RENO-TAHOE AIRPORT AUTHORITY BOARD OF TRUSTEES FINANCE AND BUSINESS DEVELOPMENT COMMITTEE Minutes from the Meeting May 13, :00 a.m.

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1 RENO-TAHOE AIRPORT AUTHORITY BOARD OF TRUSTEES FINANCE AND BUSINESS DEVELOPMENT COMMITTEE Minutes from the Meeting May 13, :00 a.m. In Attendance: Adam Mayberry, Chairman* Dr. Kosta Arger, Trustee* Steve Katzmann, Trustee* Bill Eck, Trustee Bob Larkin, Trustee Marily M. Mora, President/CEO Ann Morgan, Fennemore Craig Jones Vargas Rick Gorman, Chief Financial Officer James McCluskie, VP of Planning, Engineering & Environmental Mgt. Leah Williams, Manager of Accounting Tony Osendorf, Manager of Budget & Finance Laurie Weeks, Manager of Concessions Patrick North, Senior Internal Auditor Julie Sternberg, Senior Benefits Specialist Brian Moore, Director of Human Resources Marty Mueller, Director of Technology & Information Systems David Pittman, Director of Facilities & Maintenance Randy Whitworth, Building Maintenance Superintendent Alex Kovacs, Financial Analyst Paula Murphy, Internal Auditor Chrissy Gonzales, Administrative Assistant II Megan Landon, LP Insurance Services Lloyd A. Barnes, LP Insurance Services * Denotes Finance Committee member TOPICS DISCUSSED: I. REVIEW OF MEETING MINUTES FROM APRIL 8, 2014 A motion was made by Trustee Mayberry, Seconded by Trustee Katzmann and the Committee unanimously approved the minutes from the April 8, 2014 Finance and Business Development Committee meeting. II. PUBLIC COMMENT Page 1 of 7

2 III. ITEMS TO BE PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR REVIEW AND RECOMMENDATION TO THE BOARD: A. #14(05)-20 ADOPTION OF THE FISCAL YEAR BUDGET Staff gave a presentation to request approval for the adoption of the Fiscal Year Budget. President/CEO Marily Mora stated that staff has changed the funding of the Unmanned Aircraft System Vehicle (UAS) position from a half year to a whole year. The Reno-Tahoe Airport Authority (RTAA) has no intention on filling this position until there is a need and have scoped out what the position will be; however, this change will allow staff the flexibility to respond more quickly to market demand. One of the budget adjustments reflected an increase of $1,500 for electricity associated with the advertising billboard leased along Interstate 580. Trustee Arger inquired as to if NV Energy s bill for the billboard is retroactive. Staff stated that NV Energy can only go back one (1) year on past billings. Trustee Arger wanted clarification on the upgrade to the restroom facilities in the taxi staging area. Staff stated that the facilities will be an upgrade in that it will have power supplied to the trailer for lighting and a facility to wash your hands year round. Trustee Katzmann asked for clarification on the thermoplastic materials outlined in the budget. Staff stated that this is a continuation of the initial effort and will complete airfield signs not previously painted using this material. This investment will allow staff to avoid annual repainting of the identified signs for a period of eight years or more. Trustee Arger inquired about the Federal Inspection Service (Custom Building) improvements and whether the U.S. Customs and Border Protection (CBP) are mandating the proposed upgrades. Staff stated that CBP do have certain standards to process international passengers. President/CEO stated that the Federal Government could deny landing rights if they feel that the facility is not adequate. Trustee Katzmann asked for clarification about the early repayment of the subordinate lien notes and the reduction in debt service. Staff stated the proposed repayment of debt is associated with the new Reno-Stead Terminal Building. The remaining debt, not funded by passenger facility charges, relates to the Parking Garage and the Terminal Refurbishment Program in the Baggage Claim Area. Page 2 of 7

