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Audit Report - 2009 I I I I I I I l I~' t I I I I I I I I Prepared by the Management of the Salina Airport Authority www.salinaairport.com CUSIP #794760XXX 3237 Arnold I Salina, KS 67401 I 785-827-3914 ~WWW.5alinaairport.com I www.flysalina.com !il'" 11I"_ I I I I I I I I I I I I I II I I I I I SALINA AIRPORT AUTHORITY TABLE OF CONTENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT F or the Fiscal Year Ended December 31, 2009 INTRODUCTORY SECTION Letter of Transmittal..................................................................................... .1-8 Principal Officers............................................................................................9 Authority Staff Members ..... .................................. ......... .......:....... ................10 Organizational Chart..................................................................................... .11 Certificate of Achievement........................................................................... .12 Salina Municipal Airport Aerial View........ .......... ................................... ......13 FINANCIAL SECTION Independent Auditors' Report .... ........................................ ............................15-16 Management's Discussion and Analysis ......................................................17-23 Statements of Net Assets .... .................... .......... ............ ... ..............................24-25 Statements of Revenues, Expenses and Changes in Net Assets .............................................................................. .26 Statements of Cash Flows (Direct Method) ...................................................27 -28 Notes to Financial Statements....... ....................... ........ ........... ......... ..............29-44 Supplemental Information Schedules of Revenues, Expenses and Changes in Net Assets ..................45-47 Capital Expenditures.................................................................................. .48-49 General Obligation Refunding Bonds - Series 1999-B...............................50 General Obligation Improvement Bonds - Series 2001-A..........................51 General Obligation Improvement Bonds - Series 2002-A..........................52 General Obligation Improvement Bonds - Series 2005-A .........................53 General Obligation Improvement Bonds - Series 2007-A.........................54 General Obligation Temporary Notes - Series 2007-1...............................55 General Obligation Improvement Bonds - Series 2009-A .........................56 General Obligation Improvement Bonds - Series 2009-B .........................57 Special Assessment Debt-Street and Utility Improvement.........................58 Special Assessment Debt-Sanitary Sewer Extension .................................59 Financing Lease Payable............................................................................ .60 Insurance in Force...................................................................................... .61 ii I I I I I I I I' I I I I I I I I I I I STATISTICAL SECTION Statistical Table of Contents .......................................................................62 Total Annual Revenues, Expenses and Changes in Net Assets History........63-64 Change in Cash and Cash Equivalents History ..............................................65-66 General Obligation Debt Service Coverage...................................................67 Capital Expenditure History ......................................................................... .68 Revenue Bond Coverage............. ................ ........................ ................ ... ........69 Local Government Mill Levy Rates, Direct and Overlapping.......................70 Principal Customers....................................................................................... 71 Mill Levy Revenue........................................................................................ 72 Air Traffic, Fuel Flowage, and Enplanement Trends .................................... 73 Major Employers ..... .......... ..... ....... ........... ... ..................... ..... ..... ... ................74 Saline County Population and Demographic Statistics .................................75 Saline County Largest Taxpayers and Tax Collection Statistics ...................76 COMPLIANCE Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards........................................................... 77-78 Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance In Accordance with OMB Circular A-133 ...........................................79-80 Schedule of Expenditures of Federal Awards................................................ 