Page 1


COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal years ended June 30, 2017

Birmingham Airport Authority, Birmingham, AL Prepared by the Birmingham Airport Authority


COMPREHENSIVE ANNUAL FINANCIAL REPORT 2017

1


LAUDERDALE Pickwick Lake

Florence

LIMESTONE

Muscle Shoals

Tuscumbia

Wheeler Lake

Huntsville

65

MADISON

65

Athens

Sheffield

JACKSON

Huntsville Madison 565

COLBERT

Scottsboro Decatur

LAWRENCE

Russellville

FRANKLIN

DeKALB

MORGAN

Hartselle

Guntersville Lake

Fort Payne

20/59

Guntersville

Arab

MARSHALL

Weiss Lake

Albertville

Hamilton

WINSTON

MARION

Boaz

Cullman

59

CULLMAN

Lewis Smith Lake

Winfield

759

BLOUNT

Gadsden Jacksonville

WALKER

FAYETTE Fayette

Center Gardendale Point*

JEFFERSON

Birmingham

Trussville* Irondale*

Forestdale*

Hueytown*

Homewood*

Bessemer*

20

Oxford

20

Pell City

Mountain Brook Vestavia Hills Meadowbrook

Talladega

TALLADEGA

Chelsea

Pelham

Helena*

Anniston

Hoover

SHELBY

Alabaster 359

RANDOLPH

CLAY

Sylacauga

Tuscaloosa

Calera

BIBB

20 59

TALLAPOOSA

Brent

COOSA

65

GREENE

Alexander City

CHAMBERS

Martin Lake

CHILTON

59

CLEBURNE

Anniston

Moody

Hoover*

459

Northport* Tuscaloosa*

Saks

Leeds* Birmingham* Fairfield

TUSCALOOSA

CALHOUN

ST. CLAIR

Clay*

Fultondale

Pleasant Grove*

PICKENS

Gadsden

Rainbow City Southside*

Jasper

LAMAR

CHEROKEE

ETOWAH

65

22

Clanton Valley

HALE PERRY

Opelika

Marion

ELMORE

Livingston

AUTAUGA

SUMTER Demopolis

Auburn

85 LEE

Millbrook Prattville

Selma

MONTGOMERY*

Phenix City

85

Tuskegee

MACON DALLAS

Montgomery

MARENGO

RUSSELL

MONTGOMERY

LOWNDES

BULLOCK CHOCTAW WILCOX Eufaula

Thomasville

BARBOUR

PIKE

Greenville

Troy

BUTLER

65

CLARKE

MONROE

CRENSHAW

65

Jackson*

HENRY

Monroeville

CONECUH

Ozark Evergreen

WASHINGTON

COFFEE

Andalusia

DALE

Enterprise

COVINGTON

Atmore

Citronelle

Bay Minette Saraland

MOBILE

HOUSTON Brewton

Prichard

BALDWIN

165

Mobile

Daphne

Mobile

Tillmans Corner

Fairhope

10 10

Foley

Mobile Bay

Gulf Shores

Dothan

ESCAMBIA GENEVA


December 11, 2017  Board of Directors  Birmingham Airport Authority  5900 Messer Airport Highway  Birmingham, Alabama 35212    Ladies and Gentlemen:    It is our pleasure to present the Comprehensive Annual Financial Report (CAFR) of the Birmingham Airport  Authority (“the Authority”), for the fiscal year ended June 30, 2017. Responsibility for both the accuracy  of  the  data  and  completeness  and  fairness  of  the  presentation,  including  all  disclosures,  rests  with  management  of  the  Authority.  To  the  best  of  our  knowledge  and  belief  the  enclosed  information  is  accurate and complete in all material respects and reported in a manner designed to present fairly the  financial  position,  results  of  operations,  and  cash  flows  in  accordance  with  the  Generally  Accepted  Accounting Principles (GAAP).    GAAP requires that management provide a narrative overview and analysis to accompany the financial  statements  in  the  form  of  a  Management’s  Discussion  and  Analysis  (MD&A).  This  letter  of  transmittal  should be read in conjunction with the MD&A, which can be found immediately following the report of  the independent auditors in the financial section of the CAFR. 

Organization The Authority is an independent authority of the City of Birmingham (“the City”) that was established in  June 1986. Birmingham‐Shuttlesworth International Airport (“the Airport”) is operated by the Authority  pursuant to a 50‐year lease (“the City Lease”), which became effective on September 16, 1986 and expires  on September 15, 2045. Under the terms of the City Lease, all real property acquired by the Authority is  conveyed to the City and becomes subject to the terms and conditions of the City Lease. The Authority is  governed by a seven‐member Board of Directors (“the Board”). The Board appoints a President and CEO  to serve as chief operating officer. Directors of the Board are nominated by the Mayor of the City and  appointed by the City Council. Directors are appointed to staggered six‐year terms. The Mayor is a non‐ voting ex‐officio director. The current members of the Board are Michael H. Bell (Chairperson), G. Ruffner  Page,  Jr.,  Robert  Earl  Kelly,  John  McMahon  III,  Aaisha  Muhammad,  Christopher  Johnson  and  Randall  Woodfin (Mayor Ex Officio Member).    The operations and improvements at the Airport are funded by airport user charges, Passenger Facility  Charges  (PFCs),  Customer  Facility  Charges  (CFC’s),  bond  funds,  and  funds  received  from  the  Federal  Aviation Administration (FAA) and the Transportation Security Administration (TSA). No general tax fund 


revenues are  used  to  operate  or  maintain  the  Airport.  Mr.  Al  Denson,  President  and  Chief  Executive  Officer,  has  overall  responsibility  for  the  management,  administration,  and  planning  of  organizational  activities  for  the  Authority.  Mr.  Denson  has  an  experienced  staff  to  aid  him  in  carrying  out  the  responsibilities of the position.    The City Lease requires that the annual operating budget and the five‐year capital improvement budget  of the Authority be submitted to the Mayor of the City and the City Council for approval. The Authority  maintains financial records in accordance with generally accepted accounting principles and practices and  is subject to an independent audit at any time at the discretion of the City. On June 1, 1990, the City Lease  was amended such that the Authority’s financial obligation under the City Lease was subordinated to any  pledge of the Authority of its revenues to secure any indebtedness.   

Economic Conditions  The  City  of  Birmingham  area  continues  to  show  the  effects  of  the  slow  recovering  economy.  The  Birmingham‐Hoover Metropolitan Statistical Area unemployment rate for June 2017 was 4.7%, which was  above the State of Alabama and the national rates of 4.6% and 4.4%, respectively.    The primary service region for the Airport, the seven‐county Birmingham‐Hoover ‐ Metropolitan Statistical  Area  ("MSA"),  has  a  diverse  economic  base  and  is  the  principal  center  of  finance,  trade,  health  care,  manufacturing, transportation, and education in the State of Alabama.  The MSA includes the following  seven counties, ordered based on population size (largest to smallest): Jefferson, Shelby, St. Clair, Walker,  Blount, Chilton, and Bibb. Jefferson County, which has an estimated population of approximately 661,000  in 2017, is the center of the seven‐county Birmingham‐Hoover Metropolitan Statistical Area (MSA), which  covers 6,145 square miles. Birmingham, the State’s largest city and the  county seat, has an estimated  population of approximately 210,000 in 2017.    With over 2.6 million passengers annually, the Airport is Alabama’s busiest commercial service airport.  Currently, the Airport is served by four major airlines providing travelers with 112 daily flights and service  to 18 airports in 15 cities. In addition to these passenger carriers, the Airport is served by three all‐cargo  operators: Federal Express (FedEx), Mountain Air, and United Parcel Service (UPS). Combined with the  “belly”  cargo  transported  by  the  passenger  airlines,  more  than  85,000  tons  of  landing  weight  is  attributable  to  cargo  at  the  Airport  each  year.  The  Airport  also  receives  significant  activity  by  General  Aviation (GA) aircraft. Of the 94,000 operations reported for FY 2017, 40% were categorized as general  aviation activity. GA is a broad classification covering all aviation activity other than scheduled commercial  service and military aviation. General aviation activity therefore covers a range that includes a personal,  business, training, and emergency service activity.   

Major Initiatives and Development  The Authority’s five‐year Capital Improvement Plan (CIP) for fiscal years 2018 – 2022 has appropriation  requirements of approximately $159 million dollars, with 8.4% of appropriations planned for fiscal year 


2018 as of June 30, 2017. This CIP was developed in conjunction with the master plan study currently  being completed. Future improvements will be funded with airport funds, proceeds from new bond issues,  FAA and other grants, passenger facility charges, and rental car customer facility charges. The Authority  continually reviews its CIP to address changing economic and air traffic demands, operating conditions,  and assessments of facility condition.    The Authority is proceeding with the planning, procurement, and design of a new Rental Car Quick Turn  Around  Facility  (QTA).  The  new  QTA  facility  is  projected  to  be  completed  by  2019  and  will  include  maintenance and washing bays, staging areas for fleet management, and administration space for all four  rental car brand families operating at the airport. Currently, the rental car agencies are meeting these  obligations at non‐contingent locations near the economy parking lot.  

Financial Information  Management’s  Discussion  and  Analysis  (MD&A),  starting  on  page  20,  summarizes  the  Authority’s  Statements  of  Net  Position  and  Statements  of  Revenues,  Expenses,  and  Changes  in  Net  Position  and  reviews the changes from the beginning to the end of fiscal year 2017 as well as certain comparisons of  the current year to the prior year. The actual financial statements and related footnotes are presented on  pages 28 to 69. The information contained in the MD&A should be considered in conjunction with the  information contained in this report.  

Internal Control Structure Framework  The  financial  statements  of  the  Authority  are  prepared  following  U.S.  generally  accepted  accounting  principles applicable to governmental unit enterprise funds. This results in financial statements prepared  on  the  full  accrual  basis.  Internal  control  is  a  process  affected  by  an  entity’s  governing  board,  management,  and  other  personnel  and  designed  to  provide  reasonable  assurance  regarding  the  achievement  of  objectives  in  the  following  categories:  (a)  safeguarding  of  assets  from  loss  from  unauthorized  use  or  disposition;  (b)  execution  of  transactions  in  accordance  with  management’s  authorization;  (c)  reliability  of  financial  records  for  preparing  financial  statements  and  maintaining  accountability for assets; (d) effectiveness and efficiency of operations; and (e) compliance with applicable  laws and regulations, including contracts and grant agreements.     Internal controls, no matter how well designed and operated, can provide only reasonable assurance to  management and the  board regarding  achievement of an entity’s control objectives. The  likelihood of  achievement is affected by limitations inherent to internal control. Such limitations include:  

• Human judgment in decision‐making can be faulty;   • Breakdowns in internal controls can occur due to errors or mistakes;   • Controls can be circumvented by the collusion of two or more people or management override  of internal controls;  


• Costs of an entity’s internal controls should not exceed the benefits that are expected to be  derived; and   • Custom, culture and the corporate governance system inhibit irregularities by management, but  they are not absolute deterrents.  

All  internal  control  evaluations  occur  within  the  above  framework.  We  believe  that  the  Authority’s  internal controls adequately meet the objectives listed above and have devoted considerable time this  past  year  to  attract  and  retain  individuals  in  our  Finance  Department  who  embrace  the  concept  of  a  healthy internal control environment.   

Independent Audit  Our independent auditors, Banks, Finley, White & Co., audit the financial statements of the Authority each  year. The financial section of this report includes the independent auditor’s report on the basic financial  statements.     The Authority is required to undergo an annual Single Audit in conformity with the provisions of the Single  Audit  Act  of  1984,  the  U.S.  Office  of  Management  and  Uniform  Administrative  Requirements,  Cost  Principles,  and  Audit  Requirements  for  Federal  Awards  2  CFR  200,  “Audits  of  State  and  Local  Governments”. All schedules and reports required under these federal and state regulations are included  in the compliance section of this report. 

Respectfully Submitted,            Al Denson, A.A.E.  President and Chief Executive Officer            Sylvester Lavender, CPA  Director of Finance  Authority Treasurer       


Administrative Clerk

Acquisition & DBE Manager

Receptionist

Employment Officer

Human Resources Generalist

Human Resources Administrator

IT Technician III

Electronic Technician

IT Help Desk Support

Information Technology Telecommunications

IT & Telecommunications Administrator

Secretary

Airport Engineer Landside

Parking Operations Supervisor

Assistant Parking Operations Manager

License Plate Recognition Clerk

Cashier

Public Relations & Marketing Manager

Purchasing Clerk

Auditor

Accounting Clerk II

Revenue Analyst

Financial Project Manager

Senior Staff Accountant

Controller

Taxi Starter

Shuttle Driver

Operations Specialist I

Building Service Worker

Custodial Supervisor (Department Total 39)

Secretary

Operations Specialist II

Operations Supervisor

Operations Badge Clerk

Operations Badge Coordinator

Sr. DBE & Properties Manager

Airport Planner

Senior Airport Planner

Operations Manager

Director of Operations & Planning (Department Total 47)

Marketing Specialist

Secretary

Executive Assistant

Director of Finance (Department Total 20)

Parking Operations Manager (Department Total 11)

Airport Engineer Airside

Secretary

Office of President & CEO (Department Staff Total 3)

Project Manager

Director of Engineering & Development (Department Staff Total 5)

Administrative Clerk

Director of Administration Services (Department Total 12)

Legal Secretary

Chief Legal Officer and General Counsel

Board of Directors

Birmingham Airport Authority Organizational Chart

Vehicle Service Coordinator

Inventory & Receiving Clerk

Assistant Automotive Mechanic

Automotive Mechanic

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Maintenance Repair Worker

HVAC Maintenance Specialist

Painter

Electricians Semi-Skilled Laborers Equipment Operators

Facilitates Supervisor

Administrative Clerk

Maintenance Supervisor

Director of Facilities (Department Total 65)

Effective August 1, 2017


BIRMINGHAM AIRPORT AUTHORITY Management's Discussion and Analysis (Unaudited) Fiscal Years Ended June 30, 2017, 2016, and 2015 The following Management Discussion and Analysis (MD&A) of the Birmingham Airport Authority ("the Authority") presents a narrative overview of the financial activities of the Authority, which operates the Birmingham-Shuttlesworth International Airport (“the Airport�), for the fiscal years ended June 30, 2017, 2016, with selected comparative information for the fiscal year ended June 30, 2015. Following this MD&A are the basic financial statements of the Authority and the notes to the financial statements. The report includes the following three basic financial statements: the statements of net position, the statements of revenues, expenses and changes in net position, and the statements of cash flows. The accompanying notes to the financial statements are essential to a full understanding of the data contained in the financial statements. AIRPORT ACTIVITIES AND HIGHLIGHTS Activities at the Airport during Fiscal Year 2017 increased by 2.0% for Air Carrier Landing Weight. Enplanements, Total Passengers, and Air Carrier Operations fell by (1.0%), (1.0%), and (2.0%) respectively. Several of the most common indicators of activity during fiscal years 2017, 2016, and 2015 appear below: 2017

2016

2015

Enplanements % increase / (decrease)

1,336,065 (1.0%)

1,349,032 1.4%

1,330,235 1.7%

Total Passengers % increase / (decrease)

2,668,010 (1.0%)

2,694,995 1.2%

2,662,197 1.9%

37,706 (2.0%)

38,492 2.3%

37,630 0.9%

1,656,428 2.0%

1,624,706 (0.6%)

1,635,170 (0.4%)

Air Carrier Operations % increase / (decrease) Air Carrier Landing Weight % increase / (decrease)

Most of these decreases are attributed to the Birmingham area economy lagging behind the national economy with a job growth rate of (1.0%). As of June 30, 2017, four major passenger carriers, ten regional carriers, and three regularly scheduled all-cargo carriers served the Airport.

3


BIRMINGHAM AIRPORT AUTHORITY Management's Discussion and Analysis (Unaudited) (continued) Fiscal Years Ended June 30, 2017,2016, and 2015 FINANCIAL OPERATIONS HIGHLIGHTS The increase in net position for 2017 was $3.2 million as compared to $5.8 million in 2016 and $8.9 million in 2015. 

Operating Revenues decreased by (0.5%) from $44 million in 2016 to $43.8 million in 2017. Applicable airline user revenues increased by 2.1%. Concession fees increased by 5%. Ground hangar rentals decreased by (5.9%).

Operating Expenses before depreciation and amortization decreased by (4.4%) from $30.2 million in 2016 to $28.9 million in 2017. Operating expenses increased for personnel costs, security and fire protection, materials and supplies, and repairs and maintenance. They decreased for pension expense, utilities, professional services, and other services.

The net result of the above was operating income before depreciation and amortization increased from $13.8 million in 2016 to $14.9 million in 2017 or 8.0%. The operating loss before non-operating revenues and expenses decreased from ($2.5) million in 2016 to ($2.4) million in 2017.

Non-Operating Revenues and Expenses, net decreased from $695 thousand in 2016 to $681 thousand in 2017.

Capital contributions received in the form of grants from the Federal government decreased from $7.6 million in 2016 to $4.9 million in 2017 due to a reduction in FAA funded capital projects.