3 A motion was made by Trustee Katzmann; Seconded by Trustee Mayberry and the Committee unanimously recommended this item [#14(05)-20] to the Board for the adoption of the RTAA Fiscal Year Budget with the understanding that staff will come back to the Finance Committee before filling the Unmanned Aircraft System (UAS) project manager position. B. #14(05)-22 AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH INTERLOC SOLUTIONS FOR THE UPGRADE OF THE MAXIMO COMPUTERIZED MAINTENANCE MANAGEMENT SYSTEM, IN AN AMOUNT NOT TO EXCEED $104,000 Staff gave a presentation requesting authorization for the President/CEO to execute a professional services agreement with Interloc solutions for the upgrade of the Maximo Computerized Maintenance Management System, in an amount not to exceed $104,000. Trustee Arger inquired into the life expectancy of the Maximo Computerized Maintenance Management System 7.5. Staff stated that there is no way to know the life expectancy of this system; however, the typical life cycle for software is typically five to seven years. Trustee Katzmann inquired about the warranty period and maintenance agreement costs associated with the Maximo system. Staff stated that the RTAA has maintained an on-going agreement for the entire life of Maximo, which is a separate agreement that is included in the operating and maintenance budget. The estimated cost in the budget is approximately $13,000 annually. A motion was made by Trustee Mayberry; Seconded by Trustee Katzmann and the Committee unanimously recommended this item [#14(05)-22] to the Board for approval at the upcoming Board meeting. C. #14(05)-23 AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE A ONE-YEAR CONTRACT FOR RTAA EMPLOYEE MEDICAL AND PRESCRIPTION INSURANCE WITH SAINT MARY S HEALTH PLAN FOR FY , IN THE AMOUNT OF UP TO $2,206,000; CREATION AND FUNDING OF MEDICAL SAVINGS ACCOUNTS IN THE AMOUNT OF UP TO $433,000 AND CONTINUATION OF SELF INSURED 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 (RTAA) employee medical and prescription insurance with Saint Mary s Health Plan for Fiscal Year (FY) , in the amount of up to $2,206,000; creation and funding of medical savings accounts in the amount of up to $433,000 and continuation of selfinsured dental and vision coverage. Page 3 of 7

4 Trustee Arger inquired as to why is there a choice between the Health Reimbursement Account (HRA) and the Health Savings Account (HSA) and whether staff can choose either one. Staff stated that the type of tax deferred account depends upon the health insurance plan they select. The HRA is paired with the Hybrid Preferred Provider Organization (PPO) plan and the HSA is paired with the Traditional PPO plan. This pairing and the Authority s proposed initial funding of these accounts were done to encourage staff to select the lowest cost plan to the Authority. Trustee Katzmann inquired about why not go with a two (2) year agreement rather than a one (1) year agreement. Lloyd A. Barnes representing LP Insurance Services stated that long-term agreements for health insurance no longer exist due to the uncertainty of health care cost, the risk profile of insurance companies and new mandates. Trustee Arger recused himself from the proposed action item due to a conflict of interest associated with his medical practice and business relationship with Saint Mary s Health Plan. Trustee Arger turned the Committee Chairmanship over to Trustee Mayberry for discussion of the proposed selection of the health insurance provider and did not participate in the discussion regarding the proposed health care provider and committee vote. A motion was made by Trustee Katzmann; Seconded by Trustee Larkin and the Committee unanimously recommended this item [#14(05)-22] to the board for information, discussion, and possible action at the upcoming Board meeting. D. #14(05)-24 ADOPTION OF RESOLUTION NO. 517 RESCINDING RESOLUTION NO. 492 AND AMENDING THE CIVIL SERVICE PLAN; AND ADOPTION OF RESOLUTION NO. 518 RESCINDING RESOLUTION NO. 493 AND AMENDING THE MANAGEMENT GUIDELINES EFFECTIVE JULY 1, 2014 TO REDUCE RENO-TAHOE AIRPORT AUTHORITY (RTAA) CONTRIBUTIONS TOWARDS DEPENDENT HEALTH INSURANCE PREMIUMS TO 85% AND TO ELIMINATE THE MANAGEMENT GUIDELINES BENEFITS BANK RESULTING IN A SAVINGS TO THE RTAA OF UP TO $279,300 Staff gave a presentation requesting the adoption of Resolution No. 517 rescinding Resolution No. 492 and amending the Civil Service Plan; and adoption of Resolution No. 518 rescinding Resolution No. 493 and amending the Management Guidelines effective July1, 2014 to reduce the Reno-Tahoe Airport Authority (RTAA) contributions towards dependent health insurance premiums to 85% and to eliminate the Management Guidelines Benefits Bank resulting in a savings to the RTAA of up to $279,300. Page 4 of 7