81 Notes to Schedule of Expenditures of Federal Awards ................................82 Summary Schedule of Prior Audit Findings .................................................83 Schedule of Findings and Questioned Costs .................................................84 Corrective Action Plan .................................................................................. 85 I I I I I I I I I I I I I I I I I I I ^ ~ .. l1li o D- C n .. -. o ~ ( For years, the terms "UAS" and "UA V' have been synonymous with "futuristic" and "science fiction," but in a ribbon cutting ceremony for the Unmanned Aircraft Systems Laboratory on Oct. 21, K-State at Salina and its partners brought the future to the present. \ The building is home to K-State's new and impressive Advanced Avionics Miniaturization Program which is dedicated to the miniaturization of unmanned systems and payloads by the rapid insertion of advanced miniaturization technology into unmanned aerial vehicle cameras, sensors and navigation systems. Forecast International predicts that the worldwide market for UA Vs may be worth more than $38 billion in the next decade. ~ y ~ SA LINAA irport =,q~-J I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I SA LINA Airport Il~ Chairman Jeffrey R. Thompson Vice-Chairman Troy Vancil Secretary Dr. Randy Hassler Treasurer Eric R. Hardman Past Chairman Julie Sager Miller Executive Director Timothy F. Rogers, A.A.E. Mgr. of Administration and Finance Michelle R. Swanson Mgr. of Operations David "Gunner" Wiles Mgr. of Facilities Kenny Bieker Mgr. of Public Affairs and Communications Melissa l. McCoy Board Attorney Greg A. Bengtson June 16,2010 Salina Airport Authority Board of Directors 3237 Arnold Ave. Salina, KS 67401 To the Board of Directors ofthe Salina Airport Authority: The Comprehensive Annual Financial Report (CAFR) of the Salina Airport Authority (the "Authority") for the fiscal year ended December 31, 2009 is hereby submitted in accordance with the Kansas Statutes Annotated (K.S.A. 27-324). As required by the statute, the City of Salina will be furnished copies ofthe Authority's 2009 CAFR. Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rests with the Executive Director of the Authority. To the best of our knowledge and belief, the data as presented is accurate in all material aspects, that it is presented in a manner designed to fairly set forth the fiscal position and results of the operation of the Authority as measured by its financial activity, and that all disclosures necessary to enable the reader to gain maximum understanding are included in the. report. This CAFR is presented in accordance with generally accepted accounting principles (GAAP) and pursuant to K.S.A 27-324, an audit of the books, accounts and financial statements has been completed by the Authority's independent certified public accountants, Clubine and Rettele, Chartered. The independent audit is in accordance with the Kansas Municipal Audit Guide. the Government Auditing Standards issued by the Comptroller General of the United States, and the provisions of the Office of Management and Budget Circular A-133, "Audits of States, Local Governments and Nonprofit Organizations" . GAAP requires that management provide an overview and analysis to accompany the financial statements in the form of a Management Discussion and Analysis (MD&A). It is recommended that this letter of transmittal be read in conjunction with the MD&A, which can be found immediately following the report of the independent auditor in the Financial Section of this report. REPORTING ENTITY The Salina Airport Authority is a body corporate and politic. The Authority was created by the City of Salina in April 1965 (Sec. 4-16, Salina City Code) pursuant to the authority granted by the City by the surplus property and public airport authority act of the State of Kansas (K.S.A 27-315 et seq.) The Authority was created for the purpose of accepting as surplus property portions of the former Schilling AF.B., which was closed by the United States Department of Defense in June 1965. By quitclaim deed the Authority received over 2,900 acres of land and numerous buildings for the purpose of operating and INTRODUCTORY FY 2009 developing the Salina Municipal Airport and the Salina Airport Industrial Center. The Authority is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. The Board appoints the Executive Director, who is the chief executive officer of the Authority. The Executive Director hires the remaining employees ofthe Authority. The Executive Director and his staff of nineteen employees manage and operate the Salina Municipal Airport and the Salina Airport Industrial Center. The Salina Municipal Airport is the only commercial service airport serving Salina/Saline County and the 24-county area, which comprises North Central Kansas. The Airport also services the corporate, business, private aviation and flight training needs of industry, business and individuals in the area. The Airport is also used by Kansas State University at Salina (KSUS). The