RENO-TAHOE AIRPORT AUTHORITY BOARD OF TRUSTEES FINANCE AND BUSINESS DEVELOPMENT COMMITTEE Minutes from the Meeting October 6th, :00 a.m.

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1 In Attendance: RENO-TAHOE AIRPORT AUTHORITY BOARD OF TRUSTEES FINANCE AND BUSINESS DEVELOPMENT COMMITTEE Minutes from the Meeting October 6th, :00 a.m. Jerry Hall, Trustee* Lisa Gianoli, Trustee * Rick Murdock, Trustee* Jenifer Rose, Trustee * Adam Mayberry, Trustee ** Jessica Sferrazza, Trustee** Bill Eck, Trustee Marily Mora, President/CEO Katherine Hoffman, Fennemore Craig Rick Gorman, Chief Financial Officer Tina Iftiger, Vice President of Airport Economic Development Leah Williams, Manager of Accounting Tony Osendorf, Manager of Budget & Finance Joyce Humphrey, Manager of Purchasing & Materials Management Stacie Huggins, Manager of Economic Development Patrick North, Senior Internal Auditor Paula Murphy, Internal Auditor Ken Moen, Economic Development Specialist Lacy Glodowski, Administrative Assistant II Marty Mueller, Director of Technology & Information Systems Mike Scott, Vice President Operations and Public Safety Brian Moore, Director of Human Resources Tom Nelson, Chief of Airport Fire Fighters Julie Sternberg, Senior Benefits Specialist David Pittman, Director of Facilities & Maintenance Scott Harkema, Airfield Superintendent Lloyd Barnes, LP Insurance Alby Redick, Aviation Classics Rick Eaton, Aviation Classics * Denotes Finance Committee member ** Denotes Finance Committee alternate TOPICS DISCUSSED: Page 1 of 8

2 I. REVIEW OF MEETING MINUTES FROM SEPTEMBER 8, 2015 A motion was made by Trustee Gianoli, Seconded by Trustee Murdock, and the Committee unanimously approved the minutes from the September 8, 2015 Finance and Business Development Committee meeting. II. PUBLIC COMMENT None III. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR INFORMATION A. AUDIT OF FOUR SELECT SERVICE PARTNER (SSP) AMERICA CONCESSIONAIRES Staff reported on the audit of the Select Service Partner (SSP) America concession agreement. Trustee Murdock requested an assurance that based on staff s finding of an error during the audit that SSP would pay the discrepancy. Staff responded yes ; SSP America will pay the shortfall. A motion was made by Trustee Rose; Seconded by Trustee Murdock and the Committee unanimously approved this item. B. FISCAL YEAR (FY) AUDIT PLAN RESULTS Staff reported on the FY Audit Plan Results. Trustee Rose commented on how well the reports were written. A motion was made by Trustee Rose; Seconded by Trustee Murdock and the Committee unanimously approved this item. C. STAFF REPORTS Trustee Hall proposed a change in the standard process by which staff reports are presented to the Committee. In the past, staff members provided an overview presentation of each report and individually answered any Trustee questions. Since the Trustees receive the staff reports in advance of the Committee meeting, Trustee Hall indicated it may be more efficient and productive to eliminate the staff presentations and to consider the staff reports listed below as a whole. As in the past, staff will be prepared to address any questions the Trustees may have under this agenda item. Page 2 of 8

