Metropolitan Airports Commission

Transcription

1 Metropolitan Airports Commission Finance and Administration Committee Agenda Regular Monthly Meeting on Monday, March 03, 2014 at 9:30:00 AM

2 SEE ATTACHED SECURITY CHECKPOINT INFORMATION FINANCE AND ADMINISTRATION COMMITTEE Timothy Geisler, Chair Jim Deal Tammy Mencel James Hamilton Dan Boivin Chairman Mike Landy Chair M&O Paul Rehkamp Chair PD&E OPEN FORUM METROPOLITAN AIRPORTS COMMISSION NOTICE OF REGULAR MEETING FINANCE AND ADMINISTRATION COMMITTEE Monday, March 3, 2014, 9:30 a.m. Room 3048A, Terminal 1-Lindbergh Minneapolis-St. Paul International Airport AGENDA The Open Forum is a portion of the Committee meeting where persons will be allowed to address the Committee on subjects which are not a part of the meeting agenda. Speakers are asked to limit their remarks to two minutes each. Persons wishing to speak must complete a sign-up card prior to the start of the meeting. The sign-up card should be given to any staff person. The Committee may take action or reply at the time of the statement or may give direction to staff at the end of the meeting regarding investigation of the concerns expressed. CONSENT 1. REPORTS a. Budget Variance Report - Preliminary December January 2014 b. Accounts Receivable Summary Bob Schauer, Director - Finance 2. MAC CONTINUOUS AUDIT REPORT th QUARTER Mike Willis, Director Internal Audit DISCUSSION ACTION 3. ANNUAL EQUIPMENT FINANCING AGREEMENTS Brad Johnson, Purchasing Manager DISCUSSION INFORMATION Page 1 of 42

3 Materials for this meeting are available at the following website: Meetings/Board-Meetings.aspx. SECURITY CHECKPOINT INFORMATION Stop by the information booth near the tram station on the Tram Level. At the information booth, you will be asked to complete a security checkpoint access form and show valid, government-issued photo identification, such as a driver s license. Take your completed access form with you up two floors, to the Ticketing Level security checkpoints. Show your approved access form to security checkpoint personnel. You will then be screened just as if you were traveling. Access forms are only valid for the purpose of attending a public MAC meeting at a particular date and time. Commission Chambers are located on the Mezzanine Level overlooking the airport s central shopping area (above Chili s Restaurant), past the main security checkpoints. Allow yourself at least 30 minutes to park, complete the access form and get through the security checkpoint prior to the meeting. Parking will be validated; please bring your parking ticket to the meeting. Directions to the Tram Level Information Booth From short-term parking: At the Lindbergh Terminal entrance, take the escalator or elevator down to the Tram Level. The information booth is straight ahead, in the center of the room. From general parking: If you park in the Blue or Red ramps, take the elevator down to the tram, which will transport you directly to the Lindbergh Terminal s Tram Level. When you exit the tram, the information booth is straight ahead, in the center of the room. If you park in the Green or Gold ramps, take the skyway to the Lindbergh Terminal s Mezzanine Level. From there, take an elevator or escalator to Tram Level. The information booth is straight ahead, in the center of the room. 2 Page 2 of 42

4 MEMORANDUM ITEM 1a TO: Finance and Administration Committee FROM: Karen Schaefer, Senior Financial Analyst ( ) SUBJECT: REPORTS Budget Variance Report Preliminary December 2013 DATE: February 21, 2014 The Preliminary December Budget Variance Report is presented for your review with the first pages providing a summary of the year-to-date activity. These preliminary numbers could change upon completion of the accruals as calculated per the airline agreement and any adjustments proposed as part of the financial audit. Details for the variances are available in the report. Operating Revenues are over budget $9.4 million or 3.4%. Greater than Budget Terminal 2 Lobby Fees greater activity Terminal 2 Other Cost/Passenger Fees additional aircraft parking Food & Beverage Strong public spending Passenger Services Wireless management concession Parking Greater activity Ground Transportation Greater activity Auto Rental CFC s Greater activity Reliever Airports Athletic field agreement and miscellaneous revenue GA/Airside Fees Budget omission Other Revenues T1 vacancy surcharge Lower than Budget Terminal 1-Lindbergh Terminal Rentals space allocations MSP Employee parking Decrease in the number of parkers Other Concessions Outdoor Advertising extended contract with lower minimums Page 3 of 42

5 $=000 Passengers =000 3,000 2,500 2,000 Enplaned Passengers by Month ,500 1, January February March April May June July August September October November December Operating Expenses are over budget $3.8 million or 2.7%. Greater than Budget Personnel Overtime, Doubletime and Temps Multiple ice and snow events and health insurance with greater claims Utilities Greater Heating expenses (jet fuel secondary source) Maintenance Snow removal materials Multiple ice and snow events Other Bad debt expenses Lower than Budget Operating Services Lower Service Agreement expenses Net Revenues Available for Designation total $45.8 million. $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $- Net Revenues Available for Designation Year-to-Date January February March April May June July August September October November December Page 4 of 42

