400 21, % 276, % G/L on Sale of Capital Assets 1-1 n.a. 169, ,209 n.a. 0 n.a. Other Non-Operating Revenue (Expense) n.a n.a. 0 n.a. Interest Expense (40,609) (40,608) (1) 0.0% (487,308) (487,300) (8) 0.0% (487,300) 100% Total $ 587,101 $ 760,374 $ (173,273) -22.8% $ 10,095,862 $ 9,117,900 $ 977, % $ 9,117, % Net Income Before Capital Contributions $ (3,259,895) $ (1,361,507) $ (1,898,388) % $ (10,238,819) $ (18,369,504) $ 8,130, % $ (18,369,504) 56% 10

38 Operating Revenue and Expense YTD through June 30, 2018 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 FY 2017 Revenue FY 2017 Expense FY 2018 Revenue FY 2018 Expense Fiscal Year Landing fees Parking and ground transportation Reimbursements for services Employee wages and benefits Purchase of services Administrative expenses Concession revenue Rentals Other revenue Utilities and communications Materials and supplies 11

39 SUMMARY OF NON-AIRLINE REVENUES Reno-Tahoe Airport Authority Over 6/30/2018 Over % of 6/30/2018 6/30/2017 (Under) % Year to Date (Under) % Annual YTD Actual YTD Actual Prior Year Variance Budget Budget Variance Annual Budget Budget Aircraft Fees - Reno $ 985,859 $ 962,045 $ 23, % $ 944,700 $ 41, % $ 944, % Aircraft Fees - Stead 85,078 37,888 47, % 24,300 60, % 24, % - Gaming Concession 1,069, ,431 93, % 977,700 91, % 977, % Food & Beverage 1,345,763 1,231, , % 1,149, , % 1,149, % Retail/Merchandise 1,045,973 1,060,468 (14,495) -1.4% 1,111,000 (65,027) -5.9% 1,111, % Advertising 701, ,246 15, % 665,900 35, % 665, % Other Concessions 184, ,408 13, % 177,100 7, % 177, % FBO and Ground Handlers 373, ,253 (89,681) -19.4% 362,500 11, % 362, % Stead Concessions 26,594 19,289 7, % 18,400 8, % 18, % Auto Rental 8,054,839 7,190, , % 7,190, , % 7,190, % Ground Transportation 378, ,435 75, % 304,300 73, % 304, % Auto Parking 11,631,651 11,014, , % 11,026, , % 11,026, % Other Terminal Rents 833, ,282 (95,615) -10.3% 831,600 2, % 831, % Reno-Tahoe Building Rents 3,209,281 3,013, , % 3,048, , % 3,048, % Reno-Tahoe Land Rents 3,246,885 2,864, , % 3,158,200 88, % 3,158, % Reno-Stead Rents 769, , , % 612, , % 612, % Reimbursed Services 2,467,869 2,531,223 (63,354) -2.5% 2,592,581 (124,712) -4.8% 2,592, % Miscellaneous 166, ,024 (1,309) -0.8% 36, , % 36, % Total Non-Airline Operating Revenue 36,576,355 34,262,956 2,313, % 34,232,531 2,343, % 34,232, % - Non Operating Revenue (a) 1,303, , , % 706, , % 706, % TOTAL NON-AIRLINE REVENUE $ 37,879,716 $ 35,106,357 $ 2,773, % $ 34,939,431 $ 2,940, % $ 34,939, % Year to Date Enplaned Passengers 2,064,968 1,909,187 1,948,002 1,948,002 Non-Airline Revenue Per EPAX (b) $ $ $ $ (a) Excludes PFC and CFC revenues (b) Total Non-Airline Revenue less Reimbursed Services divided by enplaned passengers 12