3 The Committee agreed to this modified approach for the following reports: 1. Operating Results through August Budget Transfers - no transfers during this month 3. Contracts and Professional Service Agreements through September Legal Counsel Budget through August Board Budget through August Legislative Consultants Budget through August Hangar Lease Execution Status through September 2015 No questions were presented by the Committee in conjunction with the reports. IV. ITEMS TO BE PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR REVIEW AND RECOMMENDATION TO THE BOARD: A. #15(10)-37 AWARD OF BID #15/16-02 FOR THE PURCHASE OF ONE DUAL ENGINE FOUR-WHEEL STEER 5,000 TON PER HOUR SNOW BLOWER, TO J.A. LARUE, INCORPORATED, IN THE AMOUNT OF $499,948 Staff gave a presentation requesting authorization for the Award of Bid #15/16-02 for the purchase of one dual engine four-wheel steer 5,000 ton per hour snow blower, to J.A. Larue, Incorporated, in the amount of $499,948. Trustee Sferrazza asked for clarification on the wide range of pricing within the bid results. Staff stated that they were just as surprised in the price variance of the bids. However, the next lowest bid was only $16,000 higher than the successful submission. In order to make sure they are a reputable company, Trustee Sferrazza then asked if J.A. Larue supplies to other airports. Staff stated yes ; they are a very reputable company and the Reno-Tahoe Airport Authority (RTAA) currently has another J.A. Larue machine on hand that has been trouble free. Trustee Rose asked for clarification as to whether all the machines in the bids have the same specifications (specs). Staff stated that while each submission included exceptions to the standard, ideal bid specifications, the equipment outlined in the lowest, responsive proposal will meet the needs of the RTAA. Trustee Murdock asked when the RTAA will take delivery of this machine. Staff stated 330 days from when the order is received by J.A. Larue. A motion was made by Trustee Gianoli; Seconded by Trustee Rose and the Committee unanimously recommended this item [#15(10)-37] to the Board for approval at the upcoming Board meeting. Page 3 of 8

4 B. #15(10)-38 AWARD OF BID 14/15-04 FOR THE PURCHASE OF ONE 3,000 GALLON PANTHER 6X6 HIGH REACH EXTENDABLE TURRET (HRET) AIRCRAFT RESCUE AND FIRE FIGHTING VEHICLE, TO ROSENBAUER MINNESOTA, LLC, IN THE AMOUNT OF $863,103 Staff gave a presentation requesting authorization for the Award of bid 14/15-04 for the Purchase of One 3,000 Gallon Panther 6x6 High Reach Extendable Turret (HRET) Aircraft Rescue and Fire Fighting (ARFF) Vehicle, to Rosenbauer Minnesota, LLC, in the Amount of $863,103. Trustee Gianoli asked if it is unusual to receive only two bids or is it because there are only a few vendors. Staff stated that there are only two known vendors. Trustee Gianoli further asked if there was any push back from Oshkosh regarding their nonresponsive bid. Staff stated that they did notify Oshkosh, and subsequently staff received an notifying the RTAA that Oshkosh would be appealing the decision to the Federal Aviation Administration (FAA). Trustee Rose asked for clarification on why the additional command and control module for the Driver Enhanced Vision System (DEVS) system valued at $7,500 was removed from the contract award. In response, staff indicated that the FAA would only approve that module for one vehicle at Reno-Tahoe International Airport. Upon review, staff is recommending that the module would better serve the RTAA if it is included in the new Fire Ban Quick Response Vehicle to be acquired during the coming year. Trustee Hall asked for clarification as to whether the DEVS system is a piece of equipment to be installed on this equipment. Staff responded yes, the DEVS system will be installed; however, the additional command and control module that tracks the location of other equipment responding to an incident will be acquired in the future. Trustee Rose asked if in the meantime does the RTAA have a vehicle that is equipped with the Command and Control Center on it or are we working without one. Staff stated that the current Quick Response Vehicle (Fire 2), which will be replaced in the next year, does have this module installed. Therefore, the RTAA does have one system in place and therefore it is not needed on this new piece of equipment. A motion was made by Trustee Rose; Seconded by Trustee Murdock and the Committee unanimously recommended this item [#15(10)-38] to the Board for approval at the upcoming Board meeting. C. #15(10)-39 AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE A ONE-YEAR CONTRACT FOR RENO-TAHOE AIRPORT AUTHORITY EMPLOYEE MEDICAL AND PRESCRIPTION INSURANCE WITH PROMINENCE HEALTH PLAN FOR CALENDAR YEAR 2016 IN THE Page 4 of 8