SUMMARY OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

Operating revenues Operating expenses Total operating income before depreciation, amortization and non-operating revenues and expenses Depreciation and amortization Operating income (loss) before other nonoperating revenues and expenses Non-operating revenues and expenses, net Income (loss) before capital contributions from federal agency Capital contributions from federal agency Increase in net position Total net position, beginning of the year-restated (Note 19) Total net position, end of the year

2017

2016

2015

$ 43,829,278 (28,908,956)

$ 44,046,195 (30,225,569)

$ 44,053,522 (27,485,962)

14,920,322 (17,342,863)

13,820,626 (16,311,707)

16,567,560 (15,572,715)

(2,422,541) 680,885

(2,491,081) 694,680

994,845 1,077,460

(1,741,656) 4,937,446 3,195,790

(1,796,401) 7,600,907 5,804,506

2,072,305 6,844,392 8,916,697

431,839,367 $ 435,035,157

426,034,861 $ 431,839,367

417,118,164 $ 426,034,861

4


BIRMINGHAM AIRPORT AUTHORITY Management's Discussion and Analysis (Unaudited) (continued) Fiscal Years Ended June 30, 2017,2016, and 2015 FINANCIAL POSITION SUMMARY The statements of net position present the financial position of the Authority. The statements include all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position of the Authority. A summary comparison of the Authority’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position at June 30, 2017, 2016, and 2015 is as follows:

ASSETS Current assets Non-current assets Total assets DEFERRED OUTFLOWS OF RESOURCES TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES LIABILITIES Current liabilities Non-current liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES NET POSITION Net investment in capital assets Restricted Unrestricted Total net position TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION

2017

2016

2015

$ 110,208,497 535,130,387 645,338,884

$ 99,132,488 546,546,871 645,679,359

$ 87,793,625 555,782,029 643,575,654

13,190,592

17,858,527

4,142,871

$ 658,529,476

$ 663,537,886

$ 647,718,525

$ 13,319,297 200,986,374 214,305,671

$ 13,251,079 218,447,440 231,698,519

$ 14,846,064 206,837,600 221,683,664

9,188,648

-

-

353,534,611 42,945,084 38,555,462 435,035,157

358,269,422 42,688,471 30,881,474 431,839,367

361,560,555 37,294,907 27,179,399 426,034,861

$ 658,529,476

$ 663,537,886

$ 647,718,525

Net position may serve over time as a useful indicator of the Authority’s financial position. The Authority’s net position exceeded liabilities by $435 million at June 30, 2017, a $3.2 million increase from June 30, 2016. The largest portion of the Authority’s net position (81% at June 30, 2017) represents its investment in capital assets (e.g., land, buildings, infrastructure improvements, 5


BIRMINGHAM AIRPORT AUTHORITY Management's Discussion and Analysis (Unaudited) (continued) Fiscal Years Ended June 30, 2017,2016, and 2015 and equipment), less the amount of related debt outstanding. The Authority uses these capital assets to provide services to its passengers and visitors to the Airport; consequently, these assets are not available for future spending. Although the Authority's investment in its capital assets is reported net of related debt, it is noted that the resources required to repay this debt must be provided annually from operations. An additional portion of the Authority's net position (10% at June 30, 2017) represents bond reserve funds, passenger facility charges, and federal grant contributions that are subject to restrictions and federal regulations. The remaining unrestricted net position (9% at June 30, 2017) may be used to meet any of the Authority's ongoing obligations. The Authority is required by certain agreements to maintain two months of operating expenses on hand which is included in the total of unrestricted net position. AIRLINE RATES AND CHARGES From January 1, 2006 until March 1, 2009, the airlines operated without an agreement in place, but were charged rental rates and landing fees based on the methodology contained in the expired agreement. On March 1, 2009, the Authority changed its rate setting methodology to an approach of crediting the Airport’s terminal cost center with 25% of all terminal building non-airline revenues, and calculating landing fees based on a full compensatory methodology. From July 1, 2011 until August 14, 2016, the Authority entered into a new agreement with each of the six major airlines serving Birmingham. Under the terms of the agreement, the airlines will be charged full compensatory landing fee rates for the airfield, and will be charged commercial compensatory rates for the terminal building reduced by a 35% non-airline terminal building revenue credit. Effective August 15, 2016, the Authority entered into a new five-year agreement with each of the four major airlines serving Birmingham. Under the terms of the agreement, the airlines will be charged full compensatory landing fee rates for the airfield, and will be charged commercial compensatory rates for the terminal building reduced by a 35%-50% non-airline terminal building revenue credit depending on the Capital Improvement Fund balance. The new agreement contains an end of term option that allows for a renewal of an additional five years. 2017

2016

2015

$6,355,239 692,343 9,266,125

$6,381,759 699,327 9,095,656

$6,863,627 744,868 9,045,201

Total Signatory Airline Charges

$16,313,707

$16,176,742

$16,653,696

Airline Cost per Enplaned Passenger

$12.21

$11.99

$12.52

Terminal Building Charges Aircraft Parking Charges Landing Fees

6


BIRMINGHAM AIRPORT AUTHORITY Management's Discussion and Analysis (Unaudited) (continued) Fiscal Years Ended June 30, 2017,2016, and 2015 The airline cost per enplaned passenger is calculated by adding all the airport charges to the airlines during a fiscal year and dividing that sum by the number of passengers enplaned by the airlines during the twelve-month period. CHANGES IN NET POSITION From July 1, 2016 to June 30, 2017, net position increased by $3.2 million or by 0.7%. From July 1, 2015 to June 30, 2016, net position increase by $5.8 million or by 1.4%. Operating revenue: Space rentals Concession fees - parking Concession fees - other Landing fees Fuel flowage Ground hangar rentals Other revenues Total operating revenues Operating expenses Personnel costs Pension expense Security and fire protection Utilities Professional services Materials and supplies Repairs and maintenance Other services Total operating expenses before depreciation and amortization Depreciation and amortization Total operating expenses Operating income (loss) before non-operating revenues (expenses) Non-Operating Revenues (Expenses): Passenger facility charges Customer facility charges Interest income Interest expense Gain on disposal of capital assets Insurance settlement Unrealized gain (loss) on investments (net) Total non-operating revenues Income (loss) before capital contributions from federal agency Capital contributions from federal agency Net Position: Increase in net position Total net position, beginning of the year-restated (Note 19) Total net position, end of the year

2017

2016

2015

$ 9,205,501 12,615,023 8,643,213 10,303,116 340,322 1,458,502 1,263,601 43,829,278

$ 9,273,080 12,984,370 8,783,938 10,114,416 327,774 1,545,886 1,016,731 44,046,195

$ 11,296,350 12,764,253 7,057,996 10,277,188 312,429 1,445,876 899,430 44,053,522

11,810,425 3,501,021 4,520,505 1,912,000 568,201 1,154,405 3,627,252 1,815,147

11,279,857 4,793,349 4,080,074 2,137,622 735,644 996,564 3,619,370 2,583,089

11,705,510 1,632,061 3,920,943 2,265,915 1,186,682 1,401,053 3,126,806 2,246,992

28,908,956 17,342,863 46,251,819

30,225,569 16,311,707 46,537,276

27,485,962 15,572,715 43,058,677

(2,422,541)

(2,491,081)

994,845

5,208,341 4,745,406 239,243 (9,572,401) 27,283 33,013 680,885

5,258,436 4,830,565 110,407 (9,606,613) 110,000 (8,115) 694,680

5,241,743 4,725,271 130,593 (9,011,341) (8,806) 1,077,460

(1,741,656) 4,937,446

(1,796,401) 7,600,907

2,072,305 6,844,392

3,195,790

5,804,506

8,916,697

431,839,367 $435,035,157

426,034,861 $431,839,367

417,118,164 $426,034,861

7


BIRMINGHAM AIRPORT AUTHORITY Management's Discussion and Analysis (Unaudited) (continued) Fiscal Years Ended June 30, 2017,2016, and 2015 SUMMARY OF CASH FLOW ACTIVITIES The following shows a summary of the major sources and uses of cash and cash equivalents for the past three years. Cash and cash equivalents are considered cash-on-hand, bank deposits and highly liquid investments with an original maturity of three months or less:

Cash Flow from Operating Activities Cash Flow from Capital and Related Financing Activities Cash Flow from Investing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents: Beginning of the Year End of the Year

2017

2016

2015

$18,491,783

$16,167,886

$14,307,425

(6,186,140) (5,490,955)

(5,560,086) 3,163,191

(13,008,195) 974,322

6,814,688

13,770,991

2,273,552

74,437,666

60,666,675

58,393,123

$81,252,354

$74,437,666

$60,666,675

The Authority's available cash and cash equivalents increased from $74.4 million at the end of 2016 to $81.3 million at the end of 2017 due primarily to the final reimbursement for the Terminal Modernization Project from the FAA. FINANCIAL STATEMENTS The Authority's financial statements are prepared on an accrual basis in accordance with U.S. generally accepted accounting principles promulgated by the Governmental Accounting Standards Board (GASB). The Authority is structured as a proprietary fund with revenues recognized when earned and expenses are recognized when incurred. Capital assets are capitalized and (except land and construction in progress) are depreciated over their useful lives. Amounts are restricted for debt service and, where applicable, for construction activities. See the notes to the financial statements for a summary of the Authority's significant accounting policies. CAPITAL ACQUISITIONS AND CONSTRUCTION ACTIVITIES During 2017, the Authority expended $5.5 million on capital activities. Major capital activities were as follows: QTA Land Acquisition - $4.3 million, runway and taxiway improvements - $512 thousand, Master Plan - $261 thousand, and other projects - $409 thousand.

8


BIRMINGHAM AIRPORT AUTHORITY Management's Discussion and Analysis (Unaudited) (continued) Fiscal Years Ended June 30, 2017,2016, and 2015 Capital asset acquisitions and improvements, exceeding $5,000 are capitalized at cost. Acquisitions are funded using a variety of financing techniques, including federal grants with matching airport funds, passenger facility charges, debt issuance, and airport revenues. LONG-TERM DEBT OUTSTANDING In 2003, the Authority issued $20,820,000 of Series 2003-A Airport Revenue Refunding Bonds dated October 22, 2003, maturing annually from 2014 through 2023, with interest on a variable rate determined weekly. On December 1, 2009, the Authority reoffered the bonds with fixed interest rates ranging from 3.25 percent to 4.5 percent, with a net interest cost of 3.99 percent. 

Balance outstanding June 30, 2017 - $15,105,000; June 30, 2016 - $17,440,000; June 30, 2015 - $19,665,000

In 2007, the Authority issued $44,635,000 of Series 2007 Airport Revenue Refunding Bonds dated July 11, 2007, maturing annually from 2008 through 2026, with interest coupons ranging from 5.00 percent to 5.25 percent, with a net interest cost of 4.82 percent. 

Balance outstanding June 30, 2017 - $23,110,000; June 30, 2016 - $25,980,000; June 30, 2015 - $28,720,000

In 2010, the Authority issued $151,705,000 of Series 2010 Airport Revenue Bonds dated December 22, 2010, maturing annually from 2011 through 2040, with interest coupons ranging from 3.00 percent to 6.00 percent, with a net interest cost of 5.52 percent. 

Balance outstanding June 30, 2017 - $144,755,000; June 30, 2016 - $146,140,000; June 30, 2015 – 147,470,000

The total Authority debt outstanding at June 30, 2017, totals $182,970,000 compared to June 30, 2016 - $189,560,000; June 30, 2015 - $195,855,000 The underlying ratings of the Authority’s obligations for fiscal year 2017:

Fitch's Bond Rating Moody's Bond Rating

As of June 30, 2017 AA3

PASSENGER FACILITY CHARGE (PFC) The Authority initially received approval from the FAA to impose of PFC of $3.00 per enplaned passenger beginning August 1, 1997, not to exceed $7,657,558, principally to finance the rehabilitation of the main runway. Subsequently, the Authority requested and received approval to increase the charge per enplanement to $4.50, and to increase the total collection amount to $212,777,466. The Authority has used and will continue to use PFCs to finish the rehabilitation 9


BIRMINGHAM AIRPORT AUTHORITY Management's Discussion and Analysis (Unaudited) (continued) Fiscal Years Ended June 30, 2017,2016, and 2015 of the main runway, to pay for the rehabilitation of the air carrier apron, to relocate a sanitary sewer lift station, to remove obstructions from beyond the end of the main runway, and to design, construct and finance a terminal modernization program. The collection period is scheduled to end on February 1, 2031. Through June 30, 2017, the Authority has collected PFCs, including interest earnings thereon, totaling $95,196,631. For further details related to the current year activity, see the Schedule of Passenger Facility Charges in the Compliance Section of this report. REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the Authority's finances for all those interested. Questions concerning any of the information provided in this report or request for additional information should be addressed in writing to the Director of Finance, Birmingham Airport Authority, 5900 Messer Airport Highway, Birmingham, Alabama 35212, or call 205-5950533.

10


BIRMINGHAM AIRPORT AUTHORITY STATEMENTS OF NET POSITION BIRMINGHAM AIRPORT AUTHORITY For the years ended June 30, 2017 and 2016 STATEMENTS OF NET POSITION For the years ended June 30, 2017 and 2016 2017 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES ASSETS ANDASSETS DEFERRED OUTFLOWS OF CURRENT RESOURCES Unrestricted Assets: CURRENT ASSETS Cash and cash equivalents Unrestricted InvestmentsAssets: Cash andreceivable cash equivalents Grants Investments Accounts receivable (net of allowance for Grants receivable of $29,002 and $28,376 uncollectibles Accounts receivable of allowance for in 2017 and 2016,(net respectively) uncollectibles of $29,002 Other accounts receivable and $28,376 in 2017insurance and 2016, respectively) Prepaid Other accounts receivable Inventory PrepaidTotal insurance unrestricted assets Inventory Restricted Assets: Total unrestricted assets Funds: Passenger Facility Charges Restricted Assets: Cash and cash equivalents Passenger Charges Funds: AccountsFacility receivable Cash and cash equivalents Customer Facility Charges Funds: Accounts receivable Cash and cash equivalents Customer Charges Funds: AccountsFacility receivable Cash and cash equivalents Revenue Bond Reserve Funds: Accounts Cash andreceivable cash equivalents Revenue Bond Reserve Funds: Construction Bond Funds: Cash and cash equivalents Cash and cash equivalents Construction Bondreceivable Funds: Accrued interest Cash and cashrestricted equivalents Total assets AccruedTotal interest receivable current assets Total restricted assets Total current ASSETS assets NON-CURRENT

2017

2016 2016

$ 34,430,543 25,926,563 $ 34,430,543 25,926,563 -

$ 28,488,429 20,168,903 $ 28,488,429 876,944 20,168,903 876,944

836,648 36,676 836,648 519,720 36,676 292,764 519,720 62,042,914 292,764 62,042,914

1,505,157 4,765 1,505,157 468,723 4,765 249,349 468,723 51,762,270 249,349 51,762,270

1,624,848 736,515 1,624,848 736,515 15,935,402

1,402,123 750,876 1,402,123 750,876 15,375,908

606,666 15,935,402 606,666 28,827,856

669,335 15,375,908 669,335 28,545,636

28,827,856 433,705 591 433,705 48,165,583 591 110,208,497 48,165,583 110,208,497

28,545,636 625,570 770 625,570 47,370,218 770 99,132,488 47,370,218 99,132,488

535,130,387 535,130,387 535,130,387 645,338,884 535,130,387 645,338,884

546,546,871 546,546,871 546,546,871 645,679,359 546,546,871 645,679,359

Deferred refunding DEFERRED OUTFLOWS OF RESOURCES Deferred outflow of resources related to pension Deferred refunding Deferred outflow of resources to pension Total deferred outflowsrelated of resources

748,721 12,441,871 748,721 12,441,871 13,190,592

922,047 16,936,480 922,047 16,936,480 17,858,527

Total deferredAND outflows of resources TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES

13,190,592

17,858,527

$ 658,529,476

$ 663,537,886

Capital assets, net of accumulated depreciation NON-CURRENT ASSETS Total non-current assets Capital assets, net Total assetsof accumulated depreciation Total non-current assets Total assets DEFERRED OUTFLOWS OF RESOURCES

$ 658,529,476

See Accompanying Notes to the Financial Statements. See Accompanying Notes to the Financial Statements.

$ 663,537,886 11 11


BIRMINGHAM AIRPORT AUTHORITY BIRMINGHAM AIRPORT AUTHORITY STATEMENTS OF NET POSITION STATEMENTS OF NETJune POSITION For the years ended 30, 2017(continued) and 2016 For the years ended June 30, 2017 and 2016 ASSETS AND DEFERRED OUTFLOWS OF LIABILITIES, RESOURCESDEFERRED INFLOWS OF RESOURCES, AND NET POSITION CURRENT ASSETS CURRENT LIABILITIES Unrestricted Assets: Payable From Cash and cashUnrestricted equivalents Assets: and accrued expenses Accounts payable Investments Grants receivable Total payable from assets Accounts receivable (netunrestricted of allowance for uncollectibles of $29,002 and $28,376 Payable From Assets: in 2017 andRestricted 2016, respectively) Construction contracts payable Other accounts receivable Accrued payable Prepaidinterest insurance Current maturities of revenue bonds payable Inventory Total from restricted assets Totalpayable unrestricted assets Restricted Assets: Total current liabilities Passenger Facility Charges Funds: Cash and cash equivalents NON-CURRENT LIABILITIES Accounts receivable absences Compensated employee Customer Facility Charges Funds: Revenue bonds net of unamortized Cash and cashpayable, equivalents bond discount Accounts receivable Net pensionBond liability Revenue Reserve Funds: OPEB 19) Cash liability and cash(Note equivalents Construction Bond Funds: Total non-current liabilities Cash and cash equivalents Accrued receivable Totalinterest liabilities Total restricted assets TotalINFLOWS current assets DEFERRED OF RESOURCES Deferred inflow of resources related to pension NON-CURRENT ASSETS Capital assets, net of accumulated depreciation NET POSITION Total non-current Net investment in capital assets assets, net of related debt Total assets Restricted: For debt service DEFERRED Federal grantsOUTFLOWS and programsOF RESOURCES Deferred Total refunding restricted Deferred outflow of resources related to pension Unrestricted Total deferred outflows of resources Total net position TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION

2017 2017

$

$ 34,430,543 1,310,978 25,926,563 1,310,978

2016 2016

$

$ 28,488,429 981,662 20,168,903 876,944 981,662

836,648 292,117 36,676 4,786,202 519,720 6,930,000 292,764 12,008,319 62,042,914

1,505,157 747,066 4,765 4,932,351 468,723 6,590,000 249,349 12,269,417 51,762,270

13,319,297 1,624,848 736,515 529,385 15,935,402 175,556,677 606,666 23,193,736 1,706,576 28,827,856 200,986,374 433,705 214,305,671591 48,165,583 110,208,497 9,188,648

13,251,079 1,402,123 750,876 510,161 15,375,908 182,488,768 669,335 33,918,973 1,529,538 28,545,636 218,447,440 625,570 770 231,698,519 47,370,218 99,132,488 -

535,130,387 535,130,387 353,534,611 645,338,884 24,041,654 18,903,430 748,721 42,945,084 12,441,871 38,555,462 13,190,592 435,035,157

546,546,871 546,546,871 358,269,422 645,679,359 23,613,285 19,075,186 922,047 42,688,471 16,936,480 30,881,474 17,858,527 431,839,367

$ 658,529,476 $ 658,529,476

$ 663,537,886 $ 663,537,886

See Accompanying Notes to the Financial Statements. See Accompanying Notes to the Financial Statements.

11 12


BIRMINGHAM AIRPORT AUTHORITY BIRMINGHAM AIRPORT STATEMENTS OF NETAUTHORITY POSITION STATEMENTS OF REVENUES, AND CHANGES For the yearsEXPENSES, ended June 30, 2017 and 2016IN NET POSITION For the years ended June 30, 2017 and 2016 2017 2016 OPERATING REVENUES ASSETS AND DEFERRED OUTFLOWS OF Space rentals RESOURCES Concession fees - parking CURRENT ASSETS Concession fees - other Unrestricted Assets: Landing fees Cash and cash equivalents Fuel flowage Investments Ground hangar rentals Grants receivable Other revenues Accounts receivable (net of allowance for Total operating revenues

uncollectibles of $29,002 and $28,376 OPERATING EXPENSES in 2017 and 2016, respectively) Personnel costs receivable Other accounts Pension Prepaidexpense insurance Security and fire protection Inventory UtilitiesTotal unrestricted assets Professional services Restricted Assets: Materials and supplies Passenger Facility Charges Funds: Repairs and maintenance Cashservices and cash equivalents Other Accounts receivable Total operating expenses before depreciation Customer Facility Charges Funds: and amortization Cash and cash equivalents Depreciation and amortization Total operating expenses Accounts receivable Revenue Bond Reserve Funds: Operating before non-operating revenues (expenses) Cash andloss cash equivalents Construction Bond Funds: Cash and cash equivalents NON-OPERATING REVENUES (EXPENSES) Accrued interest receivable Passenger facility charges Total restricted assets Customer facility charges current assets Interest Total income Interest expense

2017

$

9,205,501 12,615,023 8,643,213 10,303,116 $ 34,430,543 340,322 25,926,563 1,458,502 1,263,601 43,829,278

836,648

2016

$

9,273,080 12,984,370 8,783,938 10,114,416 $ 28,488,429 327,774 20,168,903 1,545,886 876,944 1,016,731 44,046,195

1,505,157

11,810,425 36,676 3,501,021 519,720 4,520,505 292,764 1,912,000 62,042,914 568,201 1,154,405 3,627,252 1,624,848 1,815,147

11,279,857 4,765 4,793,349 468,723 4,080,074 249,349 2,137,622 51,762,270 735,644 996,564 3,619,370 1,402,123 2,583,089

28,908,956 15,935,402 17,342,863 46,251,819 606,666

15,375,908 16,311,707 46,537,276 669,335

(2,422,541) 28,827,856

(2,491,081) 28,545,636

433,705 591 5,208,341 48,165,583 4,745,406 110,208,497 239,243

625,570 770 5,258,436 47,370,218 4,830,565 99,132,488 110,407

736,515

750,876

30,225,569

NON-CURRENT ASSETS Gain on disposal of capital assets Capital assets, net Insurance settlement of accumulated depreciation Unrealized gain (loss) on investments (net) Total non-current assets Total revenues Totalnon-operating assets

(9,572,401) 535,130,387 27,283 33,013 535,130,387 680,885 645,338,884

(9,606,613) 110,000 546,546,871(8,115) 546,546,871 694,680 645,679,359

Loss before capital contributionsOF from DEFERRED OUTFLOWS RESOURCES federal agency Deferred refunding Deferred outflow of resources related to pension

(1,741,656) 748,721

(1,796,401) 922,047

Capital contributions from federal agency

Total deferred outflows of resources NET POSITION Increase in net position TOTAL ASSETSbeginning AND DEFERRED OUTFLOWS Total net position, of the year-restated (Note 19) OF RESOURCES

Total net position, end of the year

12,441,871

16,936,480

13,190,592

17,858,527

4,937,446 3,195,790 431,839,367

$ 658,529,476

$ 435,035,157

See Accompanying Notes to the Financial Statements. See Accompanying Notes to the Financial Statements.