40 NET REVENUE SHARING - YEAR TO DATE Reno-Tahoe Airport Authority For the Twelve Months Ending June 30, 2018 Baggage Reno Airfield Terminal System Landside Other Stead Total Revenue Sharing Airline Revenue 8,258,195 10,050, ,309,155 Non Airline Revenue 1,004,759 5,963,566 1,595,651 20,153,767 8,070, ,059 37,668,931 Total Revenue 9,262,954 16,014,526 1,595,651 20,153,767 8,070, ,059 55,978,086 Budgeted Revenue 9,713,404 15,715,500 1,552,481 18,600,300 7,027, ,750 53,263,435 O&M Expense $ 8,660,192 $ 17,302,938 $ 1,442,503 $ 6,158,281 $ 3,964,542 $ 1,500,451 $ 39,028,908 Debt Service ,247, ,247,300 Pre Bond Loan O&M Reserve 53, ,439 8,990 41,094 26,728 10, ,791 Fixed Asset 372, , , , ,961 1,270,995 Capital Project 176, , ,775 1,414, ,150 2,322,840 Amort. Capital Items 633,562 61, , , ,565 1,667,412 Special Fund - 361, ,585 Total Requirement 9,896,516 18,797,880 1,451,493 9,293,539 5,666,417 2,041,985 47,147,831 Budgeted Requirement 10,394,835 19,178,305 1,552,481 9,651,361 5,540,169 2,611,520 48,928,671 Net Revenues (633,562) (2,783,354) 144,158 10,860,228 2,403,712 (1,160,926) 8,830,255 Budgeted Net Revenues (681,431) (3,462,805) - 8,948,939 1,486,831 (1,956,770) 4,334,764 Months 12 Airport Share $ 4,415,127 Airline Share $ 4,415,128 13

41 SUMMARY OF ENPLANED PASSENGERS BY AIRLINE Reno-Tahoe International Airport Month Year-to-date Percent YTD YTD Percent Enplaned passengers by Airline Jun-18 Jun-17 change change Major/national carriers (Signatory) Alaska 19,086 20, % 212, , % American 35,449 37, % 383, , % Delta 13,506 12, % 152, , % Southwest 82,937 75, % 901, , % United 27,689 24, % 265, , % Total 178, , % 1,915,599 1,775, % Non-Signatory and Charter Allegiant Air 2,572 2, % 30,663 31, % Frontier 3,625 0 n.a. 18,271 0 n.a. JetBlue 7,271 7, % 80,494 77, % Volaris 1,375 1, % 17,234 20, % Other Charters % 2,707 3, % Total 15,110 11, % 149, , % Total enplaned passengers 193, , % 2,064,968 1,909, % Southwest 43.7% Enplaned Passenger Market Share Year to Date June 2018 United 12.8% Allegiant Air 1.5% Frontier 0.1% JetBlue 3.9% Delta 7.4% American 18.6% Alaska 10.3% Volaris 0.8% 14

42 $90,000,000 RTAA Liquidity Position 600 $80,000,000 $70,000, $60,000, $50,000,000 $40,000, $30,000, $20,000,000 $10,000, $0 - Unrestricted Cash Restricted Cash Days Cash on Hand 15

43 DEBT SERVICE COVERAGE RENO-TAHOE AIRPORT AUTHORITY For the Twelve Months Ending June 30, 2018 For the Twelve Months Ending June 30, % OF FISCAL YEAR CURRENT PRIOR Y-T-D YEAR YEAR VARIANCE % BUDGET VARIANCE % NET OPERATING INCOME $ 10,760,231 $ 7,373,909 $ 3,386, % $ 8,262,596 $ 2,497, % OTHER INCOME (EXPENSE) Rate Base Interest Income $ 835,868 $ 531,978 $ 303, % $ 430,500 $ 405, % Other Revenue $ 2,159,531 $ 1,792, , % 1,770, , % 2,995,399 2,324, , % 2,200, , % Transfers Airline Revenue Sharing $ 4,415,128 $ 3,176,955 $ 1,238, % $ 2,167,382 $ 2,247, % Gain/Loss on Sale of Assets (169,209) (13,298) (155,911) (1,850,000) 1,680, % 35% of gaming revenue (374,379) (341,751) (32,628) 9.5% (342,195) (32,184) 9.4% Net Income Available for Debt Service $ 17,627,170 $ 12,520,220 $ 5,106, % $ 10,438,583 $ 7,188, % Debt Service (Senior) Parking Garage (a) $ 2,247,300 $ 2,249,463 $ (2,163) -0.1% $ 2,247,300 $ - 0.0% Pledged PFC Revenues % % 2,247,300 2,249,463 (2,163) -0.1% 2,247, % Debt Service (Subordinate) $ - $ 3,139,393 $ (3,139,393) % $ - $ - 0.0% Pledged PFC Revenues - (1,812,790) 1,812, % % - 1,326,603 (1,326,603) % % Debt Service After PFC Revenue $ 2,247,300 $ 3,576,066 $ (1,328,766) -37.2% $ 2,247,300 $ - 0.0% Debt Service Coverage Ratio Safety Margin 30.53% 19.74% 16.26% $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- $12, Debt Service Coverage In Thousands $10, $17,627 $2,249 $2,247 $2,247 $1,327 $- $- FY YTD Actual FY YTD Budget FY YTD Actual Net Income Available Subordinate Lien Debt Service Senior Lien Debt Service -Parking Debt Service Coverage (a) The senior lien debt was issued to fund constructed 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 cost recovery associated with airline cost centers. 16