5 AMOUNT OF $2,154,500; FUND EMPLOYEE HEALTH SAVINGS ACCOUNTS IN THE AMOUNT OF $38,000; AND CONTINUE TO SELF INSURE DENTAL AND VISION COVERAGE Staff gave a presentation requesting Authorization for the President/CEO to execute a One-Year Contract for the Reno-Tahoe Airport Authority Employee Medical and Prescription Insurance with Prominence Health Plan for Calendar Year 2016 in the Amount of $2,154,500; Fund Employee Health Savings Accounts in the Amount of $38,000; and Continue to Self Insure Dental and Vision Coverage. Trustee Gianoli inquired about the maximum amount of money the RTAA and an employee can contribute to a Heath Savings account per year. Staff stated the maximum amount is $6,700 a year. Trustee Gianoli asked what the breakdown is of employees choosing the high deductible Preferred Provider Organization (PPO) plan verses the Hybrid PPO plan. Staff stated that about 185 employees are on the Hybrid PPO plan and about 40 employees are on the high deductible plan. Trustee Rose asked if LP Insurance, the RTAA s insurance broker, is a locally owned and operated company. Staff stated yes ; they are locally owned and operated. Trustee Rose then asked for clarification on whether employees get the choice between the two plans. Staff stated yes ; employees get the choice during each open enrollment period. Trustee Rose then asked for clarification on how staff came up with the financial estimates in the Board memo since it is not known how many employees will choose each plan. Staff stated it is based on current enrollment. If additional employees choose to move to the high deductible plan, the proposed RTAA contribution to an employee s Health Savings Account (HSA) will be more than offset by the lower medical insurance premiums. Trustee Sferrazza asked for clarification on the higher deductible plan and whether the RTAA has experienced any medical issues due to employees not using preventive health care services because of the out-of-pocket costs. Staff stated no ; the high deductible plan includes all preventive services, as set forth in the Affordable Care Act, at no cost to employees. Trustee Sferrazza asked why the RTAA is not part of the Health Consortium like other local employers and why the RTAA is providing a medical insurance program on their own. Staff stated the Health Consortium group represents organizations that are self-insured. The RTAA is not of the size or risk profile to where it would reach the tipping point of wanting to become self-insured. Self-insurance is the approach where the employer pays health costs directly instead of buying insurance. To take this approach, an organization must be comfortable with a lot of volatility. Just one claim could cost the RTAA a million dollars and the RTAA is not comfortable in its Page 5 of 8

6 ability to absorb that level of a claim. Therefore, staff recommends continuing use of medical insurance plans where the RTAA is fully insured by an outside party. Trustee Rose asked if the long term plan is to always allow employees to continue to choose their plan or will the RTAA make it mandatory for them to be on one plan. Staff stated there is no long term goal to establish one plan and the approach going forward will be driven by the cost of health insurance in the future. A motion was made by Trustee Gianoli; Seconded by Trustee Murdock and the Committee unanimously recommended this item [#15(10)-39] to the Board for information, discussion, and possible action at the upcoming Board meeting. D. #15(10)-40 AUTHORIZATION FOR THE PRESIDENT/CEO TO NEGOTIATE FINAL TERMS AND EXECUTE A NEW 5-YEAR AGREEMENT WITH AVIATION CLASSICS, LTD TO LEASE TWO RENO- TAHOE AIRPORT AUTHORITY OWNED COMMERCIAL BOX HANGARS, OUTSIDE STORAGE AREA, RAMP SPACE AND FUEL STORAGE TANKS FOR THE PURPOSE OF OPERATING A NON- EXCLUSIVE FIXED BASE OPERATION AT THE RENO-STEAD AIRPORT Staff gave a presentation requesting Authorization for the President/CEO to Negotiate Final Terms and Execute a new 5-year agreement with Aviation Classics, Ltd. to lease two Reno-Tahoe Airport Authority Owned Commercial Box Hangars, Outside Storage Area, Ramp Space and Fuel Storage Tanks for the Purpose of Operating a Non-Exclusive Fixed Base Operation (FBO) at the Reno-Stead Airport (RTS). Trustee Sferrazza inquired as to why staff is recommending a five-year extension with an existing tenant rather than going through a competitive process to determine if any other party might be interested in this business opportunity. Staff responded that the RTAA is currently going through a Request for Qualifications process for a master developer to bring aviation and commercial development to the Reno-Stead Airport. The RTAA has selected Dermody Properties, LLC to serve in this capacity, and staff is hopeful to receive a full business proposal by the end of the month and enter into negotiations for Board review and possible approval. If approved, any new development at RTS will likely take between three to four years before any vertical buildings are completed. In addition, the economic recovery associated with the Tesla and Switch announcements will likely provide a positive impact on the revenue generation from RTS. Therefore, staff is recommending that the RTAA continue providing good customer service to the general aviation community by extending Aviation Classics contract. During the five year term, the anticipated future growth and its impact on the real estate market will be known, and the next generation of FBO services can be competed for in this new environment. Page 6 of 8