7,600,907

5,804,506 426,034,861

$ 663,537,886

$ 431,839,367

11 13


BIRMINGHAM AIRPORT AUTHORITY BIRMINGHAM AIRPORT AUTHORITY STATEMENTS OF CASH STATEMENTS OF NETFLOWS POSITION ForFor the the years ended June 30, 30, 2017 andand 2016 years ended June 2017 2016 2017

CASH FLOWS FROM OPERATING ACTIVITIES ASSETS AND DEFERRED OUTFLOWS OF Cash received from customers and tenants RESOURCES Cash paid to suppliers for goods and services CURRENT ASSETS Cash paid for personnel costs Unrestricted Assets: Net cash provided by operating activities

Cash and cash equivalents Investments Grants receivable CASH FLOWS FROM CAPITAL AND RELATED AccountsACTIVITIES receivable (net of allowance for FINANCING uncollectibles $29,002 and $28,376 Proceeds from sale ofof capital assets Acquisition and construction of capital in 2017 and 2016, respectively)assets Receipts federalreceivable grants, passenger facility charges, Otherfrom accounts and customer facility Prepaid insurance charges Interest paid on capital debt Inventory Principal paid capital debt assets Totalonunrestricted Net cash (used for) capital and related financing activities Restricted Assets: Passenger Facility Charges Funds: CASH FLOWS FROM INVESTING ACTIVITIES Cashfrom and cash equivalents Proceeds the sale and maturities of investments Accounts receivable Interest received on investments Customer Facility Charges Funds: Purchase of investments Cash and cash equivalents Proceeds from insurance Accounts receivable Net cash provided by (used for) investing activities Revenue Bond Reserve Funds: Net increase in cash cash equivalents Cash and cashand equivalents Construction Bond Funds: Cash Cash and cash beginning of the year andequivalents, cash equivalents Accrued interest receivable Cash and cash equivalents, end of the year Total restricted assets Total current assets

Cash and cash equivalents – Unrestricted Assets Cash and cash equivalents – Restricted Assets

NON-CURRENT ASSETS Capital assets, net of accumulated depreciation Total non-current assets Total assets

2016

2017

2016

$ 44,465,875 (13,816,928) (12,157,164) 18,491,783

$ 43,699,961 (15,763,206) (11,768,869) 16,167,886

$ 34,430,543 25,926,563 -

$ 28,488,429 20,168,903 876,944

33,013 (5,580,353) 836,648

110,000 (6,748,413) 1,505,157

15,845,167 519,720 (9,718,550) 292,764 (6,765,417) 62,042,914 (6,186,140)

17,302,294 468,723 (9,746,210) 249,349 (6,477,757) 51,762,270 (5,560,086)

1,624,848 736,515 239,422

(5,757,660) 15,935,402 27,283 606,666 (5,490,955)

1,402,123 8,200,000 750,876 148,828 (5,185,637) 15,375,908 669,335 3,163,191

6,814,688 28,827,856

13,770,991 28,545,636

74,437,666 433,705

60,666,675 625,570

36,676

591 48,165,583 110,208,497

4,765

770 47,370,218 99,132,488

$ 81,252,354

$ 74,437,666

$ 34,430,543 46,821,811 $ 81,252,354

$ 28,488,429 45,949,237 $ 74,437,666

535,130,387 535,130,387 645,338,884

546,546,871 546,546,871 645,679,359

DEFERRED OUTFLOWS OF RESOURCES Deferred refunding Deferred outflow of resources related to pension

748,721 12,441,871

922,047 16,936,480

Total deferred outflows of resources

13,190,592

17,858,527

$ 658,529,476

$ 663,537,886

TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES

See Accompanying Notes to the Financial Statements. See Accompanying Notes to the Financial Statements.

14

11


BIRMINGHAM AIRPORT AIRPORT AUTHORITY AUTHORITY BIRMINGHAM STATEMENTSOF OFNET CASH FLOWS STATEMENTS POSITION For the years ended June 30, 2017 and 2016 2016 For the years ended June 30, 2017 and

RECONCILIATION OF OPERATING INCOME TO ASSETS AND DEFERRED OUTFLOWS OF NET CASH PROVIDED BY OPERATING ACTIVITIES RESOURCES Operating loss CURRENT AdjustmentsASSETS to reconcile operating loss to Unrestricted Assets: net cash provided by operating activities: Cash and cashand equivalents Depreciation amortization Investments Bad debt expense Change Assets, Deferred Outflows/Inflows of Resources, Grantsin receivable and Liabilities: Accounts receivable (net of allowance for Receivables (net) uncollectibles of $29,002 and $28,376 Other receivable in 2017 and 2016, respectively) Prepaid insurance and inventory Other accounts receivable Compensated employee absences Prepaid insurance Accounts payable and accrued expenses Inventory Net pension and OPEB liability and related deferred Total unrestricted assetsfor pension outflows/inflows of resources Restricted TotalAssets: adjustments

2017

2016

$ (2,422,540)

$ (2,491,081)

$ 34,430,543 17,342,863 25,926,563 626 -

$ 28,488,429 16,311,707 20,168,903 26,354 876,944

668,509 (31,911) 836,648 (94,413) 36,676 19,224 519,720 (125,634)

(365,966) 19,732 1,505,157 113,191 4,765 44,653 468,723 (1,750,388)

2017

2016

292,764 62,042,914 3,135,058

249,349 51,762,270 4,259,684

$ 1,624,848 18,491,783

$ 1,402,123 16,167,886

15,935,402 606,666

15,375,908 669,335

28,827,856

28,545,636

433,705 591 48,165,583 110,208,497

625,570 770 47,370,218 99,132,488

535,130,387 535,130,387 645,338,884

546,546,871 546,546,871 645,679,359

DEFERRED OUTFLOWS OF RESOURCES Deferred refunding Deferred outflow of resources related to pension

748,721 12,441,871

922,047 16,936,480

Total deferred outflows of resources

13,190,592

17,858,527

$ 658,529,476

$ 663,537,886

See Accompanying Notes to the Financial Statements. See Accompanying Notes to the Financial Statements.

11 14

Passenger Facility Charges Funds: Cash cash equivalents Net cashand provided by operating activities Accounts receivable Customer Facility Charges Funds: Cash and cash equivalents Accounts receivable Revenue Bond Reserve Funds: Cash and cash equivalents Construction Bond Funds: Cash and cash equivalents Accrued interest receivable Total restricted assets Total current assets

NON-CURRENT ASSETS Capital assets, net of accumulated depreciation Total non-current assets Total assets

TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES

20,914,323

736,515

18,658,967

750,876


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 1

NATURE OF ORGANIZATION AND REPORTING ENTITY A.

Nature of Organization The Birmingham Airport Authority ("the Authority") was incorporated on June 6, 1986, as a nonprofit corporation under the provisions of the Code of Alabama, Title 4, Chapter 3, Article 2. The Authority is governed by a seven (7) member Board of Directors, who are nominated by the Mayor and elected by the City Council of the City of Birmingham ("the City"). The City owns the Birmingham-Shuttlesworth International Airport (the "Airport"). Pursuant to a Lease Assignment and Operating Agreement ("Agreement") dated September 16, 1986 and amended October 1, 2009, the City transferred to the Authority custody, control and management of the Airport for a term that currently expires September 15, 2045, subject to certain conditions contained in the Agreement. The Authority pays the sum of $10 as annual rent to the City during the term of the Agreement. As of June 30, 2017, the Authority was in compliance with the terms and conditions of the Agreement.

B.

NOTE 2

Reporting Entity The Authority meets the criteria set forth in generally accepted accounting principles as promulgated by the Governmental Accounting Standards Board (GASB) for inclusion as a component unit within the City's general purpose financial statements based on the City's responsibility for the appointment of the Authority members, and their approval of capital programs and certain debt issuances and the Authority's annual operating budget. As a component unit of the City, the Authority's financial statements are discretely presented on the City's general purpose financial statements. The accompanying financial statements present the financial position of the Authority only. The Authority does not have any component units and is not involved in any joint ventures.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A.

Measurement Focus, Basis of Accounting, and Basis of Presentation The accounting policies of the Authority conform to accounting principles generally accepted in the United States of America applicable to state and local governmental agencies, and as such, the Authority is accounted for as a proprietary fund. The basic financial statements presented are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time the liabilities are incurred. The financial statements are presented in accordance with GASB Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – For State and Local Governments, and related GASB pronouncements. 15


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B.

Use of Accounting Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

C.

Investments State statutes authorize the Authority to invest in U.S. government obligations or in bonds of the State of Alabama or in any county or municipality therein, or in certificates of deposit collaterally secured by a pledge of U.S. government obligations. Investments are accounted for in accordance with GASB Statement No. 72, Fair Value Measurement and Application, which requires that certain investments be recorded at fair value (e.g. quoted market prices).

D.

Restricted Assets Funds are set aside as restricted and they are not available for current expenses when constraints placed on their use are legally enforceable due to either:  

Externally imposed requirements by creditors (such as through debt covenants), grantors or contributors; Laws or regulations of other governments.

E.

Designated Assets The Authority’s management designates funds for capital projects, debt service and other specific commitments; these funds would otherwise be available for operations.

F.

Inventory Inventories consist of the following as of June 30, Baggage Handling System Parts Jet Bridge Parts Total

2017 $ 179,144 113,620 $ 292,764

2016 $ 149,564 99,785 $ 249,349

Inventory is valued at the lower of cost or replacement value. The cost is determined on a first in, first out basis. 16


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G.

Capital Assets Capital assets are recorded at cost, except for property contributed by third parties, which is recorded at fair value at date of contribution, less accumulated depreciation. Depreciation has been provided over the estimated useful lives using the straight-line method. Estimated useful lives by asset category are as follows: Buildings Infrastructure improvements Machinery and equipment Furniture and fixtures

10-35 years 5-30 years 5-15 years 5-15 years

Cost of constructed fixed assets includes net interest expense during the construction period. No depreciation is provided on construction in progress until construction is substantially complete and the asset is placed in service. When property and equipment are disposed of, the related cost and accumulated depreciation are removed from the accounts with any gains or losses on disposition being reflected in current operations. The Authority capitalizes all capital assets in excess of $5,000. Maintenance and repairs are expensed as incurred. H.

Deferred Outflows/Inflows of Resources The statements of net position will sometimes report a separate section for deferred outflows of resources and/or deferred inflows of resources. Deferred outflows of resources represent a consumption of net position that applies to a future period and, therefore, not recognized as an outflow of resources (expense) until then. Deferred inflows of resources represent an acquisition of net position that applies to a future period and, therefore, not recognized as an inflow of resources (revenue) until then. The Authority has one item that qualify for reporting as deferred outflows/inflows of resources. This is GASB No. 68 variances from actuarial assumptions. GASB No. 68 variances can occur due to actuarial assumptions that differ between the actual plan experience and the original actuarial assumed rates. Differences can result from, among others, earnings on investments, changes in assumptions, and other experience gains or losses. A variance represents a gain or a loss, shown as deferred inflows of resources or deferred outflows of resources, respectively, in the accompanying statements of net position. These outflows/inflows are amortized in accordance with the provisions of GASB No. 68. Additional items are determined annually based on each subsequent year’s variances from actuarial assumptions. 23


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I.

Airport Improvement Program Certain expenditures for airport capital improvements are significantly funded through the Airport Improvement Program (AIP) of the Federal Aviation Administration ("the FAA”), with 5% to 10% of project expenditures provided by the Authority. Funding provided under government grants is considered earned as the related allowable expenditures are incurred.

J.

Transportation Security Administration Grant Certain expenditures for airport capital improvements are funded through a Transportation Security Administration (“TSA”) grant program, with 10% provided by the Authority. Funding provided under government grants is considered earned as the related allowable expenditures are incurred.

K.

Passenger Facilities Charges The Authority is authorized to impose a Passenger Facility Charge (“PFC”) on enplaning passengers. The PFC can be collected until the date on which the total PFC revenue collected, plus interest thereon, equals the allowable cost of the approved projects, which is $212,777,466. However, the collection period ends on February 1, 2031. The PFC funds are available for authorized construction projects and debt service under an approved FAA application. PFCs, along with related interest earnings, are recorded as non-operating revenue when earned.

L.

Quick Turn Around Agreement and Customer Facility Charge (CFC) On November 19, 2012, the Authority's Board of Directors adopted a resolution authorizing Rental Car Agencies operating at the Birmingham-Shuttlesworth International Airport (“the Airport") to impose a Customer Facility Charge ("CFC"). The purpose of the CFC is in effect to provide funding for a Quick Turn Around Facility to house all rental car companies. Effective January 1, 2013, companies that operate under a Rental Car Concession Agreement at the Airport began assessing each customer an initial CFC of $5.00 per transaction day. The total amounts collected are reported and remitted monthly to the Authority by the rental car companies. The Authority has authorized to pledge the CFCs collected, by resolution or trust indenture, to pay the costs and expenses of purchasing property, financing, designing, constructing, operating, relocating, and maintaining the Quick Turn Around Facilities. The CFCs are segregated from all other funds and assets of the Authority. The total amount collected, net of expenses and interest earned, as of June 30, 2017, is $15,935,402. 23


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M.

Revenue Classifications Revenue is recognized when earned. The Authority will classify revenues as operating or non-operating based on the following criteria: Operating revenues are from the revenue sources that constitute the principal ongoing activity of the operations of the Airport. The major components of operating revenue consist of landing fees and terminal building and ground rentals, concession and parking fees, and other miscellaneous fees and charges. Landing fees and terminal building rates are charged on the basis of recovery of actual costs for operating and maintaining the Airport airfield and terminal areas. Non-operating revenues are from revenue sources related to financing activities and other activities which do not constitute the principal ongoing activities of the Authority’s operations. These include PFCs, interest income, and grant revenue related to specific programs.

N.

Expense Classifications The Authority will classify expenses as operating or non-operating based on the following criteria: Operating expenses relate to the principal ongoing activities of the operations of the Airport. The major components of operating expenses consist of personnel costs, contractual services, utilities, maintenance, materials and supplies, professional services, depreciation and amortization, and equipment rentals and repairs. Non-operating expenses relate to financing activities and other activities which do not constitute the principal ongoing activities of the Authority’s operations. These include primarily interest expense.

O.

Federal Grants When a grant agreement is approved and all eligibility requirements have been met, the expenditures are recorded as a federal grant receivable and as a capital grant contribution.

P.

Cash and Cash Equivalents The Authority considers cash-on-hand, bank deposits and highly liquid investments with an original maturity of three months or less to be cash and cash equivalents.

Q.

Receivables Accounts Receivables are reported at their gross value when earned and are reduced by the estimated portion that is expected to be uncollectible. The allowance for uncollectible amounts is based on collection history, and 23


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) current information regarding the credit worthiness of the tenants and others doing business with the Authority. When continued collection activity results in receipt of amounts previously written off, revenue is recognized for the amount collected. R.

Interest Capitalization Interest cost related to construction financing is capitalized, net of interest earned, on the borrowed proceeds, from the time of borrowing until construction is substantially complete and the assets are placed in service. Cumulative interest capitalized was $0 and $1,327,145 for the years ended June 30, 2017 and 2016, respectively.

S.

Bond Issue Costs, Original Issue Discount and Deferred Loss on Bond Refunding Bond issue costs, original issue discount and deferred loss on refunding on long-term indebtedness are deferred and amortized using the effective interest method over the life of the debt to which it relates.

T.

Compensated Absences The Authority's employees earn vacation leave at graduated rates based on their length of service (one day per month of service initially) and up to forty days of unused leave may be carried over to the following year. Sick leave is earned at the rate of eight hours for each month of service and can accumulate up to sixty days. The Authority funds sick leave as taken. An accrual is recorded for accumulated unpaid vacation pay. As of June 30, 2017 and 2016, accrued vacation pay totaled $529,385 and $510,161, respectively.

U.

Arbitrage Rebate The U.S. Treasury has issued regulations on calculating the rebate due the Federal government on arbitrage profits, calculating arbitrage penalties, and determining compliance with the arbitrage rebate provisions of the Tax Reform Act of 1986. Arbitrage profits arise when the Authority temporarily invests the proceeds of tax exempt debt in securities with higher yields. For the years ended June 30, 2017 and 2016, the Authority has no arbitrage rebate liability.

V.

Retention Payable The Authority enters into construction contracts that may include retention provisions such that a certain percentage of the contract amount is held for payment until completion of the contract and acceptance by the Authority. The Authority’s policy is to record retention payable as contract work is completed and accepted. Retention payable is included in construction contracts payable on the accompanying statements of net position. 23


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) W.

Components of Net Position The Authority’s net position classifications are as follows: Net investment in capital assets – This component of net position consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds is not included in the calculation of net investment in capital assets. Rather, that portion of the debt is included in the same net position component as the unspent proceeds. Restricted net position – This component of net position represents restrictions imposed by creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law or through constitutional provisions or enabling legislation. Unrestricted net position – This component of net position consists of net position that does not meet the definition of “restricted” or “net investment in capital assets.”

NOTE 3

CASH AND CASH EQUIVALENTS AND INVESTMENTS It is the Authority's policy to invest only in obligations of the U.S. Treasury, U.S. Government Agencies, State of Alabama obligations, and short-term bank certificates of deposit. The Authority's cash and cash equivalents and investments are subject to several types of risk, which are examined in more detail below: Custodial Credit Risk of Bank Deposits Custodial credit risk is the risk that, in the event of a bank failure, the Authority's deposits (in excess of FDIC insurance) may not be returned to it. The carrying amount of the Authority's deposits, certificates of deposits and cash on hand was $34,430,543 and $28,488,429 and the related bank balance was $33,329,844 and $31,036,488 at June 30, 2017 and 2016, respectively. The Authority also had restricted cash deposited with a trustee, with a carrying amount of $46,821,811 and $45,949,237 and related bank balances were $46,607,519 and $44,994,774 at June 30, 2017 and 2016, respectively. The Authority's deposit policy for custodial credit risk limits deposits to financial institutions that are members of the Alabama State Treasury's Security for Alabama Funds Enhancement ("SAFE") Program. Under the SAFE program, the Authority's funds are protected through a collateral pool administered by the Alabama State Treasury. Banks doing business within the State of Alabama and holding deposits 23


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 3

CASH AND CASH EQUIVALENTS AND INVESTMENTS (CONTINUED) of public funds belonging to the state, counties, cities, or agencies of state and local governments must pledge securities to the SAFE program pool which are held as collateral against these deposits. In the event of the failure of a bank, securities pledged by that bank would be liquidated by the State Treasurer to replace the public deposits. If the securities pledged failed to produce adequate funds for that purpose, every bank participating in the pool would share the liability for the remaining balance. Credit Risk Credit risk is the possibility that the issuer/counterparty to an investment will be unable to fulfill its obligations. Unrestricted investments in U.S. Treasury Bills and U.S. Government T-Notes had a market value of $25,926,563 and $20,168,903 as of June 30, 2017 and 2016, respectively. U.S. Government obligations are not considered to have credit risk and do not require disclosure of credit quality. Concentration of Credit Risk Concentration of credit risk is the inability to recover the value of deposits, investments, or collateral securities in the possession of an outside party caused by a lack of diversification (investments acquired from a single issuer). The Authority's cash deposits are held in several financial institutions and are fully insured by the Federal Deposit Insurance Corporation (FDIC), the U.S. Government, and the SAFE Program. The Authority's investment policy limits its investments by security type and institution. With the exception of U.S. Treasury securities and authorized pools, no more than 50% of the Authority's total investment portfolio will be invested in a single security type or with a single financial institution. Interest Rate Risk Interest rate risk is the possibility that an interest rate change could adversely affect an investment's fair value. Investment Maturities at Fair Value (in Years)

Type of Investment Unrestricted Assets: U.S. Treasury Bills

Less Than 1

$

U.S. Government T-Notes Total Investments

19,938,923

1-5

$

5,987,640 $

25,926,563

6-10

-

$

$

More Than 10

-

-

$

$

-

Totals 6/30/17

-

$

$

-

19,938,923

Totals 6/30/16

$

5,987,640 $

25,926,563

20,163,903

$

20,163,903

23


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 3

CASH AND CASH EQUIVALENTS AND INVESTMENTS (CONTINUED) The Authority's investment policy is to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the Authority will not directly invest in securities maturing more than three years from the date of purchase. However, unrestricted investments, the Revenue Bond Reserve Funds, and Construction Bond Funds may be invested in securities exceeding three years if the maturities of such investments are made to coincide as nearly as practicable with the expected use of the funds.