44 Administrative Report Reno-Tahoe Airport Authority Date: August 1, 2018 Administrative Report # To: Chairwoman & 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 2018 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 services 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 services agreement (PSA) when the estimated amount to perform the work is $50,000 or less, and approve an amendment to a professional services 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 services 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 MMM/hdl/cj

45 July 2018 Date Name of Company 06/20/2018 Sierra Nevada Construction 06/20/2018 Reyman Bros. Contracting Dollar Amount Description Funding Source Department/Division $36,535 This is CO#3 for the Rental Car Capital Imp Program Engineering & Facilities Asphalt Rehabilitation Project. FY Construction CO#3 provides for additional labor, Mid-Year CFC equipment, and materials as needed for Fund Bid Item quantity adjustments. $8,614 The construction contract is to demolish Capital Imp Program Facilities & Maintenance C Concourse Game room, and FY refurbish area to match existing interior Budget General finishes. Purpose Fund 06/20/2018 Shaw Carpet $38, Materials were purchased by joindering with the State of Nevada contract with Shaw Carpet. This carpet order is only for Phase One of administration carpet replacement. The installation of carpet will be bid out. 06/20/2018 Shaw Carpet $45, Materials were purchased by joindering with the State of Nevada contract with Shaw Carpet. This carpet order is only for Phase Two of administration carpet replacement. The installation of carpet 06/22/2018 Atkins North America, Inc. will be bid out. $35,000 Amendment No. 5 to the 2018 Annual Construction management Services Agreement includes services consisting of Owner s Representative services for onsite project facilitation associated with the Gentry Way Reconstruction project. Capital Imp Program FY Budget General Purpose Fund Capital Imp Program FY Budget General Purpose Fund Capital Imp Program FY Budget General Purpose Fund Facilities & Maintenance Facilities & Maintenance Engineering & Construction

46 July 2018 Date Name of Company 06/21/2018 Kittelson & Associates 06/26/2018 Granite Construction Company 07/13/2018 K7 Construction, Inc. Dollar Amount Description Funding Source Department/Division $40,000 Original PSA was for independent FY and FY Planning & traffic engineering services to support Operating Environmental RTAA in ongoing negotiations with the Budget Nevada Department of Transportation (NDOT) regarding proposal to eliminate the existing direct connect airport ramps to I580/395 as part of the Reno/Sparks Spaghetti Bowl Project. The original PSA was a not-to-exceed time and materials agreement for $48,000 of which $40,053 was invoiced through 05/31/2018. Amendment No. 1 is needed for work through 06/30/2018 and beyond for continuation of expert transportation engineering services and advice associated with this project. $48,800 This construction contract is for work FY Engineering & required to repair the water line leak at Operating Budget Construction the Quick Turn Around (QTA) Car Outside Properties Wash. Water line has completely failed CFC Fund and one wash bay is out of service. Work includes saw cutting existing concrete, excavation, repairing of water line, back fill, and concrete surface. $1, CO#1 provides for removal of existing Vinyl Composition Tile (VCT) flooring discovered in Offices 6 and 7, and the removal of the existing concrete base at the east Concrete Masonry Unit (CMU) wall associated with the Purchasing Office Relocation. Capital Imp Program - FY General Purpose Fund Engineering & Construction

47 July 2018 Name of Date Company 06/26/2018 Road Highway Builders, Inc. (RHB) Dollar Amount Description Funding Source Department/Division ($130,109.75) CO #2 is a deductive change order FAA AIP Grant- Engineering & resulting from 5 different areas of Local Share provided Construction contract savings for the rehabilitation of by Special Fund RTS Runway 8-26 including (1) the use of the existing in-place cement treated base section along Taxiway s A, A4, and B; (2) revised phasing for work on Restricted Work Areas B and C; (3) costs associated with the removal and disposal of 32 abandoned runway edge light foundations; (4) deduction of the costs invoiced for inspection and testing of RHB s changes to their job mix formula; and (5) costs associated with the removal and disposal of approximately 400 linear feet of transite pipe. The Federal Aviation Administration (FAA) gave its approval for this CO on June 18, /13/2018 Sierra Nevada Construction $15, This is CO#4 for the Rental Car Facilities Asphalt Rehabilitation Project. CO#4 provides for additional labor, equipment, and materials as needed for Landscaping and Final Bid Item quantity adjustments. Capital Imp Program FY Mid-Year CFC Fund Engineering & Construction