6 Metropolitan Airports Commission December Preliminary 2013 Budget Variance Analysis Operating Revenue ($=000) Year to Date Year To Date Dollar % OPERATING REVENUES Airline Rates & Charges Airline Agreement Landing Fees $ 51,870 $ 55,417 $ 53,847 $ 1, % Ramp Fees 6,092 6,784 6, % Airline R & R 3,408 3,452 3,502 (50) -1.4% Terminal 1 - Lindbergh - Rentals 33,714 34,985 35,667 (683) -1.9% Terminal 1 - Lindbergh - Other Rentals 3,653 4,090 4,167 (78) -1.9% Concessions Rebate (9,597) (9,889) (9,577) (312) 3.3% Total Airline Agreement 89,139 94,838 93,622 1, % Terminal 2 - HHH Lobby Fees 7,774 8,804 8, % Terminal 2 - HHH Other Cost/Passenger Fees 1,525 1,748 1, % Total Airline Rates & Charges 98, , ,267 2, % Concessions Terminal/Other Food & Beverage 13,808 14,743 13, % News 3,487 3,495 3, % Retail 5,120 4,994 4, % Passenger Services 4,437 4,657 4, % Total Terminal/Other 26,852 27,889 26,555 1, % Parking/Ground Transportation Parking 72,621 76,569 74,417 2, % Ground Transportation Fees 5,250 5,401 4, % MSP Employee Parking 2,929 2,414 2,883 (469) -16.3% Auto Rental-On Airport 17,324 17,732 17, % Total Parking/Ground Transportation 98, ,116 99,056 3, % Other Concessions 1,423 1,316 1,547 (231) -14.9% Total Concessions 126, , ,158 4, % Rentals/Fees Buildings & Facilities 7,129 6,926 7,104 (178) -2.5% Building Auto - CFC's 6,482 10,688 10, % Ground Rentals 8,752 9,041 8, % Reliever Airports 5,636 6,670 5, % Total Rentals/Fees 27,999 33,327 31,846 1, % Utilities and Other Revenue Utilities 4,284 4,778 4, % GA/Airside Fees 2,261 2,886 2, % Consortium Fees 2,360 2,873 2, % Other Revenues 1,656 1,741 1, % Reimbursed Expense 3,021 3,102 2, % Total Utilities and Other Revenue 13,582 15,380 13,705 1, % Total Operating Revenue $ 266,418 $ 285,417 $ 275,975 $ 9, % Brackets ( ) Represent Revenue Items under Budget and Expense Items over Budget Page 5 of 42

7 December Preliminary 2013 Budget Variance Analysis Operating Expenses Non-Operating Revenues & Expenses ($=000) Year to Date Year To Date Dollar % Actual Actual Budget Variance Variance Total Operating Revenue $ 266,418 $ 285,417 $ 275,975 $ 9, % OPERATING EXPENSE Personnel $ 68,145 $ 71,081 $ 68,705 $ (2,376) -3.5% Administrative 1,561 1,407 1, % Professional Services 4,536 4,514 4, % Utilities 16,288 18,633 17,804 (829) -4.7% Operating Services 17,379 18,932 19, % Maintenance 26,052 29,308 28,548 (759) -2.7% Other 2,631 2,950 2,752 (198) -7.2% Total Operating Expenses $ 136,593 $ 146,826 $ 143,017 $ (3,809) -2.7% (excludes depreciation and noise amortization) Net Operating Revenues $ 129,825 $ 138,591 $ 132,959 $ 5, % NON-OPERATING REVENUE (EXPENSES) ($=000) Year to Date Year To Date Dollar % Actual Actual Budget Variance Variance Other Non-Operating Revenue Interest Income $ 4,683 $ 4,512 $ 4,500 $ % Self-Liquidating Income 4,362 4,869 5,131 (262) -5.1% 9,045 9,381 9,631 (250) -2.6% Debt Service Short Term Financing (243) (255) (360) % Equip. Financing Prinicipal/Interest Pymts (2,515) (2,614) (2,350) (264) 11.2% Gen. Airport Revenue Bond Requirement (82,276) (93,527) (93,900) % (85,034) (96,396) (96,610) % Equipment Capital Expenditures (1,022) (781) (1,040) % Equipment Purchases (6,631) (10,300) (12,176) 1, % Carryover Equipment Purchases (1,136) (470) - (470) Equipment Financing 2,184 6,585 8,550 (1,965) -23.0% (6,605) (4,966) (4,666) (300) 6.4% Other Six Month Reserve Transfer (2,464) (1,677) (1,677) - 0.0% Interstate Settlement (3,000) Interstate Payments % Grant Reimbursement Easement Receipt Gain (Loss) on Equipment & Other (4,351) (848) (957) % Total Non-Operating Revenues (Expenses) $ (86,945) $ (92,829) $ (92,602) $ (227) 0.2% Net Revenues Available for Designation $ 42,880 $ 45,762 $ 40,357 $ 5,406 Brackets ( ) Represent Revenue Items under Budget and Expense Items over Budget Page 6 of 42