campus of KSUS is located adjacent to the Airport. The college offers degrees in professional flight training, airframe and power plant maintenance, and avionics technology. The Salina Municipal Airport and Airport Industrial Center is home for 80 businesses and organizations. Forty-five of the businesses and organizations are tenants of the Authority. One of the primary functions of the Authority is to facilitate the continued growth of jobs and payroll at the Airport and Airport Industrial Center. The Authority works in partnership with the City of Salina, Saline County and the Salina Area Chamber of Commerce for the retention of existing business and industry and the recruitment of new business and industry. ECONOMIC CONDITIONS AND OUTLOOK Local Economv The Salina/Saline County economy has continued to demonstrate economic strength, as compared to other regions of the state. In fact, Salina is the employment center for a large 13-county labor pool of nearly 44,000 individuals. At the end of 2009, the Saline micro area unemployment rate was at 5.6%. Even during these times of economic challenges, the area's unemployment rate has remained below the State and National average. Salina's visitor count during 2009 is estimated at over 600,000. Lodging revenue reached a record' high of over $19 million. Growth in the areas of manufacturing, transportation, finance, real estate, insurance, services and retail trade, confirm Salina's position as one of Kansas' strongest regional economic centers. Collectively, Salina retail sales are pushing above $900,000 million and towards the $1 billion threshold annually. Salina is the trading center of a 24-county area in North Central Kansas. In the past year, retail sales increased by more than 4%. Recent retail sales activity in Salina increased at a faster pace as other areas were declining. Salina has a 1.485 "pull-factor" reflecting the overall strength of the community as a regional retail draw. Major retail firms opening or expanding in recent years include Kohl's, Petco, Old Navy, Hobby Lobby, Logan's Roadhouse and Ashley's Furniture Store. Menard's has announced the opening of a Salina location. 2 I I II vi I I II I I I I I I I I I I I I I I I I I I I il I I I I I I I I I I I INTRODUCTORY FY 2009 Economic Condition of the Airport and Airport Industrial Center As of December 31, 2009, over 80 businesses and organizations at the Salina Municipal Airport and Airport Industrial Center employed over 4,000 employees with a combined payroll in excess of $150 million. Future Economic Outlook The future economic outlook for both Salina and the Authority continues to look favorable. Continued growth in service, retail and manufacturing sectors is expected. The Salina Area Chamber of Commerce forecasts that approximately 700 new jobs per year will be added to the economy over the next three to five years. Salina Aviation Service Center businesses including CA V Aerospace, Kansas State University at Salina, America Jet at SLN, and Flower Aviation continue to work on facility expansion plans. Salina Airport Industrial Center businesses including Geoprobe Inc., Schwan's Food Manufacturing Inc., and the Kansas Army National Guard at Salina, also continue to work on facility expansions. Collectively, these expansions will result in additional jobs and payroll. The Salina Airport Authority in partnership with the Salina Area Chamber of Commerce, the City of Salina and Saline County, continue to execute an economic development strategic plan that include web based building and site directories, electronic newsletters, trade show participation and expanding contacts through the Kansas Department of Commerce. The Airport Authority contracts the services of Mr. James Gregory, James Gregory Consultancy, for national and international recruitment of aerospace business to locate at the SLN Aviation Service Center. INITIATIVES AND DEVELOPMENT Secure 95% grant funding from the Federal Aviation Administration to complete the design of a new Aircraft Rescue and Fire Fighting Station. During 2010, the Authority will complete the design of new T -hangars at the Aviation Service Center that will provide approximately 150 new general aviation t-hangars for the users of the Salina Municipal Airport. The Authority will continue the partnership with City of Salina, USD 305, K-State and the Kansas Board of Regents to finalize settlement negotiations with the U.S. Department of Justice relative to the environmental clean-up of portions of the former Schilling Air Force Base. (See Note G in the Notes to the Financial Statements). With the 2009 announcement of the Salina Hawker Beechcraft facility closing, the SAA will target specific aviation service sectors to maximize recruiting efforts and the highest priority will be given to putting jobs back in the buildings. 