48 July 2018 Key to abbreviations: AIP = Airport Improvement Project CIP = Capital Improvement Program CFC = Customer Facility Charge CO = Change Order NTE = Not to Exceed PFC = Passenger Facility Charge PO = Purchase Order PSA = Professional Service Agreement RTS = Reno-Stead Airport *Contract signed by authorized designee Executive Vice President/COO

49 Administrative Report Reno-Tahoe Airport Authority Date: August 1, 2018 Administrative Report # To: Chairwoman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: FY GENERAL COUNSEL S BUDGET The following is a summary of the General Counsel s budget for the fiscal year. The summary shows the amounts budgeted compared to actual by the major account classifications. Actual costs for the year are 85.2% of the total budget. Account Classification YTD Actual YTD Budget Over (Under) Budget % Variance Annual Budget % of Annual Budget Purchased Services Fennemore Craig, PC $ 359,978 $ 425,000 $ (65,022) -15.3% $ 425, % Specialty Area, Legal 16,509 15,000 1, % 15, % Other Purchased Services % % Administrative Expense Books (600) % % Conference Registration 0 1,800 (1,800) % 1, % Travel Expense 1,380 1,700 (320) 18.8% 1, % Total General Counsel $ 378,486 $ 444,350 $ (65,864) 14.8% $ 444, % MMM/lw/cj

50 Administrative Report Reno-Tahoe Airport Authority Date: August 1, 2018 Administrative Report # To: Chairwoman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: FY BOARD OF TRUSTEE S BUDGET The following is a summary of the Board of Trustee s budget for the fiscal year. The summary shows the amounts budgeted compared to actual by the major account classifications. Actual costs for the year are 97.6% of the total budget. Account Classification YTD Actual YTD Budget Over (Under) Budget % Variance Annual Budget % of Annual Budget Personnel Services Trustee Stipend $ 61,040 $ 60,480 $ % $ 60, % Personnel Services 46,390 46,500 (110) -0.2% 46, % Purchased Services 45,935 39,450 6, % 39, % Materials and Supplies 1,759 1,800 (41) -2.3% 1, % Administrative Expense Conference Registration & Training 1,415 5,700 (4,285) -75.2% 5, % Meeting Expenses 8,264 8,400 (136) -1.6% 8, % Travel and Reimbursed Expense 3,330 10,000 (6,670) -66.7% 10, % Total Board $ 168,133 $ 172,330 $ (4,197) -2.4% $ 172, % MMM/lw/cj

51 Administrative Report Reno-Tahoe Airport Authority Date: August 1, 2018 Administrative Report # To: Chairwoman & Board Members From: Marily M. Mora, A.A.E., President/CEO Subject: FY LEGISLATIVE CONSULTANT S BUDGET The following is a summary of the Legislative consultant s budget for the fiscal year. The summary shows the amounts budgeted compared to actual by the major account classifications. Actual costs for the year are 60.0% of the total budget. Account Classification YTD Actual YTD Budget Over (Under) Budget % Variance Annual Budget % of Annual Budget State and Local Governmental Relations $ 18,000 $ 75,000 $ (57,000) -76.0% $ 75, % Legislative Consultant Washington, D.C. 84,000 95,000 (11,000) -11.6% 95, % Total Governmental Relations $ 102,000 $ 170,000 $ (68,000) -40.0% $ 170, % Note: The contract for State and Local Governmental Relations expired September MMM/lw/cj

52 Board Memorandum Reno-Tahoe Airport Authority Date: August 1, 2018 Memo: # 18(08)-50 To: Chairwoman & Board Members For: August 9, 2018 Board Meeting From: Marily M. Mora, A.A.E., President/CEO Subject: AUTHORIZATION FOR THE PRESIDENT/CEO TO EXERCISE THE FIRST TWO-YEAR CONTRACT EXTENSION OPTION TO THE PROFESSIONAL SERVICES AGREEMENT FOR GENERAL BANKING SERVICES, WITH WELLS FARGO BANK, N.A., IN THE AMOUNT OF APPROXIMATELY $51,000 STAFF RECOMMENDATION Staff recommends that the Board authorize the President/CEO to exercise the first twoyear contract extension option to the Professional Services Agreement (PSA) for general banking services with Wells Fargo Bank N.A. (Wells Fargo), in the amount of approximately $51,000. PURPOSE The purpose of this action is to authorize the President/CEO to award the first two-year term extension with Wells Fargo Bank for general banking services. This is the first of two (2) two-year extensions provided as an option, subject to the approval of both parties, under the current agreement. This action is in support of the Reno-Tahoe Airport Authority (RTAA) Strategic Priority # 5 Financial Diversification and Growth, as adopted in the Fiscal Year (FY) Comprehensive Strategic Plan. BACKGROUND General banking services represent a safe, secure, and efficient place for the RTAA to deposit funds, make payments (payroll, operating, and capital projects), and track and reconcile Authority business operations. The RTAA requires a full range of products that includes on-line banking, remote check deposit, electronic funds transfer, and the ability to easily download and access transactions/reports. In addition, Wells Fargo also coordinates armored transportation of cash, coin, and checks derived from the public parking facility and deposits by the RTAA and its tenants placed into the Night Depository. As of June 30, 2018, the RTAA has approximately $7.1 million on deposit with Wells Fargo to meet our day-to-day banking, working capital, and funding to meet the payment requirements of the on-going capital improvement projects. Currently, the RTAA pays Wells Fargo approximately $32,500 annually or $2,700 per month in bank transaction and service fees.

