ATTACHMENT D. RTAA Financial Update Presentation Fitch Ratings on May 29, 2015

Size: px

Start display at page:

Download "ATTACHMENT D. RTAA Financial Update Presentation Fitch Ratings on May 29, 2015"

Derrick Daniels
6 years ago
Views:

1 ATTACHMENT D RTAA Financial Update Presentation Fitch Ratings on May 29, 2015

2 Fitch Ratings Update May 29, 2015

3 Agenda RTAA Overview and Strategic Priorities Regional Economic Outlook FY RTAA Initiatives Air Service Market Update Financial Overview Revenue Operating Expense Property, Plant and Equipment Capital Improvement Projects Debt Service Key Financial Ratios and Measures 2

4 Created in 1977 by State Legislation Owners and Operators of Who We Are Reno-Tahoe Airport Authority Reno-Tahoe International Airport Reno-Stead Airport Governed by Board of Trustees appointed by: Cities of Reno and Sparks Washoe County Reno-Sparks Convention and Visitors Authority A City Unto Itself Operationally independent with in-house police and fire departments, human resources, accounting, etc. 3

Catchment Area The RNO Catchment Area Includes, the Reno/Sparks

Bureau, 2010 Lake Tahoe Reno Nevada) Sparks RNO Carson City The

population grew 20% over the past decade RNO has limited

5 Catchment Area The RNO Catchment Area Includes, the Reno/Sparks MSA, Lake Tahoe and Carson City (capital of Source: U.S. Census Bureau, 2010 Lake Tahoe Reno Nevada) Sparks RNO Carson City The RNO primary catchment area has a population of over 587,439 people 1.3M people in secondary catchment area Northern Nevada population grew 20% over the past decade RNO has limited competition from other airports (SMF 140 miles away, Bay Area over 200 miles) Las Vegas is 450 miles awayestimated drive of 7 hours 4

Gateway to Lake Tahoe Reno-Tahoe International Airport makes getting to Lake Tahoe a breeze It take over 2 hours to get to Lake Tahoe from SMF RNO Lake Tahoe During a regular week day, on average,

6 Gateway to Lake Tahoe Reno-Tahoe International Airport makes getting to Lake Tahoe a breeze It take over 2 hours to get to Lake Tahoe from SMF RNO Lake Tahoe During a regular week day, on average, car rentals at SMF cost 69% more than car rentals at RNO Source: Reno-Tahoe International Airport Car Rental Survey SMF Resort Reno-Tahoe International Sacramento Airport Additional time & miles from SMF Distance Driving Time Distance Driving Time Distance Driving Time Northstar California 42 miles 46 mins 116 miles 1:55 hr 74 miles 1:09 hr Squaw Valley 48 miles 53 mins 117 miles 1:57 hr 69 miles 1:04 hr Source: March 2011; Yahoo Maps 5 South Lake Tahoe 58 miles 1:13 hr 115 miles 2:05 hr 57 miles 46 mins 5 Heavenly Ski Resort 59 miles 1:16 hr 115 miles 2:06 hr 56 miles 50 mins

last five years Created an airport that provides a

7 Gateway to the Region Airport is the Gateway to the Reno-Tahoe region $100M in terminal improvements in last five years Created an airport that provides a sense of place You know you are in Reno-Tahoe when you land 6

8 Strategic Plan (FY ) RTAA Board and Staff established a vision for the future: Five Strategic Priorities Five-year plan with flexibility and forethought Serve as a compass for the future Public process Airport committees User groups Board and staff Public 7

9 Strategic Plan (FY ) Work plans developed and resources identified Guiding Principles/Operating Practices Safety and Security Customer Service Financial Integrity Professionalism and Ethics Environmental Guiding Principles drive the day-to-day operations 8

10 Regional Economic Outlook 9

11 Economic Influences National and Regional Economic Factors Modest improvement next year, bright future Significantly lower unemployment rate Tesla Effect Technology / Data Centers Industrial Real Estate Market Unmanned Aircraft Systems Casino / Ski Resort Development Bowling Tournament Visitors 10

12 Improving Unemployment Rate 51% Reduction Since 2011 (14.0% to 6.9%) 11

13 Review of Key Economic Indicators M i l l i o n s Washoe County Visitors, Passengers, Airline Seats Passengers Visitors Available Seats M i l l i o n s Washoe County Taxable Gaming Revenue Washoe Co. Taxable Gaming Revenue $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 * Source: Reno-Tahoe International Airport and Reno-Sparks Convention and Visitor s Authority * Source: Nevada State Gaming Control Board Washoe County Median Home Sale Price Median Home Sale Price B i l l i o n s $9.000 $8.000 $7.000 $6.000 $5.000 $4.000 $3.000 $2.000 $1.000 $0.000 Washoe County Taxable Sales Washoe County Taxable Sales * Source: Reno/Sparks Association of Realtors * Source: State of Nevada Department of Taxation 12