5 Trustee Katzmann asked if the employees in the Civil Service Plan (CSP) and the Management Guidelines have been briefed and well informed regarding these changes. Staff stated that staff has given several presentations to both CSP and Management regarding the changes. A motion was made by Trustee Mayberry; Seconded by Trustee Katzmann and the Committee unanimously recommended this item [#14(05)-24] to the Board for information, discussion, and possible action at the upcoming Board meeting. IV. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR APPROVAL V. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR DISCUSSION VI. ITEMS PRESENTED TO THE FINANCE AND BUSINESS DEVELOPMENT COMMITTEE FOR INFORMATION A. REVIEW OF INTERNAL AUDIT REPORT OF RENO AIRPORT LODGING (HYATT PLACE HOTEL) Staff reported on the finding from the internal audit report of the Reno Airport Lodging (Hyatt Place Hotel). Trustee Arger asked for clarification about the lump sum cash payments to Reno Airport Lodging for utility work and other site development work identified in contract provision reviewed during the audit. Staff stated that Reno Airport Lodging invested monies into utility work and the site development that benefit the entire Airport East site beyond the ground lease for the hotel. The original agreement identified that a rent credit be provided over several years as compensation for site improvements that benefited the site. As the project was close to completion, Reno Airport Lodging requested to have a lump sum payment be made instead of having rent credit. Upon Board approval, staff calculated the time value of money for the remaining rent credits to be paid at a discount rate of 4% and a check was issued. B. INVESTMENT PORTFOLIO REPORT FOR THE QUARTER ENDED MARCH 2014 Staff reported on the investment portfolio report for the quarter ended March C. REVIEW OF OPERATING RESULTS THROUGH MARCH 2014 Page 5 of 7

6 Staff reported on the Operating Results through March D. REVIEW OF BUDGET TRANSFERS E. REVIEW OF CONTRACTS AND PROFESSIONAL SERVICES AGREEMENTS THROUGH APRIL 2014 Staff reported on the Administrative Award of Contracts pursuant to Resolution #462. Trustee Katzmann inquired as to if the Reno-Tahoe Airport Authority (RTAA) needed the assistance from Campbell-Hill Aviation Group, LLC a consultant company, to assist in an analytical review of air service provided by Southwest Airline (SWA) in Reno. President/CEO Marily Mora stated that a meeting with SWA is scheduled for June 10, 2014 and that Campbell-Hill Aviation Group, LLC has as specific expertise and relationships with SWA. If the RTAA was doing regular analytical work, then the work would be done by the staff. Campbell-Hill Aviation Group, LLC has done a lot of the merger work between Air Tran Airways and SWA and their specific knowledge is needed to identify how our market fits with SWA s business plan. F. REVIEW OF LEGAL EXPENSES THROUGH MARCH 2014 Staff reported the Legal Budget had expended 59.1% of the budget with 75% of the budget year expired. G. REVIEW OF BOARD BUDGET THROUGH MARCH 2014 Staff reported the Board of Trustee s had expended 51.5% of their budget with 75% of the budget year expired. H. REVIEW OF LEGISLATIVE CONSULTANTS BUDGET THROUGH MARCH 2014 Staff reported the Legislative Consultants Budget had expended 72.5% of their budget with 75% of the budget year expired. VIII. GENERAL MEMBER COMMENTS, QUESTIONS AND ITEMS FOR FUTURE COMMITTEE MEETINGS The Finance Committee package included information regarding the Authority s validation policy for free parking. Trustee Arger stated that the current policy Page 6 of 7

7 provides that both current and former Board of Trustees are given free parking privileges in recognition of their extensive service to the Authority. Trustee Larkin made a comment that the language in the Free Parking Privileges policy is often ambiguous and vague and would like to have the language reviewed to make it more specific. General Council Ann Morgan stated that she will look into the language that is stated in the policy for Free Parking Privileges. IX. PUBLIC COMMENT X. ADJOURNMENT The meeting was called to order at 9:01 a.m. and was temporarily adjourned at 10:18 a.m. for the Planning and Construction Committee meeting. The Finance & Business Development Committee meeting was called back to order at 10:38 a.m. and was adjourned at 12:09 p.m. AK: RG/cg Page 7 of 7