53 Wells Fargo Bank, N.A., PSA Extension # 18(08)-50 August 9, 2018 Board Meeting Page 2 of 3 The current agreement with Wells Fargo was approved by the Board of Trustees in May 2013 after a comprehensive Request for Proposals (RFP) process that included extensive advertising and a notice of solicitation directly to seven firms capable of providing these services. The RTAA received four proposals and Wells Fargo was selected as the best overall value based on the following factors: (a) Minimum financial strength (b) Firm stability and background (c) System capabilities, security, and reporting (d) Customer service / relationship team (e) Firm competitive position (f) New products and enhanced services available (g) Transition plan, if applicable (h) Fee proposal The awarded agreement with Wells Fargo was for an initial term of five years for the period of July 1, 2013 to June 30, 2018 with the option of two (2) two-year extensions. The RTAA is currently in a monthly carryover status pending possible Board approval of this extension request. DISCUSSION Based on excellent customer service over the five-year term, RTAA staff has been in negotiations with Wells Fargo to exercise the first of the two-year options and to update the fee proposal. Under the proposed amendment, Wells Fargo has agreed to maintain its current transaction and service fee structure. In addition, the parties agreed to a waiver of $7,000 annually for both years of the proposed extension. With current annual banking fees of approximately $32,500, the $7,000 credit will reduce the overall estimated costs to $25,500 annually. COMPANY BACKGROUND Wells Fargo & Company is a multinational financial services company headquartered in San Francisco, California, with central offices throughout the country. It is the world's second-largest bank by market capitalization and the third largest bank in the U.S. by total assets. The firm's primary operating subsidiary is national bank Wells Fargo Bank, N.A., which designates its main office as Sioux Falls, South Dakota. As of December 2017, it had 8,200 locations and 13,000 automated teller machines. The company operates across 42 countries and has approximately 265,000 employees. The RTAA is served by a Business Banking division based in Las Vegas and has access to a host of Northern Nevada based employees to assist as needed.

54 Wells Fargo Bank, N.A., PSA Extension # 18(08)-50 August 9, 2018 Board Meeting Page 3 of 3 FISCAL IMPACT Over the five-year term of the agreement, the RTAA expended $158,505 for general banking services. With the proposed amendment, the fiscal impact is estimated to be as follows: Original General Banking Services Costs (Initial five-year term) $ 158,505 If approved, the General Banking Services will be increased by approximately $25,500 annually for two years Total estimated General Banking Services costs in the PSA including this proposed amendment 51,000 $ 209,505 COMMITTEE COORDINATION This item is scheduled to be presented at the August 7, 2018 Finance and Business Development Committee meeting. RECOMMENDATION It is hereby recommended that the Board adopt the following motion: It is hereby moved that the Board authorizes the President/CEO to award the first twoyear contract extension option to the Professional Services Agreement for general banking services with Wells Fargo Bank, N.A., in the amount of approximately $51,000, and authorizes the President/CEO, or her designee to sign.