NOTE 4

FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS REPORTED AT FAIR VALUE The Authority categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally accepted in the United States of America. The hierarchy is based on the valuation inputs used to measure fair value. Level 1 inputs consist of quoted market prices in active markets for identical assets; Level 2 inputs consist of significant other observable inputs; Level 3 inputs consist of significant observable inputs. Certain items required to be reported at their net asset value (NAV) are not subject to level disclosure. Disclosures concerning financial instruments that are reported at fair value are presented below. Fair value has been determined based on the Authority’s assessment of available market information and appropriate valuation methodologies. The following table summarized fair value disclosures and measurements at June 30, 2017 and 2016: Fair Value Measurements at Reporting Date Using

Type of Investment U.S. Treasury Bills

Prices in Active Markets for Identical Assets (Level 1)

$

U.S. Government T-Notes Total investments at fair value

-

Significant Other Observable Inputs (Level 2)

$

-

$

-

19,938,923

Significant Unobservable Inputs (Level 3)

$

5,987,640

$

25,926,563

$

Total 6/30/2017

Total 6/30/2016

-

$ 19,938,923

$

-

-

5,987,640

20,163,903

-

$ 25,926,563

$ 20,163,903

The following methods were used to estimate fair value of each class of significant financial instruments: Investments – Fair value is estimated based upon quoted market prices, where available, and on Level 2 inputs. 23


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 4

FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS REPORTED AT FAIR VALUE (CONTINUED) The fair value presented herein is based on pertinent information available to management as of June 30, 2017 and 2016. Although management is not aware of any factors that would significantly affect fair value amounts, future events or other valuation techniques for determining fair value may differ significantly from the amounts presented herein.

NOTE 5

OPERATING LEASES The Authority is the lessor of terminal space, land, and buildings at the Airport under various operating leases for periods through 2027. Some of the leases, in addition to non-cancellable amounts at fixed rates, provide for additional payments based on usage or activity. The following is a table of future minimum noncancellable lease payments to the Authority: 2018 2019 2020 2021 2022 2023 - 2027 Thereafter

$

$

11,038,476 10,161,338 10,024,777 9,784,777 983,326 2,303,158 1,161,875 45,457,727

23


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 6

CHANGES IN CAPITAL ASSETS A summary of the changes in capital assets for the year ended June 30, 2017 and 2016, is as follows: Governmental Activities Capital assets not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets being depreciated: Buildings Infrastructure improvements Machinery and equipment Furniture and fixtures Total capital assets being depreciated Less accumulated depreciation on: Buildings Infrastructure improvements Machinery and equipment Furniture and fixtures Total accumulated depreciation Total capital assets depreciated, net Total capital assets, net

Balance at 07/01/16 $

$

183,475,374 9,507,043

Additions $

13,550 5,675,673

Balance at 06/30/17

Deductions $

(5,222,515)

$

183,488,924 9,960,201

192,982,417

5,689,223

(5,222,515)

193,449,125

278,700,061 214,848,534 61,102,412 4,315,514

552,620 3,278,866 1,722,266 59,103

(324,418) -

278,928,263 218,127,400 62,824,678 4,374,617

558,966,521

5,612,855

(324,418)

564,254,958

(73,513,170) (112,068,946) (18,633,412) (1,186,539)

(7,025,521) (6,541,208) (3,368,883) (236,017)

-

(80,538,691) (118,610,154) (22,002,295) (1,422,556)

(205,402,067)

(17,171,629)

-

(222,573,696)

353,564,454

(11,558,774)

(324,418)

341,681,262

546,546,871

$

(5,869,551)

$

(5,546,933)

$

535,130,387

[INTENTIONALLY LEFT BLANK]

23


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 6

CHANGES IN CAPITAL ASSETS (CONTINUED) Governmental Activities Capital assets not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets being depreciated: Buildings Infrastructure improvements Machinery and equipment Furniture and fixtures Total capital assets being depreciated Less accumulated depreciation on: Buildings Infrastructure improvements Machinery and equipment Furniture and fixtures Total accumulated depreciation Total capital assets depreciated, net Total capital assets, net

NOTE 7

Balance at 07/01/15 $

$

183,539,374 17,377,353

Additions $

5,960,906

Balance at 06/30/16

Deductions $

(64,000) (13,831,216)

$

183,475,374 9,507,043

200,916,727

5,960,906

(13,895,216)

192,982,417

274,074,984 205,739,167 60,112,354 4,263,002

4,625,077 9,109,367 1,251,597 52,512

(261,539) -

278,700,061 214,848,534 61,102,412 4,315,514

544,189,507

15,038,553

(261,539)

558,966,521

(67,099,203) (105,470,625) (15,729,172) (1,025,205)

(6,413,967) (6,598,321) (2,958,238) (161,334)

53,998 -

(73,513,170) (112,068,946) (18,633,412) (1,186,539)

(189,324,205)

(16,131,860)

53,998

(205,402,067)

354,865,302

(1,093,307)

(207,541)

353,564,454

4,867,599

$ (14,102,757)

555,782,029

$

$

546,546,871

LINE OF CREDIT The Authority has an unsecured line of credit with a financial institution. The maximum available line of credit is $4,422,118. At June 30, 2017, there was no outstanding balance on the line of credit. The expiration date of the agreement is July 17, 2017.

NOTE 8

REVENUE BONDS PAYABLE On October 22, 2003, the Authority issued the Birmingham Airport Authority Airport Revenue Refunding Bonds, Series 2003-A and the Airport Revenue Refunding Bonds, Series 2003-B in the amounts of $20,820,000 and $17,875,000 respectively. The Series 2003-A Bonds and the Series 2003-B were issued to provide funds to refund the Authority's Series 1993-A and 1993-B Bonds outstanding in the principal amounts of $20,390,000 and $18,060,000 respectively. The Series 2003-A Bonds were originally issued at variable interest rates determined weekly. On December 1, 2009, the Authority reoffered the bonds with fixed interest rates ranging from 3.25% to 4.5%. Principal payments on the Series 2003-A Bonds are due annually beginning July 1, 2014, and the final principal payment is due on July 1, 2023. The Series 2003-A net bond proceeds of $20,258,123 (after payment of $750,909 in issuance cost and depositing $1,778,227 into the 2003 Reserve Fund) plus an 24


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 8

REVENUE BONDS PAYABLE (CONTINUED) additional $1,967,259 of Series 1993-A and 1993-B sinking fund monies were deposited into the 1993 Escrow Fund. The Series 2003-B Bonds have been paid in full as of June 30, 2015. The Series 2003-B net bond proceeds of $19,764,504 (after payment of $577,619 in issuance cost) plus an additional $2,012,283 of Series 1993-A and 1993-B sinking fund monies were deposited into the 1993 Escrow Fund. In refunding the Series 1993-A and Series 1993-B Bonds, the Authority incurred a loss of approximately $1,802,751 which was deferred and was being amortized over the life of the new debt in accordance with GASB 23. The Authority was expected to reduce its aggregate debt service payments and obtain an economic gain (difference between the present value of debt service of the refunded bonds and the Series 2003-A and 2003-B Airport Revenue Refunding Bonds) estimated to be approximately $2,177,000. In accordance with GASB 65, the remaining balance of issuance cost was written off as of June 30, 2013. On July 11, 2007, the Authority issued the Birmingham Airport Authority Airport Revenue Refunding Bonds, Series 2007, in the amount of $44,635,000. The Series 2007 Bonds were issued to provide funds to refund the Authority's Series 1996 and 1999 Bonds outstanding in the principal amounts of $24,220,000 and $20,515,000, respectively. The Series 2007 Bonds mature no later than July 1, 2026, and require semi-annual interest payments on January 1 and July 1, beginning January 1, 2008, at rates ranging between 5 and 5.25 percent. Principal payments on the Series 2007 Bonds are due annually beginning July 1, 2008. The Series 2007 net bond proceeds of $45,622,343 (after payment of $343,478 in issuance cost) plus an additional $141,713 of Series 1996 and 1999 sinking fund monies were deposited into the 1996 and 1999 Escrow Fund. In refunding the Series 1996 and Series 1999 Bonds, the Authority incurred a loss of approximately $1,375,552, which was deferred and is being amortized over the life of the new debt in accordance with GASB 23. The Authority is expected to reduce its aggregate debt service payments over the next 19 years and will obtain an economic gain (difference between the present value of debt service of the refunding bonds and the Series 2007 Airport Revenue Refunding Bonds) estimated to be approximately $1,496,970. On December 22, 2010, the Authority issued the Birmingham Airport Authority Airport Revenue Bonds, Series 2010 in the amount of $151,705,000. The Series 2010 Bonds were issued to provide funds for certain airport improvements, primarily the renovation of the main terminal building at the Airport. 24


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 8

REVENUE BONDS PAYABLE (CONTINUED) The Series 2010 Bonds mature no later than July 1, 2040, and require semi-annual interest payments on January 1 and July 1, beginning January 1, 2011, at rates ranging between 3 and 6 percent. Principal payments on the Series 2010 Bonds are due annually beginning July 1, 2011. The Series 2010 net bond proceeds of $146,267,329 (after payment of $3,677,933 issuance cost) were deposited into the Series 2010 Capitalized Interest Account ($10,704,988), the Reserve Fund ($10,448,058) and the 2010 Construction Fund ($125,114,283). Changes in revenue bonds payable for the years ended June 30, 2017 and 2016 are summarized as follows: Balance July 1, 2016 Revenue bonds payable Less unamortized discount Revenue bonds payable, net

$ 189,560,000 (481,232) $ 189,078,768

Revenue bonds payable Less unamortized discount Revenue bonds payable, net

Balance July 1, 2015 $ 195,855,000 (479,777) $ 195,375,223

Additions

Retirements

Balance June 30, 2017

$

(2,091) (2,091)

$ (6,590,000) $ (6,590,000)

$ 182,970,000 (483,323) $ 182,486,677

$

Additions $ (1,455) $ (1,455)

Retirements $ (6,295,000) $ (6,295,000)

Balance June 30, 2016 $ 189,560,000 (481,232) $ 189,078,768

Amounts Due within One Year $ 6,590,000 $ 6,590,000

$

Amounts Due within One Year

$

6,930,000 6,930,000

The following shows debt service to maturity for the Series 2003-A and B Bonds, the Series 2007 Bonds, and the Series 2010 Bonds: Principal

FYE June 30, 2018 2019 2020 2021 2022 2023 – 2027 2028 – 2032 2033 – 2037 2038 - 2041 Total NOTE 9

$

6,930,000 7,270,000 7,625,000 8,015,000 8,390,000 49,315,000 60,645,000 17,245,000 17,535,000

$ 182,970,000

Interest $

Total

9,572,400 9,250,550 8,935,625 8,581,675 8,195,300 33,599,575 19,282,350 7,768,750 2,475,275

$ 16,502,400 16,520,550 16,560,625 16,596,675 16,585,300 82,914,575 79,927,350 25,013,750 20,010,275

$ 107,661,500

$ 290,631,500

CAPITAL CONTRIBUTIONS Since its inception, the Authority has received capital contributions from the City of Birmingham, in the form of net assets transferred as of the date of inception and through Federal grants and Passenger Facility Charges as follows: 26


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS

NOTE 9

CAPITAL CONTRIBUTIONS (CONTINUED)

Inception To-Date

Capital Contributions

City of Birmingham $ 12,359,477 Federal 370,030,101 Passenger Facility Charges 95,196,631 Total NOTE 10

$ 477,586,209

2017 $

4,937,446 5,223,463

$ 10,160,909

2016 $

7,600,907 5,095,712

$ 12,696,619

PENSION PLAN Plan Description The Authority contributes to the City of Birmingham Retirement and Relief System--a single employer defined benefit pension plan ("the Plan"). This system covers substantially all employees and certain elected officials and appointed employees. Membership is mandatory for covered employees and is effective upon employment. Employees contribute 7.0% of payroll, exclusive of overtime. The City of Birmingham ("the City") is required by statute to fund that part of current service cost and past service cost which exceeds participants' contributions as determined by annual actuarial studies. The City acts as trustee for the Plan. Plan Membership At June 30, 2016, pension plan membership consisted of the following: Retirees or beneficiaries currently receiving benefits Inactive members due a refund of contributions Inactive plan members entitled but not receiving benefits Active plan members Total

3,017 63 358 3,852 7,290

The census data as of June 30, 2017, was not available at the time of this disclosure. It is assumed that the population remains constant. Funding Policy The funding methods and determination of benefits payable were established by the legislative acts creating the Plan and provide that the Plan's fund is to be accumulated from employee contributions, employer contributions, and income from the investment of accumulated funds. The cost of administering the Plan is funded by the City. The Plan's financial statements and required supplementary 31


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED) information is presented in the City's, June 30, 2017, comprehensive annual financial report. Summary of Significant Accounting Policies The activities and the financial statements of the Plan are accounted for on the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. The City's contributions are recognized when due and a formal commitment to provide the contributions has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. The Plan's cash assets are invested in equity and fixed-income securities and are reported at fair value. Investments are traded on the national exchange. The Authority's payroll for employees covered by the pension plan was $6,982,795 and $6,507,267 and the total payroll was $7,792,011 and $7,197,329 for the years ended June 30, 2017 and 2016, respectively. The following are disclosure requirements of that all-inclusive actuarial assumption valuation, as of the last actuarial study of June 30, 2016, for the Plan. Benefits Provided Plan Year July 1 through June 30

Normal Pension

Early Retirement Pension

Eligibility

A participant may retire at (a) age 60 if he has completed 5 years of credited service, or (b) any age if he has completed 30 years of credited service.

An Authority participant may retire at age 55 if he has completed 25 years of credited service.

Amount

2.50% of final average salary for each year of credited service. This amount cannot be greater than 75.0% of the final average salary nor less than $400 per month.

1.85% of final average salary for each year of credited service.

Service credit used to determine the benefit amount may be increased by credit granted for unused sick leave (on a percent of possible total basis).

31


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED) Final average salary is defined as the highest average compensation over any 36-month period of the employee’s last ten years of participation. Disability

Ordinary

Extraordinary

Service Requirement 5 years of credited service

None

Amount

70% of final monthly salary at disability, offset by the maximum Worker’s Compensation benefit, payable immediately.

2.00% of final average salary at disability for each year of credited service, payable immediately. This amount cannot be greater than 60% of final average salary nor less than $400 per month.

Termination To a participant terminating before becoming eligible for a vested deferred pension from the plan, a lump sum of his or her own contributions without interest is payable. Participants terminating after 5 years of actual service who leave their contributions in the System Fund have a non-forfeitable right to a monthly pension beginning at age 60. The form and amount of the pension are the same as the normal pension. Death Benefits If a participant dies prior to his or her attainment of eligibility for retirement, a lump sum of his or her own contributions with interest is payable to his or her beneficiary. If an active participant who is eligible to retire or a retired participant dies, 60% of the accrued pension benefit is payable to the surviving spouse, if any, during his or her remaining lifetime. If an active participant (other than a participant of the Firemen and Policemen Supplemental System) who is not eligible to retire, but who has completed 5 years of service dies, a portion of 60% of the accrued pension benefit is payable to the spouse during her remaining lifetime. This portion is defined as follows:

31


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED) Number of Years of Service

Portion of Entitled Benefit

10 11 12 13 14 15 or more

50% 60% 70% 80% 90% 100%

This benefit is payable at the earlier of (a) date that the deceased participant would have attained age 60 or (b) the date the deceased participant would have completed 20 years of service. In lieu of the above, for all participants, an annuity of 60% of salary is payable to the surviving spouse and 10% is payable to a minor child if death is service connected; the maximum for spouse and children is 75% and the maximum for children if no spouse is 60%. The minimum spouse benefit is $320 per month. Back-DROP An employee with 33 years of service who is at least age 63 with 23 years of service may elect up to a 36-month Back-Drop. The employee’s monthly benefit will be calculated using service and final average salary as of the Back-DROP date and the employee will receive a lump sum equal to the number of months dropped back times the retirement benefit, accumulated with interest. Participation All qualified employees of the Retirement and Relief System are required to participate. Contributions Employees: 7.00% of compensation Authority: 7.00% of compensation; increasing to 7.25% effective July 1, 2017

31


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS

NOTE 10

PENSION PLAN (CONTINUED) Investments Investment Policy The following was the City’s adopted asset allocation policy as of June 30, 2017:

Asset Class Large cap domestic equity Small and mid-cap domestic equity International equity Core fixed income Short-term high yield fixed income REITs Hedge funds Total

Target Allocation 35% 10% 20% 10% 5% 5% 15% 100%

Concentrations The Plan did not hold investments in any one organization that represented 5 percent or more of the Pension Plan’s fiduciary net position. Rate of Return For the year ended June 30, 2016 the annual investment rate of return on Plan investments, net of pension plan investment expenses, was an assumed 7.50 percent. The annual investment rate of return expresses investment performance, net of investment expenses, adjusted for the changing amounts actually invested. Net Pension Liability of the Sponsor The components of the net pension liability of the sponsor on June 30, 2017 were as follows: Total Pension Liability Plan Fiduciary Net Position

$ 1,745,211,041 1,038,084,945

City's Net Position Liability Pension Fiduciary Net Position as a Percentage of Total Pension Liability

$ 707,126,096 59.48%

31


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED) Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of July 1, 2016, using the following actuarial assumptions, applied to all periods included in the measurement, with the results rolled forward to June 30, 2017: Inflation

2.50%

Salary increases

2.50%, plus age (General Employees) or service (Fire and Police) related salary scale based on participant group.