8 OPERATING REVENUE Operating revenue for December year-to-date is $9.4 million or 3.4% over budget. The greatest variance exists in the following categories. Airline Rates and Charges A year-end estimate is included for Landing Fees, Ramp Fees and Terminal 1-Lindbergh Rentals in accordance with the Airline Use Agreement. Landing Fees Landing fees are based upon the expenses in the Field & Runway service center and are calculated on a residual (breakeven) basis in accordance with the Airline Use Agreement. The field and runway expenses are divided by total landed weight. Landing fees are over budget $1.6 million or 2.9% as a result of the abnormal weather (snow and ice events) in This resulted in an increase in maintenance labor (temps, doubletime) and materials (liquid anti-icer, snow removal contract equipment). Ramp Fees Ramp fees are over budget $769,599 or 12.8% and are calculated in accordance with the Airline Use Agreement. A change in ramp fees can occur as a result of changes in expense and linear footage. The increase in ramp fees is due to greater expenses primarily in maintenance labor costs and materials related to the abnormal winter weather events in 2013 and debt service on equipment. Terminal 1-Lindbergh - Rentals Terminal 1-Lindbergh rentals are determined by dividing Terminal 1 expenses by total Terminal 1 rentable square feet. The airlines pay for only the space they occupy. The revenue is under budget $682,642 as a result of lower mechanical building expenses (Automated People Mover). Terminal 1-Lindbergh - Other Rentals Lindbergh Terminal Other Rentals are under budget $77,751 or 1.9% primarily due to the IAF (International Arrival Facility) fees. The agreement for this facility includes a fee calculation similar to the ramp and landing fees (residual.) Users of the facility are charged a passenger use fee based upon expenses. Lower building maintenance expenses can be attributed to the decrease. Concession Rebate The Concessions Rebate as calculated per the Airline Agreement is greater than budget due to the increase in Food & Beverage and Auto Rental Fees revenue. Terminal 2-Humphrey Lobby Fees Terminal 2 Lobby Fees are over budget $687,235 due to greater activity than the budget anticipated for Spirit and Sun Country. Page 7 of 42

9 Concessions The following chart compares Lobby Fees and FIS (Federal Inspection Services) activity. $2,500,000 $2,250,000 HHH Lobby Fees & FIS Fees $2,000,000 $1,750,000 $1,500,000 $1,250,000 $1,000,000 $750,000 $500,000 $250,000 $- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Note: December includes Lobby fees & FIS fees for both November and December as the data is provided the following month. (January data is recorded in February.) Terminal 2 Other Costs/Passenger Fees Terminal 2 - Other Costs/Passenger Fees are over budget $220,081 or 14.4% due to FIS (Federal Inspection Services) fees for international passenger activity along with aircraft parking greater than anticipated. Concessions Concessions year-to-date revenue is $4.2 million or 3.3% greater than budget. December 2013 Year-To-Date Variance % Variance $ Passengers as of December (includes non revenue -year over year) 2.2% n/a Food & Beverage 5.7% $ 797,066 News 1.3% $ 44,737 Retail 3.7% $ 176,881 Passenger Services 7.3% $ 315,532 Parking 2.9% $ 2,152,442 Ground Transportation 19.6% $ 883,404 MSP Employee Parking -16.3% $ (468,753) Auto Rental - On Airport 2.9% $ 492,973 Other Concessions -14.9% $ (231,210) Total Variance 3.3% $ 4,163,072 Page 8 of 42

10 $12,000,000 Total Concessions $9,000,000 $6,000,000 $3,000,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Food & Beverage Food & Beverage year-to-date revenue is $797,066 or 5.7% greater than budget due to strong public spending at T1 and T2. Four new concessions in T2 have performed beyond projections. $2,000,000 $1,800,000 Food & Beverage Revenue $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Note: May 2011 includes previous month adjustments. December includes key money. News News revenue is greater than budget $44,737 or 1.3% due to strong public spending at T1 and T2. Page 9 of 42