3 4 I I I I I I I I I I I I I I I I I I I INTRODUCTORY FY 2009 Finance and Administration Cash Reserves A significant financial objective for the Authority over the next three years is to increase cash reserves. The goal is to increase reserve levels to $1.3 million by 2013. This will be a critical objective in order to maintain the Authority's Aa2 bond rating. 2007-A General Obligation Temporary Note Issue The Authority's 2007-A General Obligation Temporary Notes ($7.05 million) will mature at the end of the third quarter of201O. The temporary notes were issued in 2007 to fund the construction and development of Hangar 600. During 2010, the Authority will explore the option of renewing the temporary notes or securing permanent financing for the balance of the outstanding temporary notes. Accounting Standards and Practices Early implementation and compliance with all new Governmental Accounting Standards Board (GASB) statements is always the practice. During 20 I 0 the SAA will insure that it is in compliance with GASB Statement No. 45, which was issued to provide more complete, reliable and decision-useful financial reporting regarding the costs and financial obligations that governments incur when they provide certain postemployment benefits as part of the compensation for services rendered by their employees. To continue our efforts in improving Board involvement in the accounting and financial responsibilities of the SAA, the Board treasurer will continue to review monthly financial statements with the Manager of Administration and Finance prior to each Board Meeting. In addition, the SAA will again establish a formal audit committee for the 2009 financial statement audit. Government Finance Officer Association (GFOA) Achievement Award SAA's 2009 Comprehensive Annual Financial Report (CAFR) will be submitted to GFOA for review and award of a Certificate of Achievement for Excellence in Financial Reporting. Energy Efficiency Throughout 2010, Authority staffwill utilize the services of the government backed program, Energy Star to assist in saving resources to protect the environment through energy efficient products and services. This process includes collecting facility data that will allow us to evaluate energy performance of buildings and facilities. Personnel Manual Update SAA personnel policies and procedures will be reviewed and updated. An updated personnel manual will be prepared to replace the current version. I I I I I I I I I I I I I I I I I I I INTRODUCTORY FY 2009 Policies and Procedures As a continuation of our update to the Airport Rules and Regulations, the SAA staff will work with Clark, Mize and Linville staff to assist in developing policies and procedures that further clarify and define doing business, operating or conducting activities at the Salina Municipal Airport and Salina Airport Industrial Center Property/Liability Insurance During the first quarter of the year the SAA will develop a Request for Proposal package for property/liability insurance brokerage/agent services. Public Affairs. Marketine and Soecial Events SLN Aviation Service Center The new year's efforts will focus on continued mention of the SLN Aviation Service Center growth.in national and international aviation/aerospace news media. Through the development of a strategic plan, the Salina Airport Authority and Salina Area Chamber of Commerce have identified existing community-based aviation-based aviation and aerospace businesses for growth opportunities and the international aerospace industry as recruiting prospects. The Salina Airport Authority will target specific aviation service sectors to maximize recruiting effectiveness. Publications and tactics will be continued that have worked well for us in the past, these include the services of a recruiter, the electronic newsletter, building relationships with aviation media to continue earned media and the annual aviation media tour with new presentation material. During 2010 out of state recruiting trips will result in meetings with over 45 prospective aerospace businesses. When facilities currently occupied by Hawker Beechcraft become available or we are provided with hard dates of when those facilities will be available the highest priority will be given to putting jobs back in those building. Please refer to the General Prospect Package for more information on those building and what industry they are best suited for. Air Service Promotion and Marketing Following the Department of Transportation's announcement ofthe selection of SeaPort Airlines as Salina's new essential air service provider, SeaPort took over the service from Salina to Kansas City in April 2010, replacing Great Lakes Airlines. With three daily roundtrip flights Sunday through Friday, the Salina and surrounding communities are serviced by the impeccable safety and reliability of the airline's 9-seat Pilatus PC-12 aircraft. SeaPort Airlines is a dba of Alaska Juneau Aeronautics, an FAA Part 135 certified scheduled air carrier founded in 1983. SeaPort Airlines operates 115 daily scheduled flights during the weekdays in five Northwest cities, five Mid-South cities, seven Southeast Alaska cities via Wings of Alaska and all with hassle-free check in, bringing the convenience of a private aircraft to the average traveler for the same cost as traditional airlines. Salina Air Service will continue to be promoted through a monthly article in the Airport Authority electronic newsletter and through promotional ads on their behalf. 