Investment rate of return

7.50% including inflation, net of pension plan investment expense

Pre-retirement mortality rates are based on the sex-distinct RP-2014 Blue Collar Employee Mortality Table, set forward two years for males and four years for females. Healthy annuitant mortality rates are based on the sex-distinct RP-2014 Blue Collar Healthy Annuitant Mortality Table, set forward two years for males and four years for females. Disabled mortality rates are based on the sex-distinct RP-2014 Disabled Retiree Mortality Table. All mortality tables are projected generationally with Scale MP-2015. The actuarial assumption used in the July 1, 2016 valuation were based on the results of an experience study for the period July 1, 2010 to June 30, 2015. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the System’s target asset allocation as of June 30, 2017 are summarized in the following table:

31


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED)

Asset Class Large cap domestic equity Small and mid-cap domestic equity International equity Core fixed income Short-term high yield fixed income REITs Hedge funds Total

Target Allocation

Long-Term Expected Real Rate of Return*

35% 10% 20% 10% 5% 5% 15% 100%

6.9% 7.8% 6.7% 2.9% 4.9% 5.5% 3.7%

Investments – Fair Value Measurements The Plan categorizes its fair value measurements, within the fair value hierarchy established by accounting principles generally accepted in the United States of America. Debt and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Debt securities classified in Level 2 of the fair value hierarchy are valued using matrix pricing techniques. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted process. Alternative investments classified in Level 3 are valued using discounted cash flow techniques, comparable transactions, and publicly quoted companies’ methods. The Plan has the following recurring fair value measurements, as of June 30, 2017

31


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED)

Investments Measured at Fair Value Retirement & Relief System

Investment Type

Fair Value

Fair Value Measurements Using Weighted Avg. Maturity (Years)

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

$

$

$

U.S. Government Agency Obligation

33,880,239

4.15

58,154,609

8.63

U.S. Corporate Debt

127,282,198

7.04

U.S. Corporate Stock

710,989,384

U.S. Treasuries

Alternative Investments Total Fair Value

$

58,154,609

-

-

769,143,993

-

127,282,198

710,989,384

$

33,880,239 -

-

78,563,027 $ 1,008,869,457

-

-

$

161,162,437

78,563,027 $

78,563,027

The valuation method for investments measured at the net asset value (NAV) per share (or its equivalent) is presented on the following table. Investments Measured at the NAV Mesirow Financial-Multi-manager/Multi-strategy Fund of hedge funds Redemption Fund Fair Value Frequency (if Redemption Notice Currently Eligible) Period Retirement & Relief $78,563,027 Quarterly 95 days Discount Rate The blended discount rate used to measure the total pension liability is 5.43%. The projection of cash flows used to determine the discount rate assumed contributions will continue to be made at 7.00% of compensation from plan members and 7.00% of compensation from the City through June 30, 2017, with City contributions increasing 7.25% beginning July 1, 2017, 8.50% beginning July 1, 2018, and 9.00% effective July 1, 2020. For this purpose, only employer contributions that are intended to fund benefits of current plan members and their beneficiaries are included. Projected employer contributions that are intended to fund the service costs of future plan members and their beneficiaries are excluded, as are projected employee contributions from future plan members. Based on these assumptions, the System’s fiduciary net position was not projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate 32


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED) of return on the System’s investments was applied to the first 29 periods of projected benefit payments and a 3.58% municipal bond rate was applied to all periods thereafter to determine the total pension liability. The 3.58% municipal bond rate is based on an index of 20-year, tax-exempt general obligation bonds, published weekly by the Federal Reserve. (The chosen rate is the Bond Buyer 20Bond GO Index rate published closest to, but not later than, the measurement date of June 30, 2017. Sensitivity of the net pension liability to changes in the discount rate The following presents the net pension liability of the System, calculated using the discount rate of 5.43%, as well as what the System’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower (4.43%) or one percentage point higher (6.43%) than the current rate:

Net pension liability

1% Decrease (4.43%) $934,877,904

Current Discount Rate (5.43%) $707,126,096

1% Increase (6.43%) $517,749,069

[INTENTIONALLY LEFT BLANK]

32


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS

NOTE 10

PENSION PLAN (CONTINUED)

The following methods and assumptions are used to determine contribution rates: Actuarial Cost Method

Entry Age Normal

Amortization Method

Level percent of payroll, using 2.50% annual increases

Remaining Amortization Period

Rolling 30 years

Asset Valuation Method

Market value of assets less unrecognized returns in each of the last five years. Unrecognized return is equal to the difference between the actual market return and the expected return on the market value, and is recognized over a five-year period, further adjusted, if necessary, to be within 20% of the market value.

Investment rate of return

7.50%, including inflation, net of pension plan investment expense

Inflation rate

2.50%

Projected salary increases

2.50%, plus age-related salary scale based on participant group

32


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS

NOTE 10

PENSION PLAN (CONTINUED)

Actuarial assumptions: Actuarial Cost Method Retirement rates

Entry Age Normal Group specific rates based on years of service, ranging from 20 to 35 years, with 100% retirement at age 65. General Employees – Rates based on age ranging from 35% at age 50 to 100% at age 74.

Mortality: Pre-retirement

Sex-distinct RP-2014 Blue Collar Employee Mortality Table, set forward two years for males and four years for females, projected generationally using Scale MP-2015

Healthy annuitant

Sex-distinct RP-2014 Blue Collar Healthy Annuitant Mortality Table, set forward two years for males and four years for females, projected generationally using Scale MP-2015

Disabled

Sex-distinct RP-2014 Disabled Retiree Mortality Table, projected generationally with Scale MP2015

[INTENTIONALLY LEFT BLANK]

32


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED) 2017 Pay in July 1, 2016 Actuarial Valuation Data

Proportion of Net Pension Liability

Proportionate Share of Net Pension Liability

Proportionate Share of Pension Expense

Net Amortization of Deferred Amounts from Changes in Proportion

Total Employer Pension Expense

City of Birmingham (without Authority) Authority Total

$193,643,689

96.72%

$ 683,932,360

$ 94,302,643

6,561,793

3.28%

23,193,736

3,198,022

$200,205,482

100.00%

$ 707,126,096

$ 97,500,665

$

(302,999)

$93,999,644

302,999

3,501,021

-

$97,500,665

$

Net Pension Liability The Authority has allocated a proportional share of 3.28% of the net pension liability of the City of Birmingham Retirement and Relief System, with the allocation based on July 1, 2016 valuation pay. This basis is intended to measure the proportion of each employer's long-term funding requirements. The Authority's allocated share of the net pension liability is $23,193,736. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the Authority's proportional share of the net pension liability of the Birmingham Retirement and Relief System, calculated using the discount rate of 5.43%, as well as what the proportional share of the net pension liability would be if it were calculated using a discount rate that is one percentage-point lower (4.43%) or one percentage-point higher (6.43%) than the current rate: City of Birmingham's proportional share of net pension liability

Current Discount (5.43%)

1% Decrease (4.43%) $

30,663,995

$

23,193,736

1% Increase (6.43%) $

16,982,169

For the year ended June 30, 2017, the Authority's recognized pension expense is $3,501,021. At June 30, 2017, the Authority reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actual experience Changes of assumptions Change in proportionate share Net difference between projected and actual earnings on pension plan investments Total

Deferred Outflows of Resources $ 617,934 9,843,092 1,230,801 $

750,044 12,441,871

Deferred Inflows of Resources $ 852,411 8,336,237 $

9,188,648

32


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED) Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended September 30, 2018 September 30, 2019 September 30, 2020 September 30, 2021 September 30, 2022 Thereafter

Recognition of deferred outflows/(inflows) $1,611,147 $1,611,147 $1,433,996 $415,846 ($1,818,913) -

Schedules of Changes in City of Birmingham Airport Authority's Proportional Share of Net Pension Liability--Last Two Fiscal Years* 2017

2016

$23,193,736

$33,918,973

Estimated covered-employee payroll

6,574,489

6,451,721

Net pension liability as percentage of covered-employee payroll

352.78%

Proportional share percentage Net pension liability

3.28%

3.26%

525.74%

[INTENTIONALLY LEFT BLANK]

34


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED) Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions- Authority Projected Recognition of Deferred Outflows/(Inflows) Outstanding Balance at July 1, 2016

Amount Recognized During FYE June 30, 2017

Outstanding Balance at June 30, 2017

$

7,556,692 16,202,847 59,746,048 16,464,905 56,861,852 319,105,900 1,420,895 -

$

1,889,173 5,400,949 14,936,512 3,292,981 14,215,463 63,821,180 284,179 18,820

$

5,667,519 10,801,898 44,809,536 13,171,924 42,646,389 255,284,720 1,136,716 94,085

$ 477,359,139

$

103,859,257

$

373,612,787

$

(1,420,895) -

$

(284,179) (5,197,627) (7,645,273) (50,830,716) (18,820)

$

(1,136,716) (25,988,125) (30,581,096) (254,153,570) (94,085)

Total Inflows

$

(1,420,895)

$

(63,976,615)

$

(311,953,592)

Total

$ 475,938,244

$

39,882,642

$

61,659,195

Fiscal Year Outflows Liability loss Investment loss Assumptions Liability loss Investment loss Assumptions Proportionate share (Authority) Proportionate share (Authority)

Year Established

Initial Balance

2015 2015 2015 2016 2016 2016 2016 2017

$ 11,335,035 27,004,744 89,619,076 19,757,884 71,077,315 382,927,078 1,705,075 112,905

Total Outflows Fiscal Year Inflows Proportionate share (City) Liability gain Investment gain Assumptions Proportionate share (City)

2016 2017 2017 2017 2017

$ (1,705,075) (31,185,752) (38,226,369) (304,984,286) (112,905)

[INTENTIONALLY LEFT BLANK]

34


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10

PENSION PLAN (CONTINUED)

Deferred Outflows/(Inflows) Recognized in Future Years

FYE June 30, 2018

FYE June 30, 2019

FYE June 30, 2020

FYE June 30, 2021

FYE June 30, 2022

Fiscal Year Outflows Liability loss

$

1,889,173

$

1,889,173

Investment loss

5,400,949

5,400,949

$

1,889,173

$

-

-

-

-

-

Assumptions

14,936,512

14,936,512

14,936,512

Liability loss

3,292,981

3,292,981

3,292,981

Investment loss

14,215,463

14,215,463

14,215,463

Assumptions

63,821,180

63,821,180

63,821,180

63,821,180

Proportionate share (Authority)

284,179

284,179

284,179

284,179

Proportionate share (Authority)

18,817

18,817

18,817

18,817

$ 103,859,254

$ 103,859,254

$

$

$

$

Total Outflows

$

3,292,981

-

-

98,458,305

$

(284,179)

$

18,817

67,417,157

$

(284,179)

$

18,817

Fiscal Year Inflows Proportionate share (City) Liability gain

(284,179) (5,197,625)

(284,179) (5,197,625)

(5,197,625)

(5,197,625)

Investment gain

(7,645,274)

(7,645,274)

(7,645,274)

(7,645,274)

Assumptions

(50,830,714)

(50,830,714)

(50,830,714)

(50,830,714)

Proportionate share (City)

(18,817)

(18,817)

(18,817)

(5,197,625) (50,830,714)

(18,817)

(18,817)

Total Inflows

$

(63,976,609)

$

(63,976,609)

$

(63,976,609)

$

(63,976,609)

$

(56,047,156)

Total

$

39,882,645

$

39,882,645

$

34,481,696

$

3,440,548

$

(56,028,339)

Detailed Development of Pension Expense for the Year Ended June 30, 2017 Service cost Interest on Total Pension Liability Employee contributions Administrative expenses Expected return on assets Expensed portion of current year period differences between expected and actual experience in Total Pension Liability Expensed portion of current year period assumption changes Current year plan changes Expensed portion of current year period differences between projected and actual investment earnings Current year recognition of deferred inflows and outflows established in prior years Total expense

$

61,202,895 81,787,344 (14,030,922) 284,778 (71,626,072) (5,197,627) (50,830,716) -(7,645,273)

$

103,556,258 97,500,665

34


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 11

OTHER POST-EMPLOYMENT BENEFITS General Information about the OPEB Plan: Plan Description The Authority’s defined benefit other post-employment benefits (OPEB) Plan, the Birmingham Airport Retiree Medical and Life Insurance Plan (BARMLIP), provides OPEB for all permanent full-time employees of the Authority. BARMLIP is a single-employer defined benefit OPEB plan administered by the Authority. Article III of the Lease and Use agreement with the City of Birmingham grants the Authority the right to establish benefit terms and financing requirements. Benefits Provided The Authority provides healthcare and life insurance benefits for retirees. The Authority adopted a policy to pay for the cost of post-employment health insurance for eligible employees. Employees of the Authority must meet the following eligibility requirements for pension benefits as defined by the City of Birmingham Retirement and Relief System for retirement: • Retirees with 30 years of service at any age • Retirees with 5 or more years of service and age 60 or older • Retirees receiving disability pension benefits • Retirees with 25 or more years of service and age 55 or older Retirees may elect to continue their health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA provides the retirees with health insurance coverage generally for a period of 18 months. Retirees may continue the same coverage (single or family) at the time of retirement. The retiree must elect health insurance coverage under COBRA within 60 days of the retirement date. Retirees who meet the eligibility requirements, as listed above, are entitled to receive a subsidy amount equal to the amount the Authority pays for single coverage for an active employee. Retirees may receive the subsidy until they reach the age of 65, become Medicare eligible, are covered under another policy or deceased. The benefits paid under this plan are reimbursements for the cost of coverage, and proof of coverage is required. The retiree is responsible for paying the applicable balance of the monthly health insurance premium. The retiree may elect to have their portion of the health insurance deducted from their monthly pension benefit or elect to mail a check to the Authority by the 10th of each month for their portion. The plan also provides all retirees with life insurance benefits in which the Authority pays 100% of the premiums reducing by 50% at age 70.

38


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 11

OTHER POST-EMPLOYMENT BENEFITS (CONTINUED) Employees covered by benefit terms At June 30, 2017, the following employees were covered by the benefit terms: Active participants in valuation: Number 156 Average age 45.2 Average years of service* 8.0 Total payroll* $9,014,199 Average payroll $57,783 Retired participants: Number with Life Insurance 16 Average age 67.4 Total Life Insurance In Force $663,500 Average Life Insurance Amount 41,169 Number Eligible for Health Insurance Reimbursement 6 Average age 62.7 *Estimated service of 8 years and salary of $57,800 applied to 46 participants. Actuarial Accrued Liability: The Authority’s actuarial accrued total OPEB liability of $1,706,576 was measured as of June 30, 2017, and was determined by an actuarial valuation as of that date. Actuarial assumptions and actuarial cost method The accrued liability in the June 30, 2017 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Rationale for Assumptions:

Discount Rates: Mortality Rates:

The information and analysis used in selecting each assumption that has a significant effect on this actuarial valuation are shown in the Birmingham Retirement and Relief System Experience Study Report for the five-year period ended June 30, 2015. Based on the results of that study as well as professional judgment, no additional demographic changes are warranted at this time and will be assessed again in the next five-year review. The Birmingham Airport Authority participates in this pension plan, and the demographic assumptions for “General Employees” of that plan apply to the Birmingham Airport Authority

3.58%

39


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 11

BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS OTHER POST-EMPLOYMENT BENEFITS (CONTINUED) Employees covered by benefit terms RP-2014 Blue Collar Employee Mortality Table, set Pre-retirement: At June 30, 2017, the following employees the benefit terms: forward were two covered years forbymales and four years for females, projected generationally using Scale MP-

Active participants in valuation: 2015 Number 156 RP-2014 Blue Collar Employee Healthy Annuitant Healthy annuitants: Mortality Table, set forward two years for males Average age 45.2and four years for females, projected generationally8.0 using Average years of service* Scale MP-2015 $9,014,199 Total payroll* Disabled annuitants: RP-2014 Disabled Retiree Mortality Table, $57,783 Average payroll projected generationally using Scale MP-2015 Retired participants: The tables with adjustments as shown, reasonably reflect the mortality 16 Number withabove, Life Insurance experience of the Birmingham Retirement and Relief System as of the measurement Average age 67.4 to date. The mortality tables were then generationally projected using Scale MP-2015 Total Life Insurance In Force $663,500 reflect future mortality improvement. Average Life Insurance Amount 41,169 Number Eligible for Health Insurance Reimbursement 6 Average age 62.7 Termination Rates Before Retirement: *Estimated service of 8 years and salary of $57,800 applied to 46 participants. Rate (%) Mortality* Age Male Female Disability** Actuarial Accrued Liability: 20 0.06 0.02 0.08 25 0.06 0.02 0.11 The Authority’s actuarial accrued total OPEB was measured 30 0.06liability of $1,706,576 0.03 0.14 as of June 30, 2017, and was determined by an actuarial valuation as of that date. 35 0.07 0.04 0.19 40 0.09 0.07 0.29 Actuarial assumptions and actuarial cost method 45 0.16 0.11 0.47 The accrued liability in the June 30, 2017 actuarial valuation was determined 50 0.27 0.17 0.79 using the following actuarial assumptions and other inputs, applied to all periods 55 0.44 0.25 1.31 included in the measurement, unless otherwise specified: 60 0.56 0.38 2.12 *Rates shown do not include generational projection. ** 50% of disability is assumed to be onused the job disability. The information and analysis in selecting each Rationale for Assumptions: assumption that has a significant effect on this

Termination Rates Before Retirement (continued): actuarial valuation are shown in the Birmingham Retirement and Relief System Experience Rate% Study ReportofforService the five-year period ended June 30, 2015. Years Withdrawal Based on 1 the results of that study 10.00 as well as professional judgment, no additional demographic 2 9.00 changes are warranted at this time and will be 3 assessed again in the next five-year 8.00 review. The 7.50 in this Birmingham4 Airport Authority participates 5 and the demographic assumptions 7.00 pension plan, for 6 6.50 to the “General Employees” of that plan apply Birmingham7 Airport Authority 6.00 Discount Rates: 3.58% 8 5.50 Mortality Rates: 9 5.00 10 4.50 39 11 4.00 39


NOTE 11

BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS OTHER POST-EMPLOYMENT BENEFITS (CONTINUED) Employees covered by benefit terms 12 3.50 At June 30, 2017, the following employees 13 were covered by the benefit terms: 3.00 14 2.50 Active participants in valuation: 15 2.00 Number 16 1.50 156 Average age 17-20 1.00 45.2 Average years of service* 8.0 20-30 1.00 $9,014,199 Total payroll* payroll $57,783 Average Retirement Rates: Retired participants: Employees are assumed to retire, after meeting the service requirements, in Number with Life 16 accordance withInsurance the following rates: Average age 67.4 Age Rate% Total Life Insurance In Force $663,500 Under 50 0.0 Average Life Insurance 41,169 50-54Amount 35.0 Number Eligible for55-60 Health Insurance Reimbursement 6 20.0 Average age 62.7 61 25.0 *Estimated service of 862years and salary of $57,800 applied to40.0 46 participants. 63-64 25.0 65-73 35.0 Actuarial Accrued74 Liability: & Over 100.0 The Authority’s actuarial accrued total OPEB liability of $1,706,576 was measured Salary Scale: as of June 30, 2017, and was determined by an actuarial valuation as of that date. Age Rate% 20 7.00 Actuarial assumptions 25 and actuarial cost method 6.25 The accrued liability in30 the June 30, 2017 actuarial valuation was determined 5.50 using the following actuarial assumptions and other inputs, applied 35 4.75 to all periods included in the measurement, unless otherwise specified: 40 4.00 45 3.50 50 3.00 Rationale for Assumptions: The information and analysis used in selecting each 55 2.75 effect on this assumption that has a significant 60 2.50 actuarial valuation are shown in the Birmingham 65 Retirement and Relief System 2.50 Experience Study 70 & over 2.50 June 30, 2015. Report for the five-year period ended

Based an onallowance the results of that of study as per well asThe The salary scale assumption includes for inflation 2.50% year. professional judgment, no additional demographic assumption is based on the City’s pay plan, along with analysis completed in conjunction changes warranted this June time 30, and2015. will be with an Experience Study Report for theare five-year periodatended assessed again in the next five-year review. The Birmingham Airport Authority participates in this Per Capita Cost Development: pension plan, Per and capita the demographic assumptions for costs were based on the active Medical and Drug “General Employees” of that plan apply to the premium rates for 2017. Birmingham Airport Authority

Discount Rates: Expenses 3.58% Administrative Mortality Rates:

Administrative expenses are included in the premium rates.

39 39


NOTE 11

BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS OTHER POST-EMPLOYMENT BENEFITS (CONTINUED) Employees covered benefitHealth terms Assumed 2017 by Average $529.75 At June 30, 2017, the employee): following employees were covered by the benefit terms: Subsidy (Single Assumed Retiree Cost for Life $3.84 per $1,000 of coverage per year. Active participants in valuation: Insurance: Number 156 Assumed Participation: 75% medical, 80% Life Insurance Average age 45.2 Dependents: Not Covered Average years of service* 8.0 $9,014,199 Total payroll* $57,783 Average payroll Retired participants: Pre-retirement Health Care Cost Trend: Number with Life Insurance 16 Health care trend measures the anticipated overall rate at which health plan costs Average age 67.4 are expected to increase in future years. The rates shown below are “net” and are applied Total Life Insurance In Force $663,500 to the net per capita costs shown above. The trend shown for a particular plan year is the Average Life Insurance Amount 41,169 rate that must be applied to that year’s cost to yield the next year’s projected cost. Number Eligible for Health Insurance Reimbursement 6 Year Ending Rate (%) Average age 62.7 2018 8.00 *Estimated service of 8 years and salary of $57,800 applied to 46 participants. 2019 7.50 2020 7.00 2021 6.50 Actuarial Accrued Liability: 2022 6.00 2023 5.50 The Authority’s actuarial accrued total OPEB liability of $1,706,576 was measured 2024 5.00 as of June 30, 2017, and was determined by an actuarial valuation as of that date. 2025+ 4.50 The trend rate assumptions were developed using Segal’s internal guidelines, which are Actuarial assumptions and actuarial cost method established each year using data sources such as the 2017 Segal Health Trend Survey, The accrued liability in the June 30, 2017 actuarial valuation was determined internal client results, trends from other published surveys prepared by the S&P Dow usingJones the following actuarialfirms assumptions andand other applied to allbyperiods Indices, consulting and brokers, CPIinputs, statistics published the Bureau included in the measurement, unless otherwise specified: of Labor Statistics.

Post-retirement Trend: Actuarial Cost Method: Rationale for Assumptions:

0%

Entry Age Normal Actuarial Cost Method. Entry The information usedthe in selecting each Age is theand ageanalysis at the time participant would assumption has a significant this had have that commenced employmenteffect if theonplan actuarial valuation in the Birmingham always been are in shown existence. Normal Cost and Retirement and Accrued Relief System Study Actuarial LiabilityExperience are calculated on an Report individual for the five-year period ended June 2015.with basis and are allocated by 30, service, Based Normal on the Cost results of that asstudy well benefit as determined if theas current professional no additional accrualjudgment, rate had always been in demographic effect. Actuarial changesLiability are warranted at by this time and will be is allocated salary. assessed again in the next five-year This is the first valuation for this review. plan. The Change in Assumptions: Birmingham Airport Authority participates in this pension plan, and the demographic assumptions for “General Employees” of that plan apply to the Birmingham Airport Authority

Discount Rates: Mortality Rates:

3.58%

39 39


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 11

OTHER POST-EMPLOYMENT BENEFITS (CONTINUED) Sensitivity of the actuarial accrued liability to changes in the discount rate and healthcare cost trend rates The following presents the actuarial accrued liability of the Authority if it were calculated using a discount rate that is 1-percentage-point lower (2.58 percent) or 1-percentage point higher (4.58 percent) than the current discount rate:

Actuarial accrued liability

1% Decrease (2.58%) $2,157,526

Discount Rate (3.58%) $1,706,576

1% Increase (4.58%) $1,486,736

Sensitivity of the actuarial accrued liability to changes in the healthcare cost trend rates The following presents the actuarial accrued liability of the Authority if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (8.5 percent decreasing to 3.5 percent) or 1-percentage-point higher (9.5 percent decreasing to 5.5 percent) than the current healthcare cost trend rates: 1% Decrease (7.5% decreasing to 3.5%) Actuarial accrued liability

$1,612,632

Healthcare Cost Trend Rate (8.5% decreasing to 4.5%) $1,706,576

1% Increase (9.5% decreasing to 5.5%) $1,819,871

39


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 12

DEFERRED COMPENSATION PLAN The Authority offers certain executive employee(s) a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to executive employee(s), permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or beneficiary) solely the property and rights of the Authority (without being restricted to the provisions of benefits under the plan), subject only to the claims of the Authority's general creditors. Participants' rights under the plan are equal to those of general creditors of the Authority in an amount equal to the fair value of the deferred account for each participant. It is the opinion of the Authority's legal counsel that the Authority has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The Authority believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future.

NOTE 13

MAJOR CUSTOMERS From January 1, 2006 until March 1, 2009, the airlines operated without an agreement in place, but were charged rental rates and landing fees based on the methodology contained in the expired agreement. On March 1, 2009, the Authority changed its rate setting methodology to an approach of crediting the Airport’s terminal cost center with 25% of all terminal building non-airline revenues, and calculating landing fees based on a full compensatory methodology. From July 1, 2011 until August 14, 2016, the Authority entered into a new agreement with each of the six major airlines serving Birmingham. Under the terms of the agreement, the airlines will be charged full compensatory landing fee rates for the airfield, and will be charged commercial compensatory rates for the terminal building reduced by a 35% non-airline terminal building revenue credit. Effective August 15, 2016, the Authority entered into a new five-year agreement with each of the four major airlines serving Birmingham. Under the terms of the agreement, the airlines will be charged full compensatory landing fee rates for the airfield, and will be charged commercial compensatory rates for the terminal building reduced by a 35%-50% non-airline terminal building revenue credit depending on Capital Improvement Fund balance. The new agreement contains an end of term option that allows for a renewal of an additional five years. 39


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 14

RISK MANAGEMENT The Authority is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees, and natural disasters. The Authority has purchased commercial insurance for all risk above minimal deductible amounts. In addition, all tenants and users of the Airport are required to have commercial insurance coverages naming the Authority as additional insured. Following the events of September 11, 2001, all insurance companies canceled their war risk liability coverage for airlines and airports. During fiscal year 2017, the Authority was able to obtain $570,588,514 of coverage for a premium of $322,968. No liability is recorded at June 30, 2017, for outstanding claims or for any potential claims incurred but not reported as of that date. Settled claims have not exceeded these commercial coverages by any material amounts during the year ended June 30, 2017.

NOTE 15

RELATED PARTY TRANSACTIONS The Authority reimburses the City for the cost of providing security and fire protection services to the Airport. Amounts charged by the City are reported as operating expenses during the year incurred and totaled $4,520,505 and $4,080,074 for the fiscal years ended June 30, 2017 and 2016, respectively.

NOTE 16

COMMITMENTS At June 30, 2017, the Authority is committed under contracts for the following construction and planning projects: Committed    Amount  Land Acquisitions (Churches)  Airport Master Plan  Taxiway A Stabilization  Parking Revenue System  QTA ‐ Rental Car Facility (Land Acquisition)    Total Committed Amounts

$                      84,104                           83,310                         636,214                         672,517                     3,980,241   $                5,456,386 

40


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS NOTE 17

RECENTLY ISSUED ACCOUNTING STANDARDS The GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans-replaces Statement No. 43 and Statement No. 57 (GASB 74). The objective of this statement is to improve financial reporting primarily through the enhancement of note disclosures and schedules of required supplementary information that will be presented by OPEB plans that are within its scope. The requirements of GASB 74 are effective for fiscal years beginning after June 15, 2016 (fiscal year 2017). The Authority implemented GASB 74 this year. The GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pensions-replaces Statement No. 45 (GASB 75). This statement requires governments to report a liability on the face of the financial statements for the OPEB that they provide. The requirements of GASB 75 are effective for fiscal years beginning after June 15, 2017 (fiscal year 2018). The Authority is currently evaluating the impact that GASB 75 may have on its financial statements. The GASB issued Statement No. 83, Certain Asset Retirement Obligations (GASB 83). This statement establishes criteria for recognition of a liability and a corresponding deferred outflow of resources and related disclosures for asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the future retirement of a tangible capital asset. The retirement of a tangible capital asset encompasses its sale, abandonment, recycling, or disposal in some other manner. The requirements of GASB 83 are effective for fiscal years beginning after June 15, 2018 (fiscal year 2019), with earlier implementation encouraged. The Authority is currently evaluating the impact that GASB 83 may have on its financial statements, if any.

NOTE 18

SUBSEQUENT EVENTS On July 17, 2017 the Authority entered into another line of credit agreement permitting the Authority to borrow up to $4,390,175 from BBVA Compass. This lending agreement expires on July 16, 2018.

NOTE 19

CHANGE IN ACCOUNTING PRINCIPLES/RESTATMENT The Authority implemented GASB Statement 74, Reporting for Postemployment Benefit Plans other than Pension Plans, in fiscal year ending June 30, 2017. The implementation of the statement required the Authority to record beginning net pension and effects on net position of contributions made by the Authority during the measurement period (fiscal year ending June 30, 2016). As a result, net position decreased by $1,529,538.

41


BIRMINGHAM AIRPORT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Last 10 Fiscal Years (1) Schedules of Changes in the Net Pension Liability and Related Ratios – Pension Plan 2017

2016

2015

Total Pension Liability Service Cost Interest Change of benefit terms Differences Between Expected and Actual Experience Changes of Assumptions Benefit Payments, including refunds and Employee Contributions

$

Net Change in Total Pension Liability

61,202,895 81,787,344 -

$

43,377,051 80,457,568 (337,185)

$

36,945,277 80,340,821 -

(31,185,752) (304,984,286)

19,757,884 382,927,078

11,335,035 89,619,076

(83,864,528)

(78,753,617)

(76,439,094)

(277,044,327)

447,428,779

141,801,115

Total Pension Liability ‑ Beginning

$ 2,022,255,368

$ 1,574,826,589

$ 1,433,025,474

Total Pension Liability ‑ Ending (a)

$ 1,745,211,041

$ 2,022,255,368

$ 1,574,826,589

$

$

$

Plan Fiduciary Net Position Contributions ‑ Employer Contributions ‑ Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Net Change in Plan Fiduciary Net Position

16,554,808 14,030,922 109,852,441 (83,864,528) (284,778)

(78,753,617) (266,304)

14,464,552 12,227,545 43,686,697 (76,439,094) (178,807)

56,288,865

$ (44,725,204)

Plan Fiduciary Net Position ‑ Beginning

981,796,080

1,026,521,284

1,032,760,391

Plan Fiduciary Net Position ‑ Ending (b)

$ 1,038,084,945

$ 981,796,080

$ 1,026,521,284

Net Pension Liability ‑ Ending (a)‑(b)

$ 707,126,096

$ 1,040,459,288

$ 548,305,305

59.48% $ 200,441,743

48.55% $ 197,758,400

65.18% $ 188,116,077

352.78%

526.13%

241.47%

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability Covered Employee Payroll Net Pension Liability as a Percentage of Covered Employee Payroll

$

16,370,100 13,843,088 4,081,529

$

(6,239,107)

(1) Information in this schedule is presented for the year in which the information is available. Information will be added each year until a full 10-year trend is presented.


BIRMINGHAM AIRPORT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Notes to the above schedule: Benefit changes: The only change in benefit provisions since GASB 67 implementation was an increase in the Retirement and Relief contribution rate from 6.50% to 7.00%, reflected in the June 30, 2016 disclosure. There is new legislation effective July 1, 2017 that impacts the benefits of future employees, but that does not have an immediate impact on total pension liability. Change of assumptions: The discount rate for GASB reporting purposes increased from 4.13% as of June 30, 2016 to 5.43% as of June 30, 2017. A detailed study of experience for the City’s Retirement and Relief System for the five-year period ending June 30, 2015 was performed and the recommendations of the experience study were approved by the Board in May 2016. The following assumptions changes are included in this disclosure as of June 30, 2016.    

 

The investment return assumption was increased from 7.00% to 7.50%. The inflation assumption was lowered from 3.00% to 2.50%. The payroll growth rate assumption (used for determining the amortization of the unfunded actuarial accrued liability) was lowered from 3.00% to 2.50%. The age-based salary scale assumption for General Employees was maintained, with the individual rates lowered. The salary scale assumption for Fire and Police was restructured from an age-related to a service-related set of rates, to reflect actual plan experience. The administrative expense assumption was increased from $150,000 to $175,000. The pre-retirement mortality assumption was changed from the sex-distinct RP2000 Combined Healthy Mortality Table, with rates set forward two years for both males and females, to the sex-distinct RP-2014 Blue Collar Employee Mortality Table with rates set forward two years for males and four years for females. This table is projected generationally with Scale MP-2015. The post-retirement mortality assumption for healthy annuitants was changed from the sex-distinct RP-2000 Combined Healthy Mortality Table, with rates set forward two years for both males and females, to the sex-distinct RP-2014 Blue Collar Healthy Annuitant Mortality Table with rates set forward two years for males and four years for females. This table is projected generationally with Scale MP-2015. The mortality assumption for disabled retirees was changed from the sex-distinct RP-2000 Disabled Retiree Mortality Table, multiplied by 70%, to the sex-distinct RP-2014 Disabled Retiree Mortality Table. This table is projected generationally with Scale MP-2015. Retirement rates were modified for all groups to better reflect actual experience and expected future patterns.


BIRMINGHAM AIRPORT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Notes to the above schedule (continued):  

 

The BackDROP utilization assumption was lowered from 100% for all groups to 40% for General Employees, 90% for Firefighters and 70% for Police Officers. The turnover assumption for all groups was modified from a five-year select-and ultimate assumption based on age to an assumption based on years of service. The rates reflect higher rates during earlier periods of employment. The rates for General Employees are higher than the rates for Police and Fire. The ultimate rate was set to zero for Police and Fire employees with twenty or more years of service. The disability rates were modified for all groups to better reflect actual experience and expected future patterns. The on-the-job disability assumption was lowered from 100% to 80% of all disabilities for Firefighters only. The percent married assumption was lowered from 80% to 75%.


BIRMINGHAM AIRPORT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Last 10 Fiscal Years (1) Schedules of Employer Contributions – Pension Plan 2017 Actuarially determined contribution* Contributions in relation to the actuarially determined contributions Contribution deficiency (excess) Covered employee payroll** Contributions as a percentage of covered employee payroll

$

30,564,212

2016 $

29,898,918

2015 $

30,398,187

16,554,808 14,009,404

16,370,100 13,528,818

14,464,552 15,933,635

200,441,743

197,758,400

188,116,077

8.26%

8.28%

7.69%

(1) Information in this schedule is presented for the year in which the information is available. Information will be added each year until a full 10-year trend is presented.

Notes to the schedule: *The actuarially determined contribution is equal to the total calculated contribution in the most recent actuarial valuation, minus the portion expected to be covered by employee contributions. **Payroll is estimated based on the actual employee contributions received and a 7.00% contribution rate. Notes: Valuation date: Actuarially determined contribution rates are calculated using a July valuation date as of the beginning of the fiscal year in which contributions are reported.


BIRMINGHAM AIRPORT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Last 10 Fiscal Years (1) Schedule of Funding Progress – Other Postemployment Benefit Plan Actuarial Valuation Date

6/30/2017

Actuarial Value of Assets (a)

$

-

Actuarial Accrued Liability (AAL) – Projected Unit Credit (b) $1,706,576

Unfunded AAL (UAAL) (b-a)

Funded Ratio (a/b)

Covered Payroll (c)

UAAL as a Percentage of Covered Payroll (ba)/(c)

$1,706,576

0.0%

$9,014,199

18.9%

(1) Information in this schedule is presented for the year in which information is available. Information will be added each year until a full 10-year trend is presented.


BIRMINGHAM AIRPORT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Last 10 Fiscal Years (1) Schedule of Employer Contribution – Other Postemployment Benefit Plan Year Beginning July 1 2016

Annual Actuarially Required Contribution $250,339

Percentage Contributed 100%

(1) Information in this schedule is presented for the year in which information is available. Information will be added each year until a full 10-year trend is presented.


REVENUES 2008 ‐ 2017  60,000,000  55,000,000  50,000,000  45,000,000  40,000,000  35,000,000  30,000,000  25,000,000  20,000,000 2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2014

2015

2016

2017

EXPENSES 2008 ‐ 2017  60,000,000  55,000,000  50,000,000  45,000,000  40,000,000  35,000,000  30,000,000  25,000,000  20,000,000 2008

2009

2010

2011

2012

2013

Source: Birmingham Airport Authority Records


2011

2012

2013

2014

2015

2016

2017

Year ‐over‐Year Change

PFC Collections

        10,054,888             5,463,930                         ‐          24,348,159 $     348,411,505

2009

2010

2012

        27,004,507             4,611,371                         ‐          19,875,139 $     379,172,765

2013

        20,313,401             5,431,811             1,501,515          14,235,396 $     386,439,652

2014

        22,797,506             9,427,381                         ‐          18,624,099 $     418,647,702

2015

        23,108,351          14,186,556                         ‐          27,179,399 $     426,034,861

2016

        23,613,285          19,075,186                         ‐          30,881,474 $     431,839,367

2017

        24,041,654          18,903,430                         ‐          38,555,462 $     435,035,157

25.00%

‐3.92%

7.93%

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

$450,000,000

$500,000,000

2008

2009 Net investment in capital assets

‐7.58%

‐0.42%

2011 Restricted ‐ debt service

2010

2013 Restricted ‐ federal grants and programs

2012

2015

‐1.79%

Restricted ‐ compensation plan

2014

Net Position as of June 30 for Each of the Years Presented

Source: Birmingham Airport Authority Records, Airline PFC Remittance Reports

3.53%

Unrestricted

2016

‐3.83%

2017

‐3.19%

2.51%

$         4,671,631 $         5,839,410 $         5,610,792 $         6,055,719 $         5,596,859 $         5,573,339 $         5,473,591 $         5,263,847 $         5,095,712 $         5,223,462

2008

2011

        30,021,761             2,827,847                         ‐          31,638,898 $     356,346,708

Source: Birmingham Airport Authority Records, GASB 34

        10,420,764             9,133,661                         ‐          22,145,157 $     321,078,746

        10,720,204             6,860,108                         ‐          15,624,473 $     291,401,810

2010

Restricted net position Restricted for debt service Federal grants and programs  Compensation Plan Unrestricted (Note 19) TOTAL NET POSITION

2009

$     258,197,025 $     279,379,164 $     308,544,528 $     291,858,202 $     327,681,748 $     344,957,529 $     367,798,716 $     361,560,555 $     358,269,422 $     353,534,611

2008

Net investment in capital assets

NET POSITION AT YEAR END


2013

2014

2015

2016

2017

NON‐OPERATING EXPENSES Interest expense Amortization of bond issuance expense Unrealized loss on investments (net) TOTAL NON OPERATING EXPENSES TOTAL EXPENSES CONTRIBUTIONS TOTAL CHANGE IN NET POSITION

Depreciation and amortization         11,545,273

       11,413,143

       11,206,784

       12,932,776

       13,447,518

Source: Birmingham Airport Authority Records

          3,599,879           3,359,044           3,342,273           3,640,736           3,480,338           3,213,571               147,579              140,698              148,108              382,059                       ‐                        ‐              167,150                       ‐                20,895                23,875               (47,431)                         ‐            3,747,458           3,666,892           3,490,381           4,043,690           3,504,213           3,166,140          35,846,849         38,137,430         36,092,468         36,912,136         38,285,004         39,817,545          17,250,076         27,068,506         22,645,758           5,110,899         21,209,548         12,759,313 $       21,293,899 $       29,676,936 $       27,332,759 $         7,935,203 $       25,513,547 $       18,357,635

          8,294,814

         6,036,654           5,592,413           5,571,815                       ‐                       ‐           2,172,432              182,826              117,074              220,012                10,758                       ‐               (91,536)                       ‐                       ‐                        ‐                       ‐                       ‐                        ‐           6,230,238           5,709,487           7,872,723 $       39,736,440 $       42,589,003 $       45,415,867

         2,479,850                       ‐               (31,443)           2,448,407         38,203,374         20,336,728 $       32,208,050

         9,775,644

         5,175,057           4,480,839              161,504             (520,928)                       ‐                       ‐           9,296,472 $       50,074,696

       16,311,707

       17,342,863

         9,011,341           9,606,613           9,572,401                       ‐                       ‐                       ‐                   8,806                   8,115                       ‐           9,020,147           9,614,728           9,572,401         52,078,824         56,152,004         55,824,220           6,844,392           7,600,907           4,937,446 $         8,916,697 $         5,804,506 $         3,195,790

       15,572,715

         5,241,743           5,258,436           5,208,341           4,725,271           4,830,565           4,745,406              130,593              110,407              239,243              110,000                       ‐                       ‐                       ‐                       ‐                27,283                       ‐                       ‐                33,013         10,097,607         10,309,408         10,253,286 $       54,151,129 $       54,355,603 $       54,082,564

$         6,992,485 $         9,523,862 $         9,355,893 $         9,417,882 $       10,031,567 $       10,231,827 $       11,879,459 $       11,705,510 $       11,279,857 $       11,810,425                         ‐                       ‐                       ‐                       ‐                       ‐                        ‐                       ‐           1,632,061           4,793,349           3,501,021            3,470,520           3,963,366           3,892,604           4,338,959           3,400,629           3,729,969           4,078,188           3,920,943           4,080,074           4,520,505            2,087,010           2,555,068           2,364,961           2,107,304           1,880,042           1,907,361           1,955,324           2,265,915           2,137,622           1,912,000            2,206,976           1,249,083              843,255              929,795              964,245           1,926,349           1,474,436           1,186,682              735,644              568,201            3,240,420                       ‐                       ‐                       ‐                       ‐                        ‐                       ‐                       ‐                       ‐                       ‐            1,209,129              949,569           1,203,043           1,388,012           1,511,562           1,114,914           1,253,762           1,401,053              996,564           1,154,405            2,575,588           2,194,177           1,358,539           1,497,850           1,815,727           2,231,832           3,024,011           3,126,806           3,619,370           3,627,252            2,022,449           2,490,140           2,170,649           1,981,860           2,244,243           2,061,635           2,314,143           2,246,992           2,583,089           1,815,147          23,804,577         22,925,265         21,188,944         21,661,662         21,848,015         23,203,887         25,979,323         27,485,962         30,225,569         28,908,956

2012

OPERATING EXPENSES Personnel costs Pension expense Security and fire protection Utilities Professional services Parking deck services Materials and supplies Repairs and maintenance Other services TOTAL OPERATING EXPENSES

2011

          4,527,956           5,753,740           5,574,993                         ‐                       ‐                       ‐               767,074              395,143              231,570                 27,836                73,431               (18,978)                         ‐                       ‐                       ‐                         ‐                       ‐                       ‐            5,322,866           6,222,314           5,787,585 $       39,890,672 $       40,745,860 $       40,779,469

2010

NON‐OPERATING REVENUES Passenger facility charges Customer facility charges Interest income Gain (loss) on disposal of capital assets Insurance Settlement Unrealized gain on investments (net) TOTAL NON‐OPERATING REVENUES TOTAL REVENUES

2009

$         5,079,741 $         5,343,369 $         5,808,947 $         5,603,426 $         6,539,542 $         7,116,657 $         9,808,742 $       11,296,350 $         9,273,080 $         9,205,501          13,371,460         12,835,802         13,224,807         13,099,652         13,048,872         13,115,821         12,545,705         12,764,253         12,984,370         12,615,023            7,442,385           7,065,940           6,975,523           5,950,106           6,525,438           6,301,301           6,530,087           7,057,996           8,783,938           8,643,213            6,416,070           6,817,657           6,464,845           6,584,659           8,592,891           8,755,509           9,543,315         10,589,617         10,442,190         10,643,438            1,750,088           1,795,730           1,750,444           1,643,143           1,433,185           1,559,544           1,441,475           1,445,876           1,545,886           1,458,502               508,062              665,048              767,318              625,216              739,588              694,312              908,900              899,430           1,016,731           1,263,601          34,567,806         34,523,546         34,991,884         33,506,202         36,879,516         37,543,144         40,778,224         44,053,522         44,046,195         43,829,278

2008

OPERATING REVENUES Space Rentals Concession fees ‐ parking Concession fees ‐ other Landing fees and fuel flowage Ground hangar rentals Other revenues TOTAL OPERATING REVENUES

CHANGE IN NET POSITION


Concession fees ‐ other 20%

2011

2012

2013

2014

2015

2016

2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2008

2010

Space Rentals

2009

2010

2011

2012

Concession fees ‐ parking

2012

2013

Concession fees ‐ other

2011

2014

2014

2015

2017

2017

Other revenues

2016

2016

Ground hangar rentals

2015

Landing fees and fuel flowage

2013

10 ‐ Year Revenues Composition

2013

Repairs and maintenance

Security and fire protection

2012

Other services

Utilities

2014

2015

Professional services

2016

2017 Utilities 7%

Professional services 2%

Repairs and  maintenance 12% Materials and  supplies 4%

Security and fire  protection 16%

Other services 6%

Pension expense 12%

Personnel costs 41%

FY 2017 Operating Expense Composition

$         9,523,862 $         9,355,893 $         9,417,882 $       10,031,567 $       10,231,827 $       11,879,459 $       11,705,510 $       11,279,857 $       11,810,425                        ‐                       ‐                       ‐                       ‐                       ‐                        ‐           1,632,061           4,793,349           3,501,021            3,963,366           3,892,604           4,338,959           3,400,629           3,729,969            4,078,188           3,920,943           4,080,074           4,520,505            2,555,068           2,364,961           2,107,304           1,880,042           1,907,361            1,955,324           2,265,915           2,137,622           1,912,000            1,249,083               843,255               929,795               964,245           1,926,349            1,474,436           1,186,682               735,644               568,201                        ‐                       ‐                       ‐                       ‐                       ‐                        ‐                       ‐                       ‐                       ‐                949,569           1,203,043           1,388,012           1,511,562           1,114,914            1,253,762           1,401,053               996,564           1,154,405            2,194,177           1,358,539           1,497,850           1,815,727           2,231,832            3,024,011           3,126,806           3,619,370           3,627,252            2,490,140           2,170,649           1,981,860           2,244,243           2,061,635            2,314,143           2,246,992           2,583,089           1,815,147          22,925,265         21,188,944         21,661,662         21,848,015         23,203,887         25,979,323         27,485,962         30,225,569         28,908,956

2009

Space Rentals 21%

100%

Source: Birmingham Airport Authority Records

Materials and supplies

2011

Pension expense

2010

2010

10 ‐ Year Expenses Composition

Parking deck services

2009

2008 $         6,992,485                         ‐             3,470,520             2,087,010             2,206,976             3,240,420             1,209,129             2,575,588             2,022,449          23,804,577

2009

$         5,343,369 $         5,808,947 $         5,603,426 $         6,539,542 $         7,116,657 $         9,808,742 $       11,296,350 $         9,273,080 $         9,205,501          12,835,802         13,224,807         13,099,652         13,048,872         13,115,821         12,545,705         12,764,253         12,984,370         12,615,023            7,065,940           6,975,523           5,950,106           6,525,438           6,301,301            6,530,087           7,057,996           8,783,938           8,643,213            6,817,657           6,464,845           6,584,659           8,592,891           8,755,509            9,543,315         10,589,617         10,442,190         10,643,438            1,795,730           1,750,444           1,643,143           1,433,185           1,559,544            1,441,475           1,445,876           1,545,886           1,458,502                665,048               767,318               625,216               739,588               694,312               908,900               899,430           1,016,731           1,263,601          34,523,546         34,991,884         33,506,202         36,879,516         37,543,144         40,778,224         44,053,522         44,046,195         43,829,278

Concession fees ‐ parking 29%

Other revenues 3%

Personnel costs

2008

OPERATING EXPENSES Personnel costs Pension expense Security and fire protection Utilities Professional services Parking deck services Materials and supplies Repairs and maintenance Other services TOTAL OPERATING EXPENSES

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

$         5,079,741          13,371,460             7,442,385             6,416,070             1,750,088                508,062          34,567,806

2008

FY 2017 Operating Revenue Composition

Landing fees and fuel flowage 24%

Ground hangar  rentals 3%

OPERATING REVENUES Space Rentals Concession fees ‐ parking Concession fees ‐ other Landing fees and fuel flowage Ground hangar rentals Other revenues TOTAL OPERATING REVENUES


2.00

4.00

6.00

8.00

10.00

12.00

Revenue per Enplanement Auto parking ‐ per enplanement Concessions ‐ per enplanement Auto rental commission and Valet Services ‐ per  enplanement

Enplanements

Revenue Auto parking Concessions Auto rental commission and Valet Services

                   8.68                     0.76

         1,479,387

       12,835,802           1,126,714           5,528,587

2009

                   9.10                     0.76

         1,454,050

       13,224,807           1,102,214           5,580,409

2010

                   8.87                     0.78

         1,476,022

       13,099,652           1,145,912           4,580,884

2011

                   9.01                     0.80

         1,447,794

       13,048,872           1,164,766           5,069,106

2012

                    9.31                      0.85

          1,408,170

        13,115,821            1,199,037            4,841,917

2013

                   9.59                     1.14

         1,307,885

       12,545,705           1,490,973           4,509,543

2014

                   9.60                     1.26

         1,330,235

       12,764,253           1,669,687           4,761,518

2015

                   9.62                     1.35

         1,349,032

       12,984,370           1,823,822           6,254,853

2016

                   9.44                     1.49

         1,336,065

       12,615,023           1,986,264           5,991,920

2017

2009

Auto parking ‐ per enplanement

2008

2010

2012 Concessions ‐ per enplanement

2011

2014

2015

2016 Auto rental commission and Valet Services ‐ per enplanement

2013

Key Revenue Sources per Enplanement

Source: Birmingham Airport Authority Records, Airline Reports

Enplanements

2017

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

                     3.45                       3.74                       3.84                       3.10                       3.50                       3.44                       3.45                       3.58                       4.64                       4.48

                     8.18                       0.81

           1,634,409

         13,371,460             1,317,447             5,639,735

2008


75,818               255,401                363,093                694,312

             107,268               285,791               515,841               908,900

Notes: 1) Space Rentals, Baggage Handling Sytem, and Jet Bridges 2) Food and Beverage, and News and Gift Shops 3) Taxi Fees, Ground Transporation, FBO Fees, Vending Machines, ATMs, and Airlines Services 4) Fuel Farms, Alabama National Guard, Reimbursement Utilities, RON, Facility Fees, TSA LEO, Settlements/Claims

Source: Birmingham Airport Authority Records

             344,633               208,021               186,934               739,588

             125,000               275,295               898,285               142,895           1,441,475

         8,354,275               877,418               304,531                   7,091           9,543,315

         1,490,973               177,869           4,509,543               351,702           6,530,087

             109,540               339,754               450,144               899,430

             120,000               275,295               905,862               144,719           1,445,876

         9,045,201           1,172,092               312,429                 59,895         10,589,617

         1,669,687               219,381           4,761,518               407,410           7,057,996

       12,764,253         12,764,253

               95,046               176,519               745,166           1,016,731

             200,851               275,295               911,477               158,263           1,545,886

         9,095,656               971,064               327,774                 47,696         10,442,190

         1,823,822               279,327           6,254,853               425,936           8,783,938

       12,984,370         12,984,370

               82,578               110,749           1,070,274           1,263,601

             120,000               275,295               879,243               183,964           1,458,502

         9,266,125               959,063               340,322                 77,928         10,643,438

         1,986,264               262,755           5,991,920               402,274           8,643,213

       12,615,023         12,615,023

$       34,567,806 $       34,523,546 $       34,991,884 $       33,506,202 $       36,879,516 $       37,543,144 $       40,778,224 $       44,053,522 $       44,046,195 $       43,829,278

             190,108               192,238               242,870               625,216

              150,000                275,295                991,428                142,821             1,559,544

           7,715,210                725,314                304,626                  10,359             8,755,509

           1,199,037                  41,772             4,841,917                218,575             6,301,301

       12,545,705         12,545,705

TOTAL OPERATING REVENUES

             386,589               180,531               200,198               767,318

             195,000               275,295               820,068               142,822           1,433,185

         7,615,115               650,717               307,698                 19,361           8,592,891

         1,164,766                 88,585           5,069,106               202,981           6,525,438

       13,048,872          13,115,821         13,048,872          13,115,821

             309,500               178,232               177,316               665,048

             419,149               281,095               796,047               146,852           1,643,143

         5,800,282               441,037               326,802                 16,538           6,584,659

         1,145,912                 45,774           4,580,884               177,536           5,950,106

       13,099,652         13,099,652

              210,047                191,630                106,385                508,062

             546,233               265,760               785,630               152,821           1,750,444

         5,690,851               422,068               316,556                 35,370           6,464,845

         1,102,214                 99,481           5,580,409               193,419           6,975,523

       13,224,807         13,224,807

             611,257               305,411               771,591               107,471           1,795,730

2017

              501,335                319,154                765,891                163,708             1,750,088

2016

         5,986,565               480,434               329,578                 21,080           6,817,657

2015

           5,463,756                503,289                431,091                  17,934             6,416,070

2014

         1,126,714               131,624           5,528,587               279,015           7,065,940

2013

           1,317,447                188,333             5,639,735                296,870             7,442,385

2012

       12,835,802         12,835,802

2011

        13,371,460          13,371,460

2010

$         3,242,961 $         3,475,702 $         3,855,831 $         3,826,955 $         4,732,833 $         5,282,069 $         7,783,870 $         9,312,392 $         7,430,336 $         7,365,856                437,655               463,667               491,146               497,350               493,446                493,446               500,283               540,766               589,742               597,959                377,475               387,037               379,515               324,435               256,394                262,019               342,920               364,318               411,821               414,254                649,257               623,990               709,900               582,553               605,666                593,077               644,573               436,801               259,688               258,990                372,393               392,973               372,555               372,133               451,203                486,046               537,096               642,073               581,493               568,442             5,079,741           5,343,369           5,808,947           5,603,426           6,539,542             7,116,657           9,808,742         11,296,350           9,273,080           9,205,501

2009

Operating revenues: Space Rentals: Terminal space rentals (1) Rental car space rentals Government agency space rentals Cargo space rentals Apron space rentals Subtotal: Concession fees ‐ parking: Auto parking Subtotal: Concession fees ‐ other: Concessions (2) Advertising Auto rental commission and Valet Services Miscellaneous (3) Subtotal: Landing fees and fuel flowage: Airline landing fees   Cargo landing fees Fuel flowage Other landing fees Subtotal: Ground hangar rentals: AAII FBO'S Executive Hangars Car Rental ‐ Service Center Subtotal: Other revenues: Badges Courtesy vehicles  Other operating revenues (4) Subtotal:

2008


2016

2017

              39,736

              42,589

              45,416

              50,075

              54,151

              54,356

              54,083

                   2.29

                   1.54

                   1.45

                    1.56

                   1.69

                   1.86

                   1.62

                   1.69

                   1.47

                   1.75

                   1.53

Net revenues in each fiscal year are required to be at lease equal to the larger of either (1) the debt service and reserve transfer requirements of each fiscal year or; (2) 125% of the debt service requirements for such fiscal year

Notes: Debt service requirements is equal to interest expense (excluding amortization of bond discount and amounts provided for payment of interest by bond proceeds and other sources and deposited into a restricted fund for that purpose) for each respective fiscal year ended June 30, plus principal payment payable on the next July 1. Certain passenger facility charge revenue is available to cover required debt service.

Source: Birmingham Airport Authority Records

                   2.24

                   1.47

                     2.02

                    1.35

Ratio of required revenue

                   1.26

$                7,955 $                7,949 $                8,565 $              11,763 $              14,262 $              14,266 $              14,262 $              14,299 $              14,317 $              14,377

                   1.52

Net Required revenue per bond rate covenant

                   2.86

                     2.53

Coverage of debt service                     2.80

                       ‐                       ‐                       ‐                 (2,500)                 (5,004)                 (5,003)                 (5,001)                 (4,999)                 (5,001)                 (5,001)                         ‐                       ‐                       ‐                       ‐                       ‐                        ‐                       ‐                       ‐                       ‐                       ‐ $                6,364 $                6,360 $                6,852 $                9,410 $              11,409 $              11,413 $              11,410 $              11,440 $              11,454 $              11,502

$                3,640 $                3,755 $                3,940 $                4,635 $                5,530 $                5,765 $                6,005 $                6,295 $                6,590 $                6,930                    2,724                     2,605                   2,912                   7,275                10,883                10,651                10,405                10,144                   9,865                   9,572                    6,364                     6,360                   6,852                11,910                16,413                16,416                16,410                16,439                16,455                16,502

              40,779

Less PFC revenue available for debt service Less grant revenue available for debt service Total debt service

Debt Service Principal Interest

              40,746

$              16,086 $              17,821 $              19,591 $              18,075 $              20,741 $              22,212 $              24,095 $              26,665 $              24,130 $              25,174

2015

Net pledged revenue

2014

              (23,805)               (22,925)               (21,189)               (21,662)               (21,848)               (23,204)               (25,979)               (27,486)               (30,226)               (28,909)

2013

Less: Operating Expenses Depreciation added

2012

               39,891

2011

Gross revenues

2010

$              34,568 $              34,524 $              34,992 $              33,506 $              36,880 $              37,543 $              40,778 $              44,054 $              44,046 $              43,829                        767                      395                      232                      183                      117                       220                      162                      131                      110                      239                    4,556                     5,827                   5,556                   6,047                   5,592                   7,653                     9,135                   9,967                10,199                10,014

2009

Net revenues Operating revenue Interest on investments ‐ revenue fund Other nonoperating revenues

2008


‐ $                     ‐

Total annual expenses:

Net pledged revenue

$                    ‐

                     ‐

$                    ‐

$                    ‐

                     ‐

$                    ‐

$                    ‐                       ‐

2010

$                    ‐

                     ‐

$                    ‐

$                    ‐                       ‐

2011

$                    ‐

                     ‐

$                    ‐

$                    ‐                       ‐

2012

2014

2015

2016

2017

                     (51)                       ‐

           (207,097)          (3,930,703)

$         1,652,755 $         4,638,771 $         4,677,940 $         4,406,442 $            878,782

                      ‐

$         1,652,755 $         4,638,822 $         4,677,940 $         4,613,539 $         4,809,485

$         1,652,743 $         4,636,133 $         4,673,396 $         4,577,500 $         4,745,406                         12                   2,689                   4,544                36,039                64,079

2013

2009

2010

2011

2012

2013

2014

2015

2016

2017

       73,780,000                       ‐           1,306,281

       70,025,000                       ‐           1,390,096

     217,790,000       213,155,000       207,625,000       201,860,000       195,855,000       189,560,000       182,970,000                       ‐                       ‐                        ‐                       ‐                       ‐                       ‐                       ‐             (380,582)             (414,110)             (446,929)             (479,024)             (479,776)             (481,232)             (483,323)

                  48.25  

Outstanding debt per enplaned passenger                   50.75

         1,479,387

                 49.11

         1,454,050

              147.29

         1,476,022

Notes: (1) Includes both current and long-term liabilities (See Note 8)

Source: Birmingham Airport Authority Records

          1,634,409

              146.94

         1,447,794

              147.13

         1,408,170

              153.97

         1,307,885

              146.87

         1,330,235

              140.16

         1,349,032

              136.59

         1,336,065

$       78,865,693 $       75,086,281 $       71,415,096 $    217,409,418 $    212,740,890 $     207,178,071 $    201,380,976 $    195,375,224 $    189,078,768 $    182,486,677

        77,420,000                         ‐            1,445,693

$       20,820,000 $       20,820,000 $       20,820,000 $       20,820,000 $       20,820,000 $       20,820,000 $       20,820,000 $       19,665,000 $       17,440,000 $       15,105,000          11,965,000         10,335,000           8,625,000           6,835,000           4,950,000           3,000,000              960,000                       ‐                       ‐                       ‐          44,635,000         42,625,000         40,580,000         38,430,000         36,180,000         33,810,000         31,330,000         28,720,000         25,980,000         23,110,000       151,705,000       151,205,000       149,995,000       148,750,000       147,470,000       146,140,000       144,755,000                         ‐                       ‐                       ‐

2008

No other Airport Funds are pledged toward the payment of the QTA

Notes: On November 19, 2012, the Authority's Board of Directors elected to impose a Customer Facility Charge of $5.00 per transaction day in order to fund a Quick Turn Around Facility "QTA" at the Airport

Total enplaned passengers

Total outstanding debt payable

Unamortized discount/premium

Subtotal, revenue bonds payable

Outstanding debt by type (1) 2003A Revenue bonds, fixed rate 2003B Revenue bonds, fixed rate 2007 Revenue bonds, fixed rate 2010 Revenue bonds, fixed rate

$                     ‐

Total resources available for debt service

$                    ‐                       ‐

2009

Source: Birmingham Airport Authority Records, Rental Car Agency CFC Remittance Reports

$                     ‐                         ‐

Customer facility charge collections Interest income

2008


Fiscal Year 2014 Total Market  Passenger Share

Fiscal Year 2015 Total Market  Passenger Share

Fiscal Year 2016 Total Market  Passenger Share

Fiscal Year 2017 Total  Market  Passenger Share

American Airlines, Inc.  Envoy Air ‐ AA American Eage ‐ AA Air Wisconsin ‐ AA Express Jet ‐ AA Mesa Airlines ‐ AA PSA Airlines ‐ AA Piedmont Airlines ‐ AA Tran State ‐ AA BahamasAir ‐ AA American Airlines, Inc. Subtotal

     144,085                ‐          81,049                ‐                ‐                ‐                ‐                ‐                ‐               998       226,132

5.5% 0.0% 3.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 8.7%

    121,600        81,678               ‐               ‐               ‐               ‐               ‐               ‐               ‐              986      204,264

4.6% 3.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 7.7%

         3,851        88,414               ‐      134,336           2,168      146,613      232,405               ‐               ‐               ‐      607,787

             734          73,721                ‐          81,879            4,816       168,447       266,838          12,003          17,739                ‐       626,177

US Airways Express Aero Mexico ‐ US Air Wisconsin ‐ US Mes Airlines ‐ US PSA Airlines ‐ US US Airways Express Subtotal

              ‐                ‐          18,652       138,119       186,072       342,843

0.0% 0.0% 0.7% 5.3% 7.1% 13.1%

             ‐              772        94,477        56,627      250,609      402,485

0.0% 0.0% 3.5% 2.1% 9.4% 15.1%

             ‐               ‐               ‐               ‐               ‐               ‐

Delta Airlines   Express Jet (ASA) ‐ DL Endeavor ‐ DL GoJet ‐ DL Shuttle America ‐ DL Skywest ‐ DL Compass ‐ DL Delta Airlines Subtotal

     657,511       107,859          66,251            6,909            1,728                ‐          22,353       862,611

25.2% 4.1% 2.5% 0.3% 0.1% 0.0% 0.9% 33.0%

    726,460      104,167           8,250        25,704               ‐           1,251

27.3% 3.9% 0.3% 1.0% 0.0% 0.0%

    746,020      134,821        21,524               ‐           2,383               ‐

    865,832

Soutwest Airlines

     929,244

35.6%     904,018

United Airlines Express Jet ‐ UA Mesa ‐ UA Skywest ‐ UA Republic ‐ UA United Airlines Subtotal

              ‐       221,866                ‐          30,003                ‐       251,869

0.0% 8.5% 0.0% 1.1% 0.0% 9.6%

Xtra Airways Republic Sunwing

              ‐               895                ‐

0.0%          1,265 0.0%              121 0.0%               ‐

Total Passengers

  2,613,594

100% 2,662,459

Airlines

             ‐      222,047              123        62,304               ‐      284,474

0.1% 3.3% 0.0% 5.0% 0.1% 5.4% 8.6% 0.0% 0.0% 0.0% 22.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

     724,089          94,620          12,185          28,429                ‐          23,676

27.1% 3.5% 0.5% 1.1% 0.0% 0.9%

32.5%     904,748

33.6%      882,999

33.1%

34.0%     883,260

32.8%      855,357

32.1%

0.0% 8.3% 0.0% 2.3% 0.0% 10.7%

6.1% 0.0% 5.0% 0.0% 11.1%

     185,951                ‐          93,068          23,154       302,173

7.0% 0.0% 3.5% 0.9% 11.3%

0.0%              ‐ 0.0%               ‐ 0.0%               ‐

0.0%           1,304 0.0%                ‐ 0.0%                ‐

0.0% 0.0% 0.0%

100% 2,694,995

100%   2,668,010

100%

    164,076                64      135,060               ‐      299,200

Source: Airline Reports Notes: Detailed deplanement information only available through Fiscal Year 2014

27.7% 5.0% 0.8% 0.0% 0.1% 0.0%

              ‐                ‐                ‐                ‐                ‐                ‐

0.0% 2.8% 0.0% 3.1% 0.2% 6.3% 10.0% 0.4% 0.7% 0.0% 23.5%


Fiscal Year

Enplanements &  Deplanements

Percentage Change

Fiscal Year

Enplanements

Percentage Change

2008

          3,266,581

5.4%

2008

          1,634,409

5.2%

2009

          2,957,181

‐9.5%

2009

          1,479,387

‐9.5%

2010

          2,907,255

‐1.7%

2010

          1,454,050

‐1.7%

2011

          2,950,871

1.5%

2011

          1,476,022

1.5%

2012

          2,889,969

‐2.1%

2012

          1,447,794

‐1.9%

2013

          2,815,266

‐2.6%

2013

          1,408,170

‐2.7%

2014

          2,613,264

‐7.2%

2014

          1,307,885

‐7.1%

2015

          2,662,197

1.9%

2015

          1,330,235

1.7%

2016

          2,694,995

1.2%

2016

          1,349,032

1.4%

2017

          2,668,010

‐1.0%

2017

          1,336,065

‐1.0%

Aircraft Landing Weight  (in millions of pounds)

Aircraft Operations Fiscal 

Increase

Percentage

Increase

Percentage

Year

Total

(Decrease)

Change

Total

(Decrease)

Change

2008

                55,434

                   5,902

11.9%

          2,367,931

              255,244

12.1%

2009

                49,970

                 (5,464)

‐9.9%

          2,152,804

            (215,127)

‐9.1%

2010

                48,416

                 (1,554)

‐3.1%

          1,948,140

            (204,664)

‐9.5%

2011

                47,484

                     (932)

‐1.9%

          1,986,509

                38,369

2.0%

2012

                44,498

                 (2,986)

‐6.3%

          1,944,874

               (41,635)

‐2.1%

2013

                41,916

                 (2,582)

‐5.8%

          1,835,261

            (109,613)

‐5.6%

2014

                37,306

                 (4,610)

‐11.0%

          1,642,368

            (192,893)

‐10.5%

2015

                37,630

                      324

0.9%

          1,635,170

                 (7,198)

‐0.4%

2016

                38,492

                      862

2.3%

          1,624,706

               (10,464)

‐0.6%

2017

                37,706

                     (786)

‐2.0%

          1,656,428

                31,722

2.0%

Source: Airline Reports


Days funded

Days in fiscal year 

100

200

300

400

500

600

700

800

900

1,000

2012

2013

2014

2015

2016

2017

                    319

365

2008

2009

Notes: 1) Unrestricted

2010

       21,661,662

                    415

2011

2012

2013

                    333

                    366

       21,848,015

Days Funded

                    555

365                     365

       21,188,944

Source: Birmingham Airport Authority Records

                      222

366

       22,925,265

2014

                     388

                     365

       23,203,887

2015

                    400

                    365

       25,979,323

2016

                    585

                    365

       25,853,901

2017

                    700

                    366

       25,432,220

                    867

                    365

       25,407,935

        23,804,577

2011

Maintenance and operating expense

2010

$       14,443,813 $       20,018,301 $       24,078,282 $       32,948,410 $       19,902,278 $       24,681,350 $       21,485,093 $       26,453,879 $       28,488,429 $       34,430,543           7,007,870         14,983,266         20,168,903         25,926,563                         ‐                       ‐                       ‐                       ‐                       ‐                       ‐           14,443,813         20,018,301         24,078,282         32,948,410         19,902,278         24,681,350         28,492,963         41,437,145         48,657,332         60,357,106

2009

Cash available for operations Cash and cash equivalents (1) Investments (1)      Total cash available for operations

2008


Location

BHM 4 miles Northeast of Downtown

Area

2,158 Acres

Elevation

650ft MSL

Airport Code

BHM

Runways

Terminal Space

18/36 6/24

7,099ft X 150ft 12,007ft X 150ft

Airlines Concession and Office Space Circulation Space Utilities Other Total

Number of Gates/Hardstand Positions

19/4

Commercial Airline Apron

1,812,216 sf

Rental Car Facility

8 Rental Car Agencies

Parking Spaces

88,527 sf 149,122 sf 147,250 sf 17,162 sf 23,062 sf 425,123 sf

Parking Deck Economy Lot Employee Lot Total

Source: Birmingham Airport Authority Records

4,500 450 287 5,237


Number of Employees

Aircraft Parking (per day) (5) Parking Rates (3) Parking Deck Daily Parking Deck Hourly Economy Lot

Signatory: Landing Rates (1) Terminal Space Rentals (2) Apron Rentals (4) Non‐Signatory: Landing Rates (1) Terminal Space Rentals (2) Apron Rentals (4)

                 12.00                   24.00                   10.00

                  12.00                      24.00                      10.00  

107

2009 116

2010

Source: Birmingham Airport Authority Records

2008

Notes: 1) Per 1,000 pounds of landing weight 2) Per square foot per year 3) Maximum per day 4) Per square foot per year 5) Priced for a narrow body aircraft

126

                 12.00                   24.00                   10.00

              105.00

                   3.65                   69.05                     1.11

                   2.92                   55.24                     0.89

2010

Source: Birmingham Airport Authority Records

              105.00

                   2.96                   69.05                     1.11

                     2.96                    50.26                         1.03                 105.00

                   2.37                   55.24                     0.89

2009

                     2.37                    40.21                         0.82

2008

2011 128

Employee Staffing

                 12.00                   24.00                   10.00

              105.00

                   3.65                   80.56                     1.35

                   2.92                   64.45                     1.08

2011

2012 114

                 12.00                   24.00                   10.00

              105.00

                   3.65                   80.56                     1.35

                   2.92                   64.45                     1.08

2012

Summary of Certain Rates and Charges

2013 130

                 12.00                     24.00                     10.00  

              105.00

                    5.19                   78.48                        1.50

                    4.15                   62.78                        1.20

2013

2014 141

                 12.00                   24.00                   10.00

              105.00

                   6.33                100.46                     1.74

                   5.06                   80.37                     1.39

2014

2015 133

                 12.00                   24.00                   10.00

              105.00

                   8.25                   82.16                     1.99

                   6.60                   65.73                     1.59

2015

2016 131

                 12.00                   24.00                   10.00

              105.00

                   6.88                   84.59                     1.88

                   5.50                   67.67                     1.50

2016

2017 158

                 12.00                   24.00                   10.00

              105.00

                   7.05                   87.09                     1.56

                   5.64                   69.67                     1.25

2017


The primary service region for the Birmingham Shuttlesworth International Airport, the seven-county BirminghamHoover - Metropolitan Statistical Area ("MSA"), has a diverse economic base and is the principal center of finance, trade, health care, manufacturing, transportation and education in the State of Alabama. The MSA includes the following seven counties, ordered based on population size (largest to smallest): Jefferson, Shelby, St. Clair, Walker, Blount, Chilton, and Bibb. Jefferson County, which has an estimated population of approximately 661,000 in 2017, is the center of the seven-county Birmingham-Hoover Metropolitan Statistical Area (MSA), which covers 6,145 square miles. Birmingham, the State’s largest city and the county seat, has an estimated population of approximately 210,000 in 2017.

Birmingham-Hoover MSA Population (2007-2016) 1,200,000 1,175,000 1,150,000 1,125,000 1,100,000 1,075,000 1,050,000 1,025,000 1,000,000

Year Population

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Source: U.S. Census, Nielson

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

1,107,256 1,117,101 1,125,271 1,128,879 1,130,905 1,133,993 1,139,018 1,142,823 1,145,647 1,150,168

Birmingham-Hoover MSA Largest Ten Employers (2016 compared to 2007) 2016 Local Name University of Alabama at Birmingham Regions Financial Corp. Honda Manufacturing of Alabama Brookwood Baptist Health Children's of Alabama St. Vincent's Health System AT&T Alabama Power Co. Mercedes-Benz U.S. International Inc. BlueCross and BlueShield of Alabama Bruno's Supermarkets Wachovia Total Est. MSA Employment

2007 % of MSA

Employees Rank Employment 23,000 7,700 4,800 4,703 4,585 4,524 4,517 3,982 3,500 3,105

64,416

1 2 3 4 5 6 7 8 9 10

4.4% 1.5% 0.9% 0.9% 0.9% 0.9% 0.9% 0.8% 0.7% 0.6%

12.3%

525,300

Source: Birmingham Business Journal, Book of Lists (2008 and 2017) Note: Due to rounding, percentages may not add up precisely to the totals provided.

Local

% of MSA

Employees Rank Employment 18,750 5,000 4,500 4,000 3,200

1 3 4 5 8

3.5% 0.9% 0.8% 0.7% 0.6%

5,485 3,000 4,000

2 10 5

1.0% 0.6% 0.7%

3,477 3,094 54,506

7 9

0.6% 0.6% 10.1%

538,700


Birmingham-Hoover MSA Statistical Summary

Year

Employment

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

538,700 525,300 496,300 495,400 500,300 506,500 514,400 517,000 522,200 525,300

(2) (2) (2) (2) (2) (2) (2) (2) (2) (2)

Personal

Per Capita

Income

Personal

Median

School

Unemployment

($000s)

Income

Age

Enrollment

Rate (%)

$43,026,551 $44,187,024 $42,527,152 $43,971,791 $45,393,432 $47,421,741 $47,393,368 $49,485,197 $51,059,479 N/A

(1) (1) (1) (1) (1) (1) (1) (1) (1) (4)

$38,859 $39,555 $37,793 $38,952 $40,139 $41,818 $41,609 $43,301 $44,568 N/A

Note: (1) U.S. Census Bureau; Bureau of Economic Analysis (2) U.S. Bureau of Labor Statistics (3) SNL Financial; Nielson (4) N/A - data is not available

Â

Average

(1) (1) (1) (1) (1) (1) (1) (1) (1) (4)

37.4 37.6

37.0 37.3 37.4 37.6 37.9 38.1 38.2 38.8

(1) (1) (1) (1) (1) (1) (1) (1) (1) (3)

267,255 277,877 282,951 284,469 286,354 282,031 284,308 278,605 281,264

N/A

(1) (1) (1) (1) (1) (1) (1) (1) (1) (4)

3.6 5.0 10.2 9.8 8.8 7.0 6.3 6.0 5.5 5.5

(2) (2) (2) (2) (2) (2) (2) (2) (2) (2)

Â


BIRMINGHAM AIRPORT AUTHORITY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the year ended June 30, 2017 Federal Grantor U. S. DEPARTMENT OF TRANSPORTATION Direct Programs: Airport Improvement Program Airport Improvement Program Airport Improvement Program Airport Improvement Program Airport Improvement Program Airport Improvement Program

ID Number

CFDA Number

AIP-3-01-0014-093-2014 AIP-3-01-0014-094-2014 AIP-3-01-0014-095-2014 AIP-3-01-0014-097-2015 AIP-3-01-0014-098-2015 AIP-3-01-0014-099-2016

20.106 20.106 20.106 20.106 20.106 20.106

Expenditures

$

Total U.S. Department of Transportation Total Expenditures of Federal Awards

183,996 235,552 235 482,820 861,787 4,050,000 5,814,390

$

5,814,390


BIRMINGHAM AIRPORT AUTHORITY NOTE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS NOTE 1

BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards include the federal grant activity of the Birmingham Airport Authority ("the Authority") and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). The Schedule presents only selected portion of the operations of the Authority. The Schedule is not intended to and does not present the financial position, changes in financial position or cash flows of the Authority.

NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported in the Schedule are reported on the accrual or modified accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, or the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Authority has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.


BIRMINGHAM AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2017 Section I--Summary of Auditor's Results Financial Statements Type of auditor's report issued:

Unmodified

Internal control over financial reporting: • •

Material weakness(es) identified? Significant deficiency(ies) identified that are not considered to be material weaknesses?

Yes

X

No

Yes

X

Noncompliance material to financial statements noted?

Yes

X

No

Yes

X

No

Yes

X

None reported

Federal Awards Internal control over major programs: • •

Material weakness(es) identified? Significant deficiency(ies) identified that are not considered to be material weaknesses?

Type of auditor's report issued on compliance for major programs:

None reported

Unmodified

Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance Section 200.515?

Yes

X

No

Identification of major programs: CFDA Numbers 20.106 Dollar threshold used to distinguish between Type A and Type B programs:

Name of Federal Program or Cluster Airport Improvement Program $750,000

Auditee qualified as low-risk auditee? Section II--Financial Statement Findings None reported. Section III--Federal Award Findings and Questioned Costs None reported.

X

Yes

No


BIRMINGHAM AIRPORT AUTHORITY SCHEDULE OF PASSENGER FACILITY CHARGES COLLECTED AND EXPENDED For the year ended June 30, 2017

Quarter Ended

PFC Charges Received

Interest Earned

Total Received

Net per Financial Statements

Expenditures on Approved Projects

Beginning Balance 9/30/2016 12/31/2016 3/31/2017 6/30/2017 Total 2017

$

88,569,789 1,422,511 1,483,205 1,227,261 1,089,724 5,222,702

$

1,403,379 117 97 273 273 761

$ 89,973,168 1,422,628 1,483,303 1,227,535 1,089,997 5,223,462

$

88,571,046 1,250,184 1,250,184 1,250,184 1,250,186 5,000,738

$ $ $ $ $

1,402,122 172,444 233,119 (22,649) (160,188) 222,725

Total Program to Date

$

93,792,490

$

1,404,140

$ 95,196,631

$

93,571,783

$

1,624,847

Receivable at June 30, 2017

$

736,515

PFC Funds to be used for future debt service payments and capital projects:

$

2,361,362


BIRMINGHAM AIRPORT AUTHORITY NOTES TO THE SCHEDULE OF PASSENGER FACILITY CHARGES COLLECTED AND EXPENDED NOTE 1

BASIS OF PRESENTATION The accompanying Schedule of Passenger Facility Charges (PFC) Collected and Expended includes all the PFCs and the interest earnings thereon collected by the Authority from August 1, 1997 (original date of approval) through June 30, 2017. The schedule also includes all funds expended life to date. The Authority currently collects $4.50 per enplaned passenger. The current approval for charges as approved by the Federal Aviation Administration is estimated to end on February 1, 2031.

NOTE 2

BASIS OF ACCOUNTING The accompanying Schedule of Passenger Facility Charges Collected and Expended present revenues received on a cash basis, while expenses are reported based upon the allocation of costs to approved projects.

NOTE 3

PROGRAM COSTS The amounts shown as current year revenues and expenses represent only the Passenger Facility Charges portions of the project costs. Entire project costs may be more than shown.

NOTE 4

RECONCILIATION TO STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION Passenger facility charges are reported on an accrual basis in the Authority’s Statement of Revenues, Expenses, and Changes in Net Position in the Comprehensive Annual Financial Report. Reporting standards adopted by the FAA require for purposes of the Schedule of PFC Collected and Expended such charges be reported on a cash basis. A reconciliation between cash collections and revenues reported on the accrual basis is as follows: Fiscal year 2017: Passenger Facility Charges: Cash collections per Schedule of PFC Collected and Expended Less prior year accrual Add current year accrual Amounts Per Statements of Revenues, Expenses, and Changes in Net Position

$

5,222,702 (750,876) 736,515

$

5,208,341


BIRMINGHAM AIRPORT AUTHORITY PASSENGER FACILITY CHARGE PROGRAM SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2017 A.

SUMMARY OF AUDITOR'S RESULTS 1) 2) 3)

B.

There were no material weaknesses identified during the audit of the passenger facility charge program. There were no significant deficiencies identified during the audit of the passenger facility charge program. The auditor's report on compliance for the passenger facility charge program expresses an unmodified opinion.

FINDINGS AND QUESTIONED COSTS None

54


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Birmingham Airport Authority Comprehensive Annual Financial Report  
Birmingham Airport Authority Comprehensive Annual Financial Report  
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