11 Retail Retail revenue is greater than budget $176,881 or 3.7% due to strong public spending at T1. $1,200,000 News and Retail Revenue $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Passenger Services Passenger Services revenue is $315,532 or 7.3% greater than budget due to contract reconciliations related to the wireless management contract. Parking Parking year-to-date revenue is $2.2 million or 2.9% greater than budget due to a gain in hours parked in MSP Value and General Parking. Parking Revenue 12/31/2013 Actual Budget Variance 1st Qtr $ 20,590,568 $ 20,337,879 $ 252,689 2nd Qtr $ 19,215,653 $ 18,379,996 $ 835,657 3rd Qtr $ 17,658,226 $ 17,329,785 $ 328,441 October $ 7,207,718 $ 7,105,014 $ 102,704 November $ 6,202,400 $ 5,813,112 $ 389,288 December * $ 5,694,387 $ 5,450,724 $ 243,663 Total $ 76,568,952 $ 74,416,510 $ 2,152,442 * Includes December sales tax accrual Page 10 of 42

12 $9,000,000 $8,000,000 Parking Revenue $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Note: A rate increase was implemented in January Ground Transportation Ground Transportation is greater than budget $883,404 or 19.6% due to increased taxi activity (dwell fees, trip fees, etrip and off-airport parking recovery plus fees) which is higher than the budget anticipated. MSP Employee Parking MSP Employee Parking is lower than budget $468,753 as a result of a reduction in Endeavor (Pinnacle) and Delta Global Services employee parking. These companies will be utilizing the Building C parking lot rather than T-2 parking ramps. Auto Rental On Airport Auto Rental On Airport is over budget $492,973 or 2.9% primarily as a result of activity greater than the budget anticipated for all of the car rental companies during July through October. Year-to-date transactions increased 1.5% over 2012 levels. On a year-to-date basis, gross sales were over 0.4% greater in 2013 than Page 11 of 42

13 $2,500,000 Auto Rental Revenue $2,000,000 $1,500,000 $1,000,000 $500,000 $- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Other Concessions Other Concessions are lower than budget $231,210 or 14.9% due to Outdoor Advertising. The CBS contract expired on July 1, 2013 and MAC agreed to a 6-month extension with a lower minimum monthly guaranteed rent that the budget did not anticipate. Rentals/Fees Building & Facilities Building & Facilities is under budget $178,089 primarily due to a rental rate change for the auto rental facilities during construction of the expanded facilities and leases which were terminated or changed after completion of the budget which were partially offset by a bankruptcy settlement for Sun Country airlines of $142,946. Building Auto CFC s Building Auto CFC s were greater than budget $688,083 or 6.9% due to greater activity than the budget anticipated. Reliever Airports Reliever Airports are over budget $806,352 or 13.8%. Due to the economic conditions at the time of budget preparation, a very conservative budget was completed. As the economy continues to improve, revenue increased. In addition, unbudgeted miscellaneous revenue, including $100,000 related to an agreement for athletic fields with the City of Blaine for the years 2012 and 2013, was excluded from the budget as the lease was not finalized at the time the budget was completed. Page 12 of 42

14 Utilities and Other Revenue Utilities Utilities is over budget $195,936 or 4.3% due to greater usage for Ground Power. GA/Airside Fees GA/Airside fees are greater than budget by 42.0% or $853,402 as a result of fuel flowage fees approved by the Commission in August These fees were inadvertently omitted from the 2013 budget. In addition, airside fees are greater than budget due to services provided to general aviation for the increased frequency of winter snow and ice events. Other Revenue Other Revenue is $294,893 or 20.4% greater than budget due to a vacancy surcharge charged for certain airlines in T1, as per a 2011 amendment to the Airline Agreement. In addition, significant projects resulted in permit fees greater than the budget anticipated. Reimbursed Expense Reimbursed expense is greater than budget $301,760 or 10.8% due to greater P-card rebates, police aid and canine reimbursements. OPERATING EXPENSE Operating Expenses are over budget $3.8 million or 2.7%. Personnel Personnel expenses are over budget $2.4 million comprised of the following: Under Lower FTE positions than the budget anticipated for wages Painters are under budget in Temps $105,287 due to expenses included in the operating budget that were related to a capital project Over Costs associated with snow removal operations (overtime, doubletime and temps) are over budget $890,574 due to the extended winter season in the second quarter and December 2013 for Maintenance personnel. Airside Operations is over budget $55,219 related to winter events and minimum staffing for training and certifications Reliever Airports are $171,864 over budget for overtime, doubletime and temps primarily as a result of weather related events Fire is over budget $64,278 to maintain minimum staffing levels related to employee turnover and FLMA Page 13 of 42