55 Board Memorandum Reno-Tahoe Airport Authority Date: August 1, 2018 Memo: # 18(08)-54 To: Chairwoman & Board Members For: August 9, 2018 Board Meeting From: Marily M. Mora, A.A.E., President/CEO Subject: AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE A RIGHT OF ENTRY AND HOLD HARMLESS AGREEMENT, NEGOTIATE FINAL TERMS AND EXECUTE A 50-YEAR LAND LEASE AT THE SOUTHEAST CORNER OF MCCARRAN BOULEVARD AND AIRWAY DRIVE, WITH DERMODY PROPERTIES, FOR AN ESTIMATED CONTRACT VALUE OF $50,500,000 STAFF RECOMMENDATION Staff recommends that the Board authorize the President/CEO to execute a Right of Entry and Hold Harmless Agreement, negotiate final terms and execute a 50-year Land Lease Agreement with Dermody Properties (Dermody) for approximately 48 acres of land at the southeast corner of McCarran Boulevard and Airway Drive commonly known as Home Gardens South (Property), for an estimated contract value of $50,500,000. PURPOSE The purpose of this action is to seek authorization of the President/CEO to execute a Right of Entry and Hold Harmless Agreement to allow Dermody to conduct due diligence on the Property. Following the due diligence period, this action authorizes the President/CEO to negotiate final terms and execute a 50-year Land Lease Agreement on the Property. Dermody proposes to lease approximately 48 acres of land for the purpose of developing a Class-A, light industrial park. If approved, the Land Lease is estimated to generate approximately $1 million per year in new non-aeronautical revenue. This action is in support of the Reno-Tahoe Airport Authority (RTAA) Strategic Priority # 5 - Financial Diversification and Growth, as adopted in the RTAA Fiscal Year (FY) Comprehensive Strategic Plan. BACKGROUND RTAA staff have actively marketed the Property (Exhibit A) for approximately seven years. The land has been listed on the RTAA s website and presented to commercial real estate brokers and developers at numerous meetings. In 2013, the RTAA issued a Best and Final Offers (BAFO) due to multiple inquiries. Dermody s 2013 BAFO represented the best offer and the RTAA Board of Trustees approved the terms in January In November 2014, the Federal Aviation Administration (FAA) notified staff that there was a new One Engine Inoperable (OEI) procedure that significantly reduced building heights on this property. Due to the new Property height restrictions, Dermody s proposed e-commerce building type was no longer viable. Dermody did pursue a FedEx Request for Proposal (RFP), but the Property was not selected. In 2015, market conditions did not support alternative, smaller building types; therefore, Dermody was unable to enter into the Board-approved lease terms. The BAFO process and Board approved terms were nullified in September DISCUSSION

56 Home Gardens Land Lease Proposal # 18(08)-54 August 9, 2018 Board Meeting Page 2 of 4 In June 2018, Dermody contacted staff advising that current market conditions would now support building types that were conducive with the OEI height restrictions on the Property. On July 18, 2018, Dermody signed a non-binding Letter of Interest (Exhibit B) reflecting the terms defined below, which are materially consistent with the terms approved by the Board in January The proposed development includes approximately 755,000 square feet of building area on approximately 48 acres of land (see attached Park Plan, Exhibit C), subject to the City of Reno s Airport Safety General Overlay standards and zoning code review and approval. The Park Plan represents six concrete tilt-up buildings ranging in size from 45,000 to 240,000 square feet. The Park Plan is designed to serve small to mid-size companies in the surrounding area and companies relocating from other states, especially California. The project is being built on a speculative basis and no tenants are currently identified. The proposed business terms are as follows: Approximate Acreage 48 Condition of Property As-Is Capital Investment $52.4 million Lease Term 50 Years, with a mid-term capital refurbishment program Lease Commencement Upon execution, but no later than December 31, 2018 Base Land Rent Rate $0.48/SF/YR Rent Commencement at first Certificate of Occupancy or no later than 24 months from Land Lease execution (January 1, 2021), whichever occurs first Rent Rate Adjustment Adjusted on each successive fifth anniversary date of the initial rent commencement date based upon the annually compounded percentage of change in the Consumer Price Index for All Urban Consumers U.S. City Average, All Items (CPI-U), or two percent (2%) compounded annually, whichever is lower. Land Rent will also be adjusted at mid-term of the initial rent commencement date to the fair market rental value based on appraisal, but never less than the Land Rent in effect at that time. Due Diligence 90 days commencing when Hold Harmless Right of Entry agreement is executed; all discovery shared with RTAA at no cost Broker Fees none Should the RTAA Board of Trustees approve this action, Dermody would enter into a Right of Entry and Hold Harmless Agreement allowing for access to the property over a 90-day due diligence period. One of the critical-path due diligence items is FAA approval of the revised Airport Layout Plan (ALP) and, subsequently, National Environmental Protection Act (NEPA) process determination. Staff has submitted the proposed Park Plan with the revised ALP for FAA review. Upon approval of the ALP, the FAA will then review the proposed Park Plan, project description, and purpose and need in order to determine the level of NEPA environmental review required: Categorical Exclusion, Environmental Assessment, or Environmental Impact Statement. Although there is no standard ALP review timeline, determination of the required NEPA process is expected to take thirty (30) days from ALP approval. While waiting for the FAA process, Dermody would proceed with the necessary studies to validate the Property s suitability for the intended Park Plan. The studies would likely include a title report, boundary and topographic surveys, American Land and Title Act survey, environmental studies, resource studies, a geotechnical report as well as consultation with the City of Reno, which could potentially result in a refined Park Plan. Dermody has offered to share all due diligence material with the RTAA at no cost. Once the full FAA environmental process and due diligence are