Puts Us on The Radar: Manufacturing Business

14 Tesla Battery Gigafactory The Largest Deal In The U.S. Changes Reno-Sparks Brand Overnight 13 More Than Jobs Puts Us on The Radar: Manufacturing Business Entrepreneurs Creative Class Research & Development Investors...

15 Tesla Only Part Of The Growth! Tesla Primary Tesla Secondary EDAWN Primary EDAWN Secondary Total Jobs ,460 4,360 7, ,479 4,384 7, ,148 4,000 5,040 10, ,000 1,640 3,500 4,410 10, ,000 4,920 3,000 3,780 14, ,800 2,952 2,500 3,150 10, ,000 2,520 4,520 5 Year Total 6,500 10,660 15,000 18,900 51,060 17,160 Total Projected Employment Growth 14 14

16 Explosive Growth Is Coming! 250, ,000 Tesla Projected Job Growth EDAWN Projected Job Growth Historic Employment 4.9% Growth 210, % Growth 190, , ,

Transportation / Distribution Center Logistics and operations industry cluster - a natural target industry for Northern Nevada, Location and geographic advantages, strong existing infrastructure and

17 Transportation / Distribution Center Logistics and operations industry cluster - a natural target industry for Northern Nevada, Location and geographic advantages, strong existing infrastructure and cost and regulatory advantages One day truck distribution to the entire west coast Union Pacific Railroad s Class 1 Transcontinental rail line Network Access Point for internet traffic - State-of-the-art digital and fiber optic highway Internet fulfillment, bio-pharma, and hi-tech business World s Largest Industrial Park upon completion 16

18 Notable Reno-Tahoe Companies 17

19 Silicon Valley Support Datacenter / Distribution / Manufacturing 18

20 Entrepreneurial Development Success! Entrepreneur.com on NBCNews.com 3 Alternative Tech Startup Cities Three Western locales previously considered vacation destinations are now alternatives to 3 Alternative Tech Startup Cities With Less Traffic, More Housing (Infographic) Three Western locales previously considered vacation destinations Silicon Valley are now life alternatives at a much to more Silicon affordable Valley life at a much more affordable price. price. IEDC Award! 19 Reno, NV (DEC. 15, 2014) Next City will host its sixth annual Vanguard conference in Reno. Vanguard is an annual experiential urban leadership conference. 19

21 RNO Land Development In Process Home Gardens South 45 acres Mill & Rock/Northeast Quadrant 36 acres Airport South 4 acres Pending Market Demand Airport East (Brookside) 50 acres Southeast Quadrant 25 acres Southwest Quadrant 90 acres Airport Gateway Center 7.5 acres Home Gardens North/Airport West 25 acres 20

22 Reno-Stead - Concept Plan Vacant Properties owned by RTAA total 2,396 acres 37% of vacant industrial land in Washoe County * Source: Truckee Meadows Regional Planning Authority, 3 rd Quarter Industrial Inventory Report 21

23 22

24 Northern Nevada UAS Partnerships 23

25 UAS Stead Test Range Concept 24

26 Aviation Taxes Competitive Disadvantage 25

27 Legislative Effort A partial abatement of taxes on aviation property and parts will lead to growth in the aviation industry in both the short and longer term. Nevada will experience significant gains in high-wage jobs and economic activity from existing Nevada-based businesses. The employment and economic benefits will begin to occur quickly, because of pent up demand. Moreover, the growth will generate tax revenues that exceed cost of the abatement. Supports designation as FAA testing site for Unmanned Aircraft Systems (UAS) 26

28 Air Service Market Overview 27

29 Air Service Market Update Strong Demand - Higher U.S. industry traffic of 2.5% Merger of American & US Airways Airline Profitability Respectable profit margins Significantly lower fuel prices Larger aircraft at bigger airports Airline perspective Why fix what is not broken? RNO More Competition - Full year impact - JetBlue and Volaris Continued existing service by current carriers 28

30 Passenger Traffic Update Enplaned Passenger forecast for FY reflects a decrease of 2.2% FY Budget is 2.9% higher than current year forecast and modestly up as compared to the adopted budget 29