5 6 I I I I I I I I I I I I I I I I I I I INTRODUCTORY FY 2009 SLN - A Destination Airport for General Aviation The Airport Authority will continue to actively recruit General Aviation (GA) to the Salina Municipal Airport. In the past, the Salina Area Chamber of Commerce has worked with groups like the Flying Dentists and Flying Farmers to come into SLN. Airport Authority staffwill work closely with Chamber Visitor's Bureau (Visit Salina) staff to find and recruit General Aviation groups to fly into SLN and have meetings in Salina. Staff will also work closely with SLN's two FBO's to position SLN as the destination for General Aviation. To achieve positioning SLN as a destination spot for GA, staffwill market to groups such as the Flying Dentists, Flying Farmers and the Experimental Aircraft Association (EAA). Staffwill also work closely with K-State at Salina, develop workshops with CA V Aerospace and develop relationships with local attractions for group fly-in events. FINANCIAL CONTROLS The Authority follows generally accepted accounting principles applicable to governmental unit enterprise funds. Accordingly, the financial statements are prepared on the accrual basis. Management of the Authority is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the Authority are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. An annual budget is prepared in accordance with the Authority's By-laws. However, the Authority is specifically exempt from the budget laws ofthe State of Kansas (K.S.A. 27-322) and the Authority is not required to demonstrate statutory compliance with its annual operating budget. Accordingly, budgetary data is not included in the accompanying financial statements. CASH MANAGEMENT All cash temporarily idle during 2009 was invested by the Executive Director of the Authority in short- term investments to attain the highest possible return consistent with the Authority's liquidity needs. All investments are in compliance with K.S.A. 12-1675 which controls the investment of public funds by Kansas governmental units. RISK MANAGEMENT The Authority is exposed to risks of loss associated with the operation of a public use airport and the operation of an airport industrial center. To handle the associated risks of loss, the Authority uses I I I I I I I I I I I I I I I I I I I INTRODUCTORY FY 2009 available tort liability legislation and purchases the appropriate types of insurance coverage. It is the policy of the Authority to eliminate or transfer risk ofloss where possible. The Kansas Tort Claims Act (K.S.A. 75-6101 et seq.) generally limits tort liability for Kansas governmental entities. The maximum liability for claims as specified by the Act is $500,000 for any number of claims arising out of a single occurrence or accident. For wrongful acts, Kansas governmental entities or their employees are exempted from liability. The Authority carries $1,000,000 of comprehensive general liability insurance. During 2009 the Authority carried $28,793,138 of insurance on airport commercial properties. The Authority also acquires construction builders' risk policies for all major construction projects or requires evidence of coverage from the contractor. The Authority's commercial property insurance included $1,765,779 in loss of rents coverage. All contractors and lessees are required to carry amounts of property insurance with limits and deductibles approved by the Authority. A schedule of insurance in force at December 31, 2009 is included in the Supplemental Section of this report. In addition, the Authority uses various risk management techniques. All contracts and leases are reviewed by the Authority's legal counsel. All contractors and subcontractors are required to submit evidence of insurance coverage naming the Salina Airport Authority and the City of Salina as named additional insured. GFOA CERTIFICATE OF ACHIEVEMENT The Government Finance officers Association of the United States and Canada (GFOA) Awarded a Certificate of Achievement or Excellence in Financial Reporting to the Salina Airport Authority for its comprehensive annual financial report for the fiscal year ended December 31, 2008. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfY both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. ACKNOWLEDGEMENTS The support of the Authority's Board of Directors has been instrumental in the preparation of this report. The Board has been actively involved in the preparation and review of this report and is committed to responsible and progressive financial reporting. Also acknowledged is the assistance of the Authority's auditor, Clubine and Rettele, Chartered, the Authority's accounting advisor, Thomas G. Arnett, CPA, Saline County Clerk's Office, Dennis Lauver, President of the Salina Area Chamber of Commerce, Rod Franz, Director of Finance for the City of Salina, Sean McIntire and Grant Swinehart, Kansas State University at Salina students and Salina 7 8 I I I I I I I I I I I I I I I I I I I INTRODUCTORY FY 2009 Airport Authority Airport Management Interns, the University of Kansas Institute for Public Policy and Business Research and the Kansas Department of Human Resources Labor Market Information Services, in the preparation of this report. R~~rtfuIJY submitted, Timothy F. Ro rs, Executive Director Salina Airport Authority V72~ <-< ~eyJ Michelle R. Swanson Manager of Administration and Finance Salina Airport Authority cc: The City of Salina Board of Commissioners I I I I I I I I I I I I I I I I I I I IN I ROm'C lOR Y I 'i ~(JlI') SALINA AIRPORT AUTHORITY PRINCIPAL OFFICERS AS OF DECEMBER 31.2009 Pictured from left to right: Troy Vancil, Secretary; Julie Sager Miller, Chairman, Jeffrey R. Thompson, Vice Chairman, Timothy F. Rogers, Executive Director; Greg Bengtson, Authority Counselor; Dr. Randy Hassler, Treasurer, and Eric R. Hardman, Past Chairman. AUTHORITY'S BOND COUNSEL Gilmore & Bell Kansas City, Missouri AUTHORITY'S FINANCIAL ADVISOR George K. Baum & Company Kansas City, Missouri AUTHORITY'S AUDITOR Leslie M. Corbett, C.P.A. Clubine & Rettele, Chartered Salina, Kansas 9 r- I I 10 I I I I I I I I I I I I I I I I I I I IN I RODl '(' lOR Y 1'\ ~11(ll) SALINA AIRPORT AUTHORITY Staff Members as of December 31. 2009 ADMINISTRATIVE STAFF Timothy F. Rogers, A.A.E. Michelle R. Swanson David "Gunner" Wiles Kenny Beiker Melissa L. McCoy Donald C. Kneubuhl Kasey L. Windhorst Executive Director Manager of Administration and Finance Manager of Operations Manager of Facilities Manager of Public Affairs and Communications Manager of Special Projects Executive Assistant FACILITY MAINTENANCE and OPERATIONS Loren Carleton - Team Leader Gary Hansen Kim Colby Rob Pejsha Dale Mattison AIRCRAFT RESCUE AND FlREFIGHTING and SAFETY and SECURITY David Nease - Team Leader Ron Boyd Alan Mason Matthew Rittel David Clark Andrew Harper I I I I I I I I I l' C 0 t::'" OS 'iii '~r OSO .S '" .&:,0 'E ~. 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Ul'" o - ",,,, .- .Q cae 'u u a>E ~S2 a> U c,., os" CO a>0 _c CUI 'ft; .! ::e= I-lD Q. -", .!!! .c -UI os.- .- " uo.. a>.Q a.o UlO<: _c '" " ._ UI :!i u:J: ~~ UlCl "lilt: =co ,!!!O u" ~.~ UlO _0; ",= ~ii: .- 3: u" a>.c a.= Ul'" ::;: > ~ a> ~!i OS:J: 'u 3: a> " a.~ Ul'g <( 11 President --- I I I p I I I I I I I I I I I I I I I 12 I Certificate of Achievement for Excellence in Financial Reporting Presented to Salina Airport Authority Kansas For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2008 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. ~/~ Executive Director I I I I I I I I I I I I I I I I I I I IN I RODllCTOR Y 1'\ 211(1') /iou-M~ SLNAirport ~ ~ SALINAAirport . /I~ " . 1"11 '--- -----J /~AviatiOn Service SLMCenter '~ ~ SALINAA7JJfJ 1~~+ 13 14 I I I I I I I I I I I I I I I I I I I (THIS PAGE INTENTIONALLY LEFT BLANK) I I I I I I I I I I I I I I I I I I I -n -. ::s S>> ::s n -. S>> ^ r \ Hundreds oflocal and state emergency responders came together in June for the largest crisis exercise to date at the Great Plains Joint Training Center's Crisis City. Police, firefighters, hazmat responders, search and rescue teams, K-9 units, National Guardsmen and Red Cross workers came together for the Vigilant Guard 2009 exercise. They brought with them everything they would need in a disaster from chicken salad sandwiches to hard hats, and unmanned aerial systems to C-130s. , , , , , , , , , , , , , , . , , , , 1.._____________..______________________-1 A big part of the team's efficiency is due to the venue's close proximity to the airport. While hundreds of U.S. first responders were on the ground at Crisis City digging through rubble and containing chemical spills, Canadian Air Force CF-18s and AlphaJ ets, along with U.S. C- 130S were on the airport flight line a mere 8 nm away. ~ ~ y SA LINAAirport =;:J~= I I I I I I I I I I I I I I I I I I I I I ,I I I I I I I I I I I I I I I I I I CLUBlNE& RETIELE CHAKIERED Certified Public Accountants " Robert I. Clubine, C.P.A. David A. Rettele, C.P.A. Jay D. Langley, C.PA Jon K. Bell, C.PA Leslie M. Corbett, C.P.A. Stacy J. Osner, C.P.A. Marci K. Fox, C.PA John T. Millikin, C.PA Linda A. Suelter, C.PA 218 South Santa Fe P.O. Box 2267 Salina, Kansas 67402-2267 Salina 785/825-5479 Salina Fax 785 / 825-2446 Ellsworth 785/472-3915 Ellsworth Fax 785/472-5478 INDEPENDENT AUDITORS' REPORT To the Board of Directors Salina Airport Authority We have audited the accompanying financial statements of Salina Airport Authority, a component unit of the City of Salina, Kansas, as of and for the years ended December 31, 2009 and 2008, as listed in the table of contents. These financial statements are the responsibility ofthe Authority's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the Kansas Municipal Audit Guide, prescribed by the Director of Accounts and Reports, Department of Administration of the State of Kansas. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Salina Airport Authority, as of December 31, 2009 and 2008, and the changes in financial position and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated June 3, 2010, on our consideration of Salina Airport Authority's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and important for assessing the results of our audits. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 17 through 23 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the 15 required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements as a whole. The Introductory Section, the accompanying schedules and additional information listed in the supplemental information of the Financial Section and the Statistical Section of the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-l33, Audits of States, Local Governments and Non-Profit Organizations, and is also not a required part of the financial statements. The schedule of expenditures of federal awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The Introductory Section of the accompanying schedules and additional information listed in the supplemental information of the Financial Section and the Statistical Section of the table of contents have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. CLUBINE AND RETTELE, CHARTERED ~~ /t("d ,{utd( June 3, 2010 16 I I I I I I I I I I I I I I I I I I I I I , I I I I I I I I I I I I I I I I I I I FINANCIAL I" 21111') MANAGEMENT'S DISCUSSION AND ANALYSIS The management of the Salina Airport Authority offers the readers of the Authority's audited financial statements this narrative overview and analysis of the financial activities of the Salina Airport Authority for the fiscal year ended December 31, 2009. AIRPORT ACTMTY AND HIGHLIGHTS The Salina Air Traffic Control Tower (ATCT) ended 2009 having handled 65,062 aircraft operations. This represented a 9.10% decrease in total aircraft operations over the prior year, which was better than expected due to significant airfield construction that resulted in multiple runway and taxiway closures. During 2009, the Authority substantially completed a multi-year phased rehabilitation ofthe Airport's parallel Taxiway A. The highest year for the most recent 1 O-year period was 2002 at 95,801 aircraft operations. Salina continues to remain strong as a mid-continent refueling stop and has earned the recognition as "America's Fuel Stop". The Airport's two world-class fixed base operators (FBOs) and tenants of the Authority, annually deliver 2.5 - 3.8 million gallons of fuel to thousands of business jets, government and military aircraft. The commercial airline industry continues to experience financial stress, especially for the carriers attempting to serve rural communities such as Salina through the Department of Transportation's (DOT) Essential Air Service Program. The 39% decrease in passenger enplanements from 2008 to 2009 was a result of Great Lakes discontinuing the daily flights to Denver that had brought about an increase in 2008 after they had transitioned to dual hub service. At the end of 2009, Great Lakes was offering multiple weekday and weekend flights to Kansas City while arriving at the end of their two-year EAS contract. As the year ended, the Authority and the Salina community began working in partnership with the DOT to Seek air carriers interested in providing air service to the residents of North Central Kansas for the next two-year EAS term and beyond. The changes in the Authority's major airport activity indicators for the past three years are as follows: 2009 2008 2007 Enplanements - Scheduled Air Carrier & Charter Flights 2,839 4,654 2,495 % increase / (decrease) -39.00% 86.53% 22.97% Aircraft Operations - All Categories 65,062 71,575 76,479 % increase / (decrease) -9.10% -6.41 % -6.12% Fuel Flowage - (gallons delivered) 2,481,585 3,114,515 3,778,794 % increase / (decrease) -20.32% -17.58% -1.00% 17 ~ l'I~i\NCli\L I') 21111') AIRPORT INDUSTRIAL CENTER ACTIVITY AND HIGHLIGHTS The Authority owns nearly 900,000 sq. ft. of manufacturing, warehouse and office space at the Airport Industrial Center. As further described herein, the building revenue generated by the Authority's leasing activity constitutes a significant portion of the annual operating revenue budget. During 2009, building rents equaled $1,402,230 or 67% of operating revenue. At the end