57 Home Gardens Land Lease Proposal # 18(08)-54 August 9, 2018 Board Meeting Page 3 of 4 complete and the Property is confirmed to be suitable, Dermody would enter into a 50-year Land Lease with the RTAA, but no later than December 31, Dermody s preliminary schedule, assuming the FAA process is timely, would include a two phased construction program as follows: Due diligence September through November 2018 Begin Phase 1 construction April 1, 2019 (Buildings 4, 5 and 6) Complete Phase 1 by the end of 2019 and lease it by the middle of 2020 Begin Phase 2 April 1, 2020 (Buildings 1, 2 and 3) Complete Phase 2 construction before the end of 2020 and have the Park Plan fully leased in 2021 COMPANY BACKGROUND Dermody Properties is a national developer of industrial and commercial properties, having been ranked among the 10 largest privately held industrial developers in the nation. Since 1960, the company has developed over 35 million square feet of industrial space including parks, speculative facilities, and build-to-suits for lease or purchase. Development is managed through each of Dermody s regional offices located in Philadelphia, Chicago, Phoenix, Portland and the corporate headquarters in Reno. The company has over 300 international, national and regional customers, many of whom are the country s most respected companies. Dermody s customers include Amazon.com, APL Logistics, Aramark, Bed Bath and Beyond, Borders Group, CDW Corporation, Dole Food Company, Federal Express, Kimberly-Clark, Kuehne + Nagel, Michelin, Office Depot, OfficeMax, Ozburn-Hessey Logistics, Pepsi-Cola, Sherwin-Williams, United Stationers Supply Co, UPS, Volvo/Mack, Wal-Mart, Xerox and Flowers.com. FISCAL IMPACT The Base Land Rent Rate is $0.48 per square foot per year and the total Property is 48 acres resulting in initial revenue of $84,166 per month or $1,010,000 per year. The proposed Land Lease would generate approximately $50.5 million in gross revenue over a 50-year term, not including Rent Rate Adjustments. To encourage Dermody s $52.4 million capital investment in RTAA-owned property, three standard incentives are proposed: 1. Rent deferment for 24 months from Land Lease execution or upon first Certificate of Occupancy, whichever occurs first. 2. Regional Transportation Commission (RTC) Regional Road Impact Fee (RRIF) credits as required by RTC for the proposed development up to a maximum credit limit of $200, RTAA will provide full use of RTAA-owned water rights at no additional cost up to a maximum of 0.75 acre feet per acre of land for the entire term of the Land Lease. The RTAA will retain ownership of the water rights. The proposed incentives are key components of the financial structure to mitigate some of the developer s up-front risk due to an uncertain FAA NEPA process and the development of land in

58 Home Gardens Land Lease Proposal # 18(08)-54 August 9, 2018 Board Meeting Page 4 of 4 As-Is condition. These incentives have been offered by the RTAA to other developers making comparable capital investments on RTAA-owned land. COMMITTEE COORDINATION This item is scheduled to be presented at the August 7, 2018 Finance and Business Development Committee meeting. RECOMMENDED MOTION It is hereby recommended that the Board adopt the following motion: It is hereby moved that the Board of Trustees authorizes the President/CEO, or her designee, to execute a Right of Entry and Hold Harmless agreement, negotiate final terms and execute a 50- year Land Lease at the southeast corner of McCarran Boulevard and Airway Drive, with Dermody Properties, for an estimated contract value of $50,500,000. MMM/ti/cj