15 Employee Medical insurance is over budget $1.4 million due to extraordinary claims (the stop loss provision did apply) along with an inflation factor greater than anticipated in the budget Professional Services Professional Services are under budget $21,244 or 0.5% due to a combination of the following: Under Over Relievers consultant expense related to survey work, land valuation and development is $33,590 under budget due to limited opportunities in Legal and Legislative-National expenses are under budget $281,065 as expenses are budgeted based upon prior year averages. Recruiting expenses are under budget $72,289 due to less employee turnover and retirements than anticipated in the budget Software consulting is under budget $118,406 due to funding from various CIP projects (rather than the operating budget) along with deferred projects Concept Development is over budget $97,958 due to the Auto Rental RFP (Request for Proposal) primarily relating to the facility allocations between T1 and T2. This cost was originally part of the Terminal 2-Humphrey RAC (Rental Auto Companies) project. However, later it was determined this type of expense was not a capital expenditure. The expenses for this work will be paid for by the RAC through CFCs (Customer Facility Charge). Planning expenses are over budget $73,546. Fees for the Solar Project and Sponsorship work exceeded the anticipated dollars due to the complexity of the project. The Marketing/Sponsorship dollars that will begin in 2014 will significantly offset the added costs. In addition, complications with the Reliever Long term Comp Plans (LTCP) associated with more stringent FAA Runway Protection Zone (RPZ) requirements have increased the cost of the Reliever LTCP work. Engineering fees are over budget $301,456 due to the write-off of CIP for project costs that have become inactive. Public Information Services is over budget $52,192 due to more costs than anticipated in completion of the new MAC website (metroairports.org) Insurance consultants costs are over budget $41,670 due to expenses associated with the Affordable Health Care Act. Consulting expenses related to the parking process improvement study are over budget $30,045. Page 14 of 42

16 Utilities Utilities are over budget $828,827. Electricity is over budget $340,827 and natural gas is over $214,709 due to increases in rates and usage (including the newly completed data center). In addition, upon Centerpoint s request, the Energy Management Center switches to jet fuel and MAC receives a rate break. The jet fuel budget was based on prior year history. However, due to the abnormal frequency of weather related events (cold temperatures, snow and ice), jet fuel expenses are above recent history and results in $180,912 over budget. Operating Services Operating Services is under budget $331,188 due to a combination of the following: Under. Over Parking management fees are under budget $80,988 due to less wages and benefits due to employee turnover than anticipated in the management contract. Security Services Checkpoint is under budget $97,543 due to a contract cancellation for bin runners. The TSA is now performing this function. Service Agreements-Computer are under budget $252,217 due to consolidating license renewals and cost savings through attrition and removal of unused products. Service Agreements Radios are under budget $56,851. Since the budget development, the actual annual renewal resulted in a decrease. $113,400 over budget for environmental costs associated with the Anoka Reliever airport clean-up project. GISW (Glycol Impacted Storm Water) is over budget $87,405 due to greater than average snowfall. Storm water monitoring is budgeted for average weather conditions. Maintenance Other expenses are over budget such as bank fees over budget $28,576 related to an increase in parking transactions, porter service fees over $36,556 (a new service in 2013) and parking equipment service agreement over $31,677. Maintenance expenses are over budget $759,151 or 2.7% due to a combination of the following: Under Building Mechanical areas (People mover, escalators, elevators, etc.) are under budget $712,917 due to less repairs and materials than budgeted. Rubbish is under budget $75,805 due to cost savings and organic composting. Page 15 of 42

17 Over Field maintenance is over budget $1.2 million related to the abnormal frequency of wet snow and ice events in the first half of 2013 and December resulting in above average use of anti-icing and de-icing chemicals, snow removal and materials. Budgeted expenses are based on average 5-year snowfall, which has been in the inch range. However, snowfall during 2013 was just under 70. Maintenance equipment, parts and gas are over budget $371,464 primarily related to weather events in Energy Management Center is over budget $23,180 for cooling tower repairs in Terminal 1-Lindbergh. Minor projects expense is over budget $34,109 related to the water/mold clean-up project at the GO. Other Other expenses are over budget $198,075 as bad debt expenses are greater than anticipated in the budget. NON-OPERATING REVENUE AND EXPENSE Non-Operating Revenue and Expense is over budget $227,000. Equipment/technology purchases (due to the length of time required to complete these projects) is a carryover from the 2012 budget resulting in additional expenses of $470,000. However, the airport revenue bond requirement is lower than the budget anticipated due to higher interest earnings on the Debt Service Reserve Fund investment agreement. Page 16 of 42

18 Passengers =000 MEMORANDUM ITEM 1a TO: Finance and Administration Committee FROM: Karen Schaefer, Senior Financial Analyst ( ) SUBJECT: REPORTS Budget Variance Report January 2014 DATE: February 25, 2014 The January Budget Variance Report is presented for your review with the first pages providing a summary of the year-to-date activity. Details for the variances are available in the report. Operating Revenues are over budget $280,566 or 1.4%. Greater than Budget Parking Greater activity 3,000 2,500 2,000 Enplaned Passengers by Month ,500 1, January February March April May June July August September October November December Operating Expenses are over budget $574,253 or 4.9%. Greater than Budget Personnel Overtime, Doubletime and Temps related to winter weather events Utilities Natural Gas Heating Jet Fuel Maintenance Snow removal equipment Page 17 of 42

