Meeting Minutes for:
Finance Committee Meeting
Yuma International Airport, Conference Room
Friday, May 05, 2023 at 12:00 PM
Call to Order:
The Yuma County Airport Authority, Inc. (YCAA) Finance Committee Meeting of the Board of Directors was called to order at 12:00PM on May 5, 2023, in the Yuma International Airport Conference Room, 2191 E. 32nd Street, Suite 218, Yuma, Arizona 85365. The Presiding officer was Stanley Gourley, Chairman.
YCAA FINANCE COMMITTEE MEMBERS PRESENT WERE:
Stanley Gourley, Chairman & YCAA Treasurer
Russell Jones, 2nd Vice President
Albert Gardner, Director
YCAA FINANCE COMMITTEE MEMBERS ABSENT WERE:
Dean Hager, 1st Vice President
ALSO PRESENT WERE:
Bill Craft, President
Ken Scott, Director
Gladys Brown, Airport Director
Gerald Hinkle, Jr., Chief Financial Officer
Andrea Lopez, Executive Assistant
Silvia Gunderman, 1st Bank Yuma (joined the meeting at 12:03PM)
CALL TO THE PUBLIC
There were no Public Comments.
1) Finance Committee discussion and overview of FY23 Year to Date Budget through March of 2023.
Ms. Brown, Airport Director, explained the YTD FY23 Budget is presented each month at our regular Board of Director meetings and went over the latest financial presentation which is slated to be provided at the May regular meeting of the Board of Directors. There was a brief discussion related to a few line items and Ms. Brown described her expectations moving into the third quarter of the fiscal year.
2) Finance Committee discussion and possible recommendation related to the establishment of a Revolving Line of Credit with 1st Bank Yuma.
Ms. Brown, Airport Director, described how she had met with Silvia Gunderman of 1st Bank Yuma on April 12, 2023 along with Junior Hinkle, YCAA’s Chief Financial Officer, to discuss YCAA’s intent to explore the possibility of providing capital project management services for the Yuma Proving Ground and at the Finance Committee’s request, investigated the possibility of obtaining a line of line of credit (LOC) secured by the YCAA’s $2 Million certificate of deposit. Ms. Brown described how the intent of the LOC would be to assist with cash flows in the case the YCAA experienced delayed installment payments from YPG and needed capital to satisfy local contractors. Mr. Hinkle, the Airport Chief Financial Officer described the revolving line of credit, and the terms offered by 1st Bank Yuma can be described as a “CD secured business purpose loan” which include:
- Maximum Amount: 95% of CD principal amount or $1,900,000
- Rate: Fixed at 3% over the CD rate or 6.93%
- Payments: Interest due monthly, principal due upon maturity of the CD (2/24/2024)
- Term: Matures on February 24, 2024
- Collateral: CD Held by 1st Bank Yuma
- Fee: $150
After describing the favorable terms included in the offer, Mr. Hinkle told the Committee that the LOC could be established in a matter of weeks and how the amount available would provide ample funds to cover any cash flow issues that may arise.
A discussion ensued regarding the terms offered, whether the LOC would be necessary and how the YCAA would ensure that the cost of borrowing would be considered in the project management fee.
It was the consensus of the Committee to recommend to the Board of Directors that this LOC be established through Board action only after the YCAA had demonstrated a need to do so and emphasized utilization of airport Capital Reserves to fill the gaps when possible.
Ms. Brown, Airport Director, then briefed the Committee on the status of an existing $1.5 Million Line of Credit with 1st Bank Yuma that was established years ago and is restricted to transactions related to ADOT funded capital improvement grants. This LOC was established to cover dramatic delays in grant reimbursements from ADOT, but has not been used in several years. Ms. Brown described the terms of this existing LOC as follows:
- Draws supported by evidence of ADOT Grant Reimbursement Request
- Interest due monthly at an annual rate of Prime plus 1%. (9.5% today)
- Principal of each draw due 6 months from date of the draw
- LOC expires in 2038 (15 years left)
- No annual fees
Ms. Brown described how it is unlikely that the YCAA will need this LOC in the next few years, but there is no cost incurred by keeping it in place and the bank has not requested any action be taken due to inactivity. After a brief discussion, the Committee came to a consensus on recommending that no action be taken in regards to this existing line of credit.
3) Finance Committee discussion and overview of the YCAA’s Capital Reserves.
Ms. Brown, Airport Director, provided a summary of recent changes in the YCAA’s balance in its capital reserves as a result of airport operations, early retirement of debt and investment into a certificate of deposit. After the presentation which included a graphic representing historical levels of capital reserves held by the YCAA and information on recent fluctuations a discussion ensued as to what appeared to be excess revenues generated by the airport being pushed into its capital reserves.