59 Exhibit A Reno-Tahoe International Airport Home Gardens South Leased Premises Home Gardens South ~48 acres 7/16/2018

60 Exhibit B Letter of Interest Reno-Tahoe Airport Authority P.O. Box Reno, NV (775) (775) July 18, 2018 Mr. George Condon Partner, Western Region Dermody Properties 5500 Equity Avenue Reno, Nevada VIA RE: Non-binding Letter of Interest to Lease Reno-Tahoe Airport Authority Land know as Home Gardens South for the Development of an Industrial Park to be branded "LogistiCenter Airway" Dear Mr. Condon, Thank you for your interest in a Land Lease to develop property owned by the Reno-Tahoe Airport Authority ("RTAA") known as Home Gardens South at the southeast corner of McCarran Boulevard and Airway Drive. To reiterate our discussions and assumptions, Dermody Properties ("Dermody") is interested in developing the entire site as an industrial park to be branded "LogistiCenter Airway" ("the Development"). This letter expresses the understandings of RTAA and Dermody with respect to the following principal processes and conditions of such a development. 1. Subject to RTAA site plan review and the condition of no remnant parcels, RTAA will lease to Dermody approximately 48 acres of land, in As-Is condition. It shall be Dermody's sole responsibility to secure FAA and environmental approvals and construct the Development. Proposed improvements to be constructed will be subject to the RTAA's design review process, as well as all FAA and City of Reno processes and permits. 2. Dermody is responsible for conducting all due diligence. Dermody may enter into a Right of Entry Hold Harmless Agreement for a 90-day due diligence period following RTAA Board approval of the Land Lease terms. 3. It shall be Dermody's sole responsibility to market and lease the Development. Prospective tenant subleases will be subject to the RTAA's approval. 4. Dermody proposes to develop a Class-A, light industrial park requiring approximately $52.4 Million in capital investment. The park would contain six concrete tilt-up buildings totaling approximately 755,000 square feet. The buildings will range in size from 45,000 to 240,000 square feet. The smaller buildings fronting South McCarran and Airway will have lower clear-heights. The larger buildings will have higher clear heights. The project will serve small to mid-size companies in the surrounding area and companies relocating from other states, especially California. These companies will include manufacturers, assemblers, distributors and contractors. 5. The Land Lease Term to be 50 years, subject to Dermody's capital investment and mid-term capital

61 Mr. Condon Dermody Properties refurbishment program. 6. Land Lease Term to Commence upon Lease execution. The Lease must be signed by Dermody no later than December 31, Base Land Rent to Commence at first Certificate of Occupancy or in twenty-four (24) months from Land Lease execution (January 1, 2021), whichever occurs first. 8. Base Land Rent is established on the fair market rental value, based on the Reno-Tahoe Airport Authority Appraisal of $0.48/SF/Year/NNN. 9. Base Land Rent will be adjusted on each successive fifth (5th) anniversary date of the initial rent commencement date based upon the annually compounded percentage of change in the Consumer Price Index for All Urban Consumers U.S. City Average, All Items (CPI-U), or two percent (2%) compounded annually, whichever is lower. Land Rent will also be adjusted at mid-term of the initial rent commencement date to the fair market rental value based on appraisal, but never less than the Land Rent in effect at that time. 10. Dermody is not represented by a real estate broker and does not require the RTAA to pay a broker fee. 11. Regional Transportation Commission (RTC) Regional Road Impact Fee (RRIF) credits as required by RTC for the proposed development up to a maximum credit limit of $200, RTAA will provide full use of RTAA-owned Water Rights at no additional cost up to a maximum of 0.75 acre feet per acre of land for the entire term of the Land Lease. The RTAA will retain ownership of the Water Rights. 13. It is understood that final terms require approval of the RTAA Board of Trustees. This letter, though not binding, is intended to serve as the basis for RTAA Board consideration and of a written Land Lease. If the foregoing points and assumptions are in line with your expectations, please acknowledge by signing below. An executed LOI by July 19, 2018 is required to meet the RTAA August Board meetings. This item is scheduled for discussion and possible action by the RTAA Finance and Business Development Committee meeting on August 7, 2018 and the Board of Trustees meeting on August 9, We look forward to working with Dermody at Home Gardens South. Please feel free to contact me at (775) if you have any questions. Sincerely, Tina. Iftiger Vice President of Airport Economic Development Reno-Tahoe Airport Authority Confidential Page 2 of 3 July 18, 2018

62 Mr. Condon Dermody Properties This Letter is non-binding and merely expresses the understandings the parties are prepared to incorporate into an agreement for consideration and approval by the RTAA's Board of Trustees. Upon RTAA Board approval, the parties will enter into a Land Lease that will be binding only upon its signature by duly authorized representatives of both parties. If concur with the aforementioned, please sign below. ACKNOWLEDGED AN]) ACCEPTED BY Dermody Properties: By: Date: 7/18/18 Name: Title: George Condon Partner, Western Region Confidential Page 3 of 3 July 18, 2018

63 Exhibit C Proposed Park Plan