19 $=000 Non-Operating Revenues and Expenses are lower than budget $17,000 or.06%. Lower than Budget Interest Rate Lower than budget Net Revenues Available for Designation total $4.6 million. $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $- Net Revenues Available for Designation Year-to-Date January February March April May June July August September October November December Page 18 of 42

20 Metropolitan Airports Commission January 2014 Budget Variance Analysis Operating Revenue ($=000) Year to Date Year To Date Dollar % Total 2014 Actual Actual Budget Variance Variance Budget OPERATING REVENUES Airline Rates & Charges Airline Agreement Landing Fees $ 4,188 $ 4,409 $ 4,329 $ % $ 56,222 Ramp Fees % 6,671 Airline R & R (1) -0.3% 3,586 Terminal 1-Lindbergh - Rentals 2,533 2,623 2,624 (1) 0.0% 36,983 Terminal 1-Lindbergh - Other Rentals (1) -3.6% 5,129 Concessions Rebate (9,840) Total Airline Agreement 7,519 7,891 7, % 98,750 Terminal 2-Humphrey Lobby Fees % 9,010 Terminal 2-Humphrey Other/Passenger Fees % 1,551 Total Airline Rates & Charges 7,567 7,931 7, % 109,311 Concessions Terminal/Other Food & Beverage % 14,635 News % 3,739 Retail % 4,728 Passenger Services (2) -0.5% 4,527 Total Terminal/Other 1,642 1,753 1, % 27,629 Parking/Ground Transportation Parking 5,746 6,141 5, % 77,926 Ground Transportation Fees % 5,347 MSP Employee Parking (14) -5.1% 2,629 Auto Rental-On Airport 1,240 1,240 1,240 (0) 0.0% 17,801 Total Parking/Ground Transportation 7,577 8,076 7, % 103,703 Other Concessions (10) -25.2% 1,878 Total Concessions 9,330 9,859 9, % 133,210 Rentals/Fees Buildings & Facilities (1) -0.1% 7,228 Building Auto - CFC's % 10,100 Ground Rentals (55) -7.4% 8,593 Reliever Airports % 6,154 Total Rentals/Fees 1,576 1,660 1,663 (3) -0.2% 32,075 Utilities and Other Revenue Utilities % 4,405 GA/Airside Fees (4) -14.2% 2,376 Consortium Fees ,857 Other Revenues % 1,544 Reimbursed Expense (4) -4.2% 2,800 Total Utilities and Other Revenue , % 13,981 Total Operating Revenue $ 18,805 $ 19,800 $ 19,520 $ % $ 288,577 Page 19 of 42

21 January 2014 Budget Variance Analysis Operating Expenses Non-Operating Revenues & Expenses ($=000) Year to Date Year To Date Dollar % Total 2014 Actual Actual Budget Variance Variance Budget Total Operating Revenue $ 18,805 $ 19,800 $ 19,520 $ % $ 288,577 OPERATING EXPENSE Personnel $ 4,825 $ 7,977 $ 7,533 $ (444) -5.9% $ 71,375 Administrative % 1,527 Professional Services % 4,849 Utilities (83) -15.0% 18,565 Operating Services % 19,405 Maintenance 1,931 2,676 2,617 (59) -2.3% 29,971 Other % 3,103 Total Operating Expenses $ 8,469 $ 12,307 $ 11,733 $ (574) -4.9% $ 148,794 (excludes depreciation and noise amortization) Net Operating Revenues $ 10,335 $ 7,493 $ 7,786 $ (294) -3.8% $ 139,782 NON-OPERATING REVENUE (EXPENSES) ($=000) Year to Date Year To Date Dollar % Total 2014 Actual Actual Budget Variance Variance Budget Other Non-Operating Revenue Interest Income $ 351 $ 376 $ 417 $ (41) -9.8% $ 5,000 Self-Liquidating Income % 5, (41) 10,486 Debt Service Short Term Financing (49) (10) (10) - 0.0% (703) Equip. Financing Prinicipal/Interest Pymts (19) (31) (31) - 0.0% (3,137) Gen. Airport Revenue Bond Requirement % (96,203) (68) (41) (41) - (100,043) Equipment Capital Expenditures (80) (61) (74) % (1,020) Equipment Purchases - (413) (413) - 0.0% (7,847) 2012 Carryover Equipment Purchases (56) Equipment Financing % 4,138 (136) (474) (487) 13 (4,729) Other Six Month Reserve Transfer (1,677) (3,298) (3,298) - 0.0% (3,300) Interstate Payments Gain (Loss) on Equipment & Other % - (1,610) (3,227) (3,238) 11 (2,580) Total Non-Operating Revenues (Expenses) $ (1,080) $ (2,937) $ (2,920) $ (17) 0.6% $ (96,866) Net Revenues Available for Designation $ 9,255 $ 4,556 $ 4,866 $ (311) $ 42,916 Page 20 of 42