Weekly Service Los Angeles, CA (American) Larger Aircraft on Sept 3, 2014 Four to Five Flights per

31 New Air Service New York, NY (jetblue) Commenced on May 28, 2015 Airbus 320 with 150 Seats Daily Service to JFK Guadalajara, Mexico (Volaris) Started Dec 16, 2014 Airbus 320 with 174 Seats Twice Weekly Service Los Angeles, CA (American) Larger Aircraft on Sept 3, 2014 Four to Five Flights per Day To start June 5, 2015 San Jose, CA (Alaska) Service Schedule Change Business Traveler Convenience 30

32 MAP 31

Passenger Traffic Market Share Southwest market share is projected to drop from 54% in FY 2012-13 to 42% in

33 Passenger Traffic Market Share Southwest market share is projected to drop from 54% in FY to 42% in FY Merger between US Airways and American. Combined market share is forecast to be 24% in FY

Strategic Priority Cargo Development In 2014, RNO Handled over 125 Million Pounds of Air Cargo, Representing the Best Cargo Year During the Last Seven Years.

34 Strategic Priority Cargo Development In 2014, RNO Handled over 125 Million Pounds of Air Cargo, Representing the Best Cargo Year During the Last Seven Years. 120 million 109 million 111 million 112 million 117 million 6.8% 125 million 102 million CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 December 2014 was recorded as the best month ever in regards to cargo handling at RNO Source: Airline Activity Report, RNO 33

recovery and growth within our region Has changed

35 A New Approach Air Service Development The most important strategic priority for the RTIA The catalyst for economic recovery and growth within our region Has changed drastically in the past 24 months Requires resources and a team approach

36 Air Service Development Temporarily waive or discount airport fees and authorize marketing/advertising support for a maximum of 365 days to a scheduled passenger airline(s), cargo carrier(s), and seasonal and scheduled charter service to a new destination Marketing Support - $25,000 in target marketing support both in and out of the market Airports are limited on what they can provide per FAA Guidelines Expanded in 2014 to build a coalition of casinos, ski resorts, local businesses, community groups, and local governmenta to create a unique synergy 35

37 Air Service Development- FY 2015 Market Analysis Air Service Development Leverage Resources Airline Meetings 36

38 Strategy Review Strategy to Develop Resources Tourism Government Business Community Expand Financial Base City Business Advisory Council Awareness Campaign Valuation of In- Kind Support County RNO Business Lounge RNO Business Services State In-Kind Support Airline Program Enrollments 37

39 Third Party Valuation - In-Kind Support Regional Air Service Corporation (RASC) offers a marketing resource that no other community can offer RASC is consortium that spreads across industries (tourism, hotel, gaming, ski, etc.) Marketing support that RASC brings provides unbeatable air service leverage. Combined Database Size Overall Social Media Reach Total Website Visitations PR outreach Other 38

40 RTAA Marketing Support of New Routes Route-based messaging Timing to maximize efficiency/effectiveness Based on Strategic Partnerships Multiple Media In-Terminal PR/Social Print Online TV Radio Outdoor 39

41 Financial Results 40

42 Airline Agreement Five (5) Year Term - Effective July 1, 2015 through June 30, 2020 Opportunity to Extend Additional five (5) years with Board approval Retain existing rate-setting methodology Hybrid approach Airfield and Baggage Handling System Cost Center Residual Terminal Building Commercial Compensatory 50/50 net revenue sharing component Enforceable Lease Five Year Financial Commitment Extraordinary Coverage Protection 41

43 Signatory Airlines Non-Signatory Airlines Allegiant Air JetBlue Airlines Volaris Airlines 42

44 Fiscal Impact Projected airline revenue of $17 million per year or $85 million over the five (5) year term Forecasted airline cost per enplaned passenger to remain less than $

45 Revenue Summary Total Revenue of $ million 2.3% above last year s budget Higher airline revenue of $411,450 Airline Cost per Enplaned Passenger of $8.39 Non-Airline Revenue is forecasted to be 2.3% above the current year budget reflecting improved FY actual results FY Budget FY Budget Dollar Change % Change Airline Revenue $14,980,252 $15,391,702 $411, % Non-Airline Revenue 28,747,526 29,394, , % Total Operating Revenue 43,727,778 44,786,625 1,058, % Non-Operating Revenue 1,637,600 1,630,300 (7,300) (0.4%) Total Revenue $45,365,378 $46,416,925 $1,051, % 44