Mr. Gardner expressed his desire to ensure that the YCAA be vigilant in determining if the airport is generating more revenues than it needs to meet its obligations. Mr. Gardner continued by adding that reducing the airport’s rates and charges should be considered if this is the case. Mr. Jones emphasized the airport’s need to accumulate capital reserves necessary to meet future infrastructure investments and continue to provide quality upkeep of existing facilities. Ms. Brown reminded Mr. Gardner that the discussion related to establishing the rates and charges necessary to continue operations occurs annually as part of the fiscal budget process. She continued by describing how the FY23 Annual Budget, as a result of reduced debt service requirements, refrained from imposing any increases in rental charges imposed on GA T-Shade/Hangar tenants, the airports signatory commercial airline or its rent car agencies despite operating in an environment of 9% inflation.
As the discussion came to a close, Mr. Hinkle informed the Committee that the annual budget process requires that revenues match expenditures and any excess revenues, or expenditures were inadvertent in nature as a result of changing conditions and discrepancies between estimates and actual results.
4) Finance Committee discussion and possible recommendation to adopt the Yuma International Airport 2024 - 2028 and Rolle Airfield 2025- 2029 Airport Capital Improvement Plan (ACIP) as presented.
Ms. Brown, Airport Director, described the planning process necessary to obtain this FAA capital improvement funding which involves the development of an Airport Capital Improvement Program (ACIP) which is reviewed and ultimately approved by each grantor agency. She provided the Committee with the most recent schedule of estimated project costs and anticipated funding requests for both the Yuma International Airport and Rolle Airfield. A brief discussion ensued related to a couple of projects included and how their progress would be scheduled.
5) Finance Committee discussion on YCAA Upcoming Projects.
Ms. Brown, Airport Director, provided an update on upcoming airport capital improvement projects to include the Rehabilitation of Taxiway F1, and the Replacement of Passenger Terminal Flooring System.
6) Finance Committee discussion and possible recommendation on general matters related to the operational finances of the YCAA.
Ms. Brown, Airport Director, provided insight into the operational finances of the YCAA. She explained the YCAA’s FY23 Operating Budget is on track. Ms. Brown stated YCAA Staff is in the process of investigating the possible investment into a couple of needed upgrades to include the replacement of the passenger terminal fire alarm system and the replacement of the airports master security system.
Ms. Brown, then described two different grants received during the COVID Pandemic that were intended to benefit the airports concessionaires by reimbursing the airport for providing them rent relief. She then described how the first such grant (FAA Grant AIP-43) in the amount of $21,520 was implemented immediately by the YCAA through providing rent relief to eligible concessionaires in November of 2021. Ms. Brown then turned to Mr. Hinkle, the airport’s Chief Financial Officer, to describe difficulties encountered in getting reimbursed.
After describing the two-year attempt (still not successful) at meeting the requirements set for getting reimbursed for the $21,520 of rent relief provided in accordance with AIP-43, Mr. Hinkle began describing how the second concessionaire relief grant (FAA Grant AIP-45) contained expanded eligibility requirements and onerous stipulations that would likely take in excess of 100 staff hours to accomplish. Mr. Hinkle then reminded the Committee that the amount of rent relief provided in AIP-45 was almost $90,000 which had to be provided before being requested for reimbursement. Due to YCAA’s experience with AIP-43, staff expects to encounter significant delay in getting reimbursed, and possible not at all.
Ms. Brown described how the difficulties encountered matched those of other airports, and shared how a number of them have decided to hold off on activity or even return these grants unused. She further described a recent inquiry by the FAA as to whether the airport intends to draw on each of the grants. She expressed how this inquiry was unusual since each grant has a four-year period to perform and may be a reflection of the FAA experiencing an overall hesitancy by airports to act due to onerous compliance requirements combined with making administrative costs ineligible for reimbursement leaving the task to airport staff. Ms. Brown described the airport’s response to the initial inquiry related to AIP-43 which included details on attempts at drawing down the grant including how attempt number four has been under consideration by the FAA for more than eight weeks to date.
Ms. Brown, described that the Committee may wish to decline or return FAA Grant AIP-45 considering recent experience and provided reasons for doing so such as:
- The risk of providing almost $90,000 in rent relief without timely reimbursement, if at all.
- Unlike other AIP Grants, administrative costs to administer AIP-45 are NOT eligible for reimbursement. This means if we hire a consultant to relieve staff of the administrative burden, it will be at our own cost.
- The administrative burden of compliance being dramatic.
It was the consensus of the Committee to recommend that the Board of Directors authorize necessary action to return FAA AIP Grant AIP-45.
There being no further business before the Committee the meeting adjourned at 1:41PM.
|// Approved //|
Treasurer, Yuma County Airport Authority; Finance Committee Chairman
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