22 OPERATING REVENUE Operating revenue for January is $280,566 or 1.4% over budget. The greatest variance exists in the following categories. Airline Rates and Charges Landing Fees Landing Fees are $79,768 or 1.8% greater than budget and is related directly to landed weight reported by the carriers being more than anticipated in the budget. Landed Weight 1/31/2014 (one thousand pound units) Actual Budget Variance January 1,663,736 1,636,250 27,486 Total 1,663,736 1,636,250 27,486 Landed Weight 3,000, ,500, ,000,000 1,500,000 ` 1,000, ,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Concessions Concessions year-to-date revenue is $191,700 or 2.0% greater than budget. Page 21 of 42

23 Concessions January 2014 Variance % Variance $ Passengers n/a n/a Food & Beverage 2.4% $ 21,159 News 0.0% $ 79 Retail 0.7% $ 2,643 Passenger Services -0.5% $ (1,619) Parking 3.0% $ 179,606 Ground Transportation 3.3% $ 13,982 MSP Employee Parking -5.1% $ (13,724) Auto Rental 0.0% $ (115) Other Concessions -25.2% $ (10,311) Total Variance 2.0% $ 191,700 $12,000,000 Total Concessions $9,000,000 $6,000,000 $3,000,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Parking Parking year-to-date revenue is $179,606 or 3.0% greater than budget due to greater transactions and hours of parking than the budget anticipated. Parking Revenue 1/31/2014 Actual Budget Variance January $ 6,140,929 $ 5,961,323 $ 179,606 Total $ 6,140,929 $ 5,961,323 $ 179,606 Page 22 of 42

24 $9,000,000 $8,000,000 Parking Revenue $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Note: A rate increase was implemented in January OPERATING EXPENSE Operating expenses are over budget $574,253 or 4.9%. Personnel Personnel expenses are over budget $444,030 or 5.9% as a result of Doubletime, Overtime and Temps associated with winter related weather events. Utilities Utilities are over budget $83,370 or 15.0% directly related to jet fuel. At Centerpoint s request, the Energy Management Center switches to Natural Gas Jet Fuel and MAC receives a rate break. The jet fuel budget was based on prior year history. However, due to the abnormal frequency of weather related events (cold temperatures, snow and ice), jet fuel expenses are above budget. Maintenance Maintenance expenses are $59,065 or 2.3% above budget related to snow removal equipment expenses. NON-OPERATING REVENUE AND EXPENSE Non-Operating Revenue and Expense is under budget due to lower interest rates earned than what was anticipated in the budget. Page 23 of 42

25 COMMITTEE ACTION REQUESTED: RECOMMEND TO THE FULL COMMISSION APPROVAL OF THE BUDGET VARIANCE REPORT AND AUTHORIZE EXPENDITURES IN THESE CATEGORIES UP TO THE BUDGETED OR FORECASTED BUDGET AMOUNTS. Page 24 of 42

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28 MEMORANDUM ITEM 2 TO: Finance and Administration Committee FROM: Mike Willis, Director Internal Audit ( ) SUBJECT: MAC CONTINUOUS AUDIT REPORT th QUARTER DATE: February 18, 2014 A continuous audit process has been implemented by the MAC Internal Audit Department in accordance with the MAC Internal Audit Annual Plan. The attached report contains an overview of the current continuous audit process including risk areas considered, associated audit testing and a summary of results for the fourth quarter of Similar reports will be issued going forward on a quarterly basis. COMMITTEE ACTION REQUESTED: RECOMMEND TO THE FULL COMMISSION ACCEPTANCE OF THE MAC INTERNAL AUDIT DEPARTMENT CONTINUOUS AUDIT REPORT th QUARTER RESULTS. Page 27 of 42