7 Trustee Rose asked for clarification on why a new roof, estimated to cost $160,000, is needed in conjunction with this contract extension, and why the RTAA would invest in a new roof before the Board has selected a master developer and knows the level of future commercial development at RTS. In response, staff stated that the RTAA owns the hangar buildings being leased to Aviation Classics and the RTAA must continue to make capital investments in the facilities in order to ensure they remain an income producing asset. Even if Aviation Classics were to choose not to remain at RTS, the RTAA would still need to repair the roof in order to lease the hangar out on the market. Trustee Rose asked if the roof is sustainable until the RTAA determines what the master development plan at RTS are going to be. Staff stated no ; the roof is currently leaking and the repairs are needed immediately. Trustee Mayberry inquired about the price difference between the two buildings per square foot. Staff stated that Building 7003 was part of the original agreement and the rent has never been brought to market. Building 8003 had an appraisal done and the market rent was adjusted to its market value. Trustee Mayberry proposed the idea of extending the leasing term beyond the proposed five (5) year period. Trustee Mayberry asked Mr. Redick to share his thoughts on this proposal contract and term. Mr. Redick stated that Aviation Classics would prefer to have a 10-year lease; however, the RTAA indicated the five (5) year term was recommended by General Counsel based on the length of the existing agreement and the market conditions outlined previously. A motion was made by Trustee Sferrazza; Seconded by Trustee Gianoli and the Committee unanimously recommended this item [#15(10)-40] to the Board for information, discussion, and possible action at the upcoming Board meeting. V. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR APPROVAL A. None VI. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR DISCUSSION A. None VII. GENERAL MEMBER COMMENTS, QUESTIONS AND ITEMS FOR FUTURE COMMITTEE MEETINGS Trustee Hall expressed his appreciation of the Board members coming to the Committee meetings prepared and asking questions that need to be asked. In addition, he also expressed his appreciation of Marily Mora, President/CEO, for her Page 7 of 8

8 revisions to the CEO Report. The changes include a trimming down of duplicate information and making the report much easier to read. Trustee Mayberry asked if staff will be bringing to the Board any changes in ground transportation policies associated with accommodating the Transportation Network Companies (TNCs) such as Uber and Lyft. Mrs. Mora stated that the RTAA intends to accommodate these new providers under current policies and agreements. Trustee Rose requested additional information prior to the October 8, 2015 Board of Trustees meeting on the RTAA s bid protest processes and procedures, specifically related to the proposed award of contract for the ARFF vehicle. Ms. Mora indicated this information will be provided to the entire Board prior to the Board meeting. Additionally, Trustee Sferrazza requested a summary of benefits for both of the RTAA recommended medical and prescription plans. In particular, Trustee Sferrazza is interested in the list of the preventive care services covered at no charge to employees and their family members. Ms. Mora indicated that this information will be provided to the entire Board prior to the Board meeting. VII. PUBLIC COMMENT None IX. ADJOURNMENT The meeting was called to order at 9:00 a.m. and was adjourned at 10:44 a.m. JH: RG/lg Page 8 of 8