46 Airline Cost Per EPAX Trend 45

47 Raleigh-Durham International Nashville International William B Hobby - Houston Fresno Yosemite International San Antonio International Jacksonville Aviation Authority Tucson International Reno-Tahoe International Austin-Bergstrom Port Columbus International John Wayne Airport- Orange County Anchorage International Indianapolis International Cincinnati/Northern Kentucky Oakland International San Jose International Lambert-St. Louis International Sacramento County Pittsburgh International Airline Cost per Enplaned Passenger By Benchmark Airports 2014 ACI-NA Benchmarking Survey Reflecting 2013 Results FY CPE of $8.39 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 46

48 Non-Airline Revenue 47

49 Non-Airline revenues of $ million, an increase of $647,397 or 2.3% Improvement in revenues per transaction - public parking and rental car Significantly higher Box Hangar occupancy Offset by lower Net Win percentage - gaming Lower cost recovery in Reimbursed Servicesdisposal fees Lower UAS Testing revenue offset by lower expenses RTAA Non-Airline Revenue NON-AIRLINE REVENUE FY Budget FY Budget Dollar Change Parking & Ground Trans $8,504,900 $8,975,800 $ 470,900 Auto Rental 5,879,900 6,267, ,700 Non-Terminal Rent 5,059,800 5,347, ,900 Baggage Handling System 1,720,826 1,644,603 (76,223) Gaming 1,125,400 1,014,800 (110,600) Retail 1,035,400 1,003,200 (32,200) Food and Beverage 885, , Other Reimbursed Svc. 910, ,520 (89,580) Aircraft Fees-Reno 810, ,000 9,400 Terminal Rents, Other 831, ,100 (46,600) Advertising 662, ,000 (2,900) Stead 795, ,200 (197,000) Other Concessions 485, ,700 63,000 Miscellaneous 39,300 22,900 (16,400) GRAND TOTAL $28,747,526 $29,394,923 $647,397 48

50 FY Expenditure Budget Proposed budget of $ million is 1.5% higher than the prior year budget Proposed budget is 2.1% above the updated FY forecast Increase of $516,000 or 2.0% in Personnel Services BUDGET UPDATED FORECAST BUDGET DOLLAR CHANGE BUDGET FORECAST A B C C -A C - B Personnel Services $25,771,165 $25,496,524 $26,286,995 $515,830 $790,471 Utilities & Communications 2,862,700 2,885,317 2,919,063 56,363 33,746 Purchased Services 5,627,235 5,607,861 5,592,574 (34,661) (15,287) Materials & Supplies 1,905,619 1,884,327 1,909,125 3,506 24,798 Administrative Expenses 2,403,054 2,457,220 2,436,631 33,577 (20,589) Total $38,569,773 $38,331,249 $39,144,387 $574,614 $813,139 49

51 Outstanding Senior Debt and Ratios Outstanding Debt (as of 3/31/2015) Series: 2005 Principal Outstanding: $23.4 million Total Remaining Debt Service: $29.7 million Final Maturity: July 1, 2026 Annual Debt Service: $2.5 million Key Ratios - FY 2015 Debt per Enplaned Passenger: $18 Debt Service Coverage: 2.98x Only one series of senior lien bonds remain outstanding (Series 2005) Debt service is primarily paid for through parking revenues With a first call date of July 1, 2015, RTAA is looking to refinance through a direct loan/ private placement 50 50

Debt Service Overview In 2014-15, partial repayment of Subordinate Lien Notes of $2.

52 Debt Service Overview In , partial repayment of Subordinate Lien Notes of $2.913 million Direct Loan/ Private Placement Refinance of 2005 Bonds Estimate savings of $184,000 or $3.2 million over next 11 years Existing 2005 Debt Service 51

53 Debt Service Coverage Ratio Net revenues including pledged Passenger Facility Charges, as defined in an airports bond ordinance, divided by principal and interest requirements for the fiscal year. 52

54 FY Proposed Budget Key Benchmarks Financial Measurements FY Budget FY Proposed Budget Landing Fee per 1,000 lbs. units $2.93 $3.09 Average Terminal Rental Rate $62.45 $62.39 Net Revenue Available for Sharing * $178,700 $565,600 Airline Cost Per EPAX $8.15 $8.34 Net Cash Flow to RTAA Discretionary * $2.47 million $3.02 million Days Cash on Hand 344 Days 361 Days * Details of Net Revenue Available for Sharing and Net Cash Flow to RTAA contained in Appendix 53

55 Days Cash on Hand Unrestricted cash and investments divided by annual operating and maintenance expenditures and multiplied by

56 Capital Improvement Update 55

57 FY Capital Improvements Project Name Estimated Cost Funding RNO Taxiway C and Connectors Reconstruction $9,123, % FAA Grants; 6.25% General Purpose RTS Taxiway C Reconstruction & Edge Lighting 2,144, % FAA Grants; 6.25% Special Fund RNO Digital Radio System Upgrade 1,526,440 42% PFC 68% General Purpose RNO Central Disposal Facility 1,500,000 Passenger Facility Charge RNO Airport Communication Center System 1,495,800 Passenger Facility Charge RNO FIDS and Terminal Paging Replacement 1,266,750 Passenger Facility Charge RNO Airfield Pavement Maintenance 829,100 General Purpose RNO Landside Pavement Maintenance 593,000 General Purpose RTS Nevada Army Guard Access Road, Ph ,150 Special Fund RNO Deicing Materials Storage Facility 380,000 Passenger Facility Charge RNO RAC Asphalt Rehabilitation National 360,000 Customer Facility Charge Guard Way (Hertz) RNO RAC Asphalt Rehabilitation Aviation Way 250,000 Customer Facility Charge RTS Building 7003 (FBO Office) Roof Replacement 160,000 Special Fund Grand Total $20,160,781 56

58 Future Development Beyond FY Reno-Tahoe - Airside Airfield Pavement Maintenance ARFF Vehicles Runway 16R Keel Section Southwest Cargo Apron Snow Removal Equipment Terminal Apron, Phase 18 Funding RTAA FAA Grant/ PFC FAA Grant FAA Grant/ PFC Backed Bonds PFC FAA Grant Reno-Tahoe Landside & Terminal Jet Bridge Replacement Landside Pavement Maintenance Passenger Sterile Area Exit Lane Rental Car Facility Renewal Terminal Elevator Replacement Third Party Cargo Facilities Third Party GA East Hangars Funding PFC RTAA FAA Grant CFC PFC Private Private Reno-Stead Airport Funding Concrete Apron FAA Grant Runway 8/26 Rehabilitation FAA Grant Land Infrastructure Private 57 57

59 Summary and Conclusion RTAA prudently manages its operations despite passenger traffic challenges Non-Airline Revenue is budgeted to increase and remain at two-thirds of total operating revenue Regional Economy and Land Development Opportunities Significant upswing CIP remains modest and does not require additional GARBs Airline CPE remains stable and at competitive levels RTAA continues to control operating costs and prudently manage its debt structure Senior Lien debt service coverage remains very strong at or above 2.9x coverage Liquidity is strong. Recent decrease due to prudent decisions to partially pre-pay $2.9 million of Subordinate Lien Notes and to keep Airline CPE at competitive levels. 58

60 Questions?

61 Appendix 60

62 Financial Overview (In Thousands) FY Actual FY Budget FY Budget Variance Forecast to Budget Operating Revenue Airline (Before Profit Sharing) $ 14,699 $ 15,159 $ 15,838 $ 679 Non-Airline 29,188 28,748 29, Non-Operating Revenue 1,697 1,638 1,630 (7) Total Revenue 45,586 45,545 46,863 1,319 O&M Expenditures (36,147) (38,570) (39,144) (575) Net Available for Debt Service 9,439 6,975 7, Debt Service after PFCs (4,583) (3,785) (3,663) 122 Net Revenue After Debt Service $ 4,856 $ 3,190 $ 4,055 $

63 Financial Overview (In Thousands) FY Actual FY Budget FY Budget Variance Budget To Budget Net Revenue After Debt Service A $4,856 $3,190 $4,055 $866 Profit Sharing Calculation Gaming Revenue- 35% (463) (394) (355) 39 Capital Asset Repayment (1,864) (2,210) (2,729) (518) Profit Sharing Adjustments (762) (228) (79) 148 Net Revenue Available-Sharing 1, Airline Share 50% 50% 50% Airline Profit Sharing B Net Revenue to RTAA A-B 3,973 3,011 3, Funds Committed to Rental Car (939) (545) (590) (44) Net Revenue to RTAA $ 3,033 $ 2,466 $ 3,019 $

FY 2015-16 Budget by Division Operations/Public

64 FY Budget by Division Operations/Public Safety and Maintenance represent 61% of the Budget 63

65 Questions?

RNO Master Plan Approved Alternatives, Financial Analysis, and Facilities Implementation Plan

RNO Master Plan Approved Alternatives, Financial Analysis, and Facilities Implementation Plan Project Schedule Today Slide 40 Project Vision To provide an achievable, flexible, fiscally, and environmentally