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40 MEMORANDUM ITEM 3 TO: Finance & Administration Committee FROM: Brad Johnson, Purchasing Manager ( ) SUBJECT: ANNUAL EQUIPMENT FINANCING AGREEMENTS DATE: February 24, 2014 When the 2014 budget was approved in December 2013, it included a list of capital assets ( Equipment ) to be acquired. As presented in the 2014 budget process, the Equipment will be acquired using either MAC funds or financing through a third party lender. The purpose of this memorandum is to award the bids for third party financing and authorize staff to proceed with acquiring the Equipment. The list of Equipment to be acquired and financed is found in Attachment A. Background In 2006, the Airline Agreement s calculation of rates and charges for tenants (airlines) was changed from charging depreciation and interest to charging for debt service. The change and use of the equipment financing mechanism allows MAC to recover some of the costs for the Equipment through rates and charges. For example, the Commission can recover up to 88% of the costs associated with purchasing some of the field maintenance equipment. If the equipment was purchased outright with MAC s available cash, there would be no recovery. Bid Process and Results In January 2014, staff advertised a Request for Bids on the MAC website and the State of Minnesota solicitation page. Twenty eight (28) vendors reviewed the solicitation and five (5) vendors submitted bids. The Bid Tabulation is found in Attachment B and reflects the pricing submitted by the five bidders and the low bid for each term. In the two year lease bid, BMO Harris submitted the lowest bid. After further investigation, staff found that the bid was non-responsive because it did not meet the terms of the bid. BMO Harris failed to identify a required balloon payment at the end of the lease. As a result, BMO Harris did not submit the lowest responsive bid. Therefore, staff recommends that BMO Harris s bid be rejected. Staff is recommending award of the two bids as follows: Lakeview Leasing for the two (2) year lease and SunTrust Equipment Finance & Leasing Corp. for the ten (10) year financing. Equipment Acquisition Once financial agreements are signed, the dollar amounts of the leases described in Attachment A will be placed in escrow accounts from which MAC will access over a period of months to pay for the Equipment. Staff will order and acquire the Equipment through competitive open bidding, the State of Minnesota Cooperative Purchasing Venture or a Page 39 of 42

41 similar purchasing cooperative in which MAC participates. The Equipment prices will not exceed the dollar amounts available in the equipment leases. COMMITTEE ACTION REQUESTED: RECOMMEND TO THE FULL COMMISSION: 1. REJECTION OF THE BMO HARRIS BID FOR THE TWO YEAR LEASES; 2. ACCEPTANCE OF THE LOWEST RESPONSIBLE BIDS FROM: (A) LAKEVIEW LEASING FOR A 2 YEAR FINANCING LEASE OF $40,137 FOR 4 SEMI-ANNUAL PAYMENTS; (B) SUNTRUST EQUIPMENT FINANCE & LEASING, CORP. FOR THE 10 YEAR FINANCING OF $433, FOR 10 ANNUAL PAYMENTS; 3. AUTHORIZE STAFF TO ACQUIRE THE EQUIPMENT IDENTIFIED AS CAPITAL ASSETS IN THE BUDGET, CONSISTENT WITH THE ABOVE FINANCING; 4. THAT THE EXECUTIVE DIRECTOR/CEO OR DESIGNEE BE AUTHORIZED TO EXECUTE THE NECESSARY DOCUMENTS. Two attachments: ATTACHMENT A ATTACHMENT B Equipment List Bid Tabulation Page 40 of 42

42 Attachment A Equipment List Quantity Total Amount Financed Description of Equipment Finance Period MAC Owns at End of Lease 1 $ 52,000 Airside Operations-Duel Fuel SUV 10 yrs Yes 1 $ 925,000 ARFF 3000 Gallon* 10 yrs Yes 2 $ 62,400 F-150 4X4 Super Cab PU 10 yrs Yes w/access. 1 $ 38,000 1 ton Crew Cab PU 2 Wheel Drive 10 yrs Yes 1 $ 34,800 4X4 Pickup Truck 10 yrs Yes 1 $ 25,000 Four-post Lift 10 yrs Yes 1 $ 910,000 HSMF Snow Removal* 10 yrs Yes 1 $ 52,000 Small Roller 10 yrs Yes 1 $ 86,000 Flat-bed Truck w/attenuator 10 yrs Yes 2 $ 564,000 Airfield Sander/Liquid Deicer 10 yrs Yes 1 $ 44,000 Skidsteer 10 yrs Yes 1 $ 225,000 Heavy-duty Road Truck 10 yrs Yes 1 $ 95,000 Small Sander/Deicer 10 yrs Yes 1 $ 845,000 High Speed Runway Snowblower 10 yrs Yes Sub-total $3,958,200 1 $ 180,000 Sweeper Lease 2 yrs No Sub-total $ 180,000 Total $4,138,200 *ARFF = Aircraft Rescue Fire Fighting Truck *HSMF = High Speed Multi-Function Snow Removal Vehicle Page 41 of 42

43 Attachment B Bid Tabulation BIDDER NAME 2 YEAR SWEEPER LEASE BMO Harris Bid Rejected PNC Equipment Finance $7, X 24 = $185, SunTrust $45, X 4 = $182, Lakeview Leasing $40, X 4 = $160, Low Bid shown in Bold. BIDDER NAME 10 YEAR FINANCING TO OWN BMO Harris $223, X 20 = $4,466, Capital One $37, X 120 = $4,510, PNC Equipment Finance $37, X 120 = $4,546, SunTrust $433, X 10 = $4,333, Lakeview Leasing $39, X 120 = $4,747, Low Bid shown in Bold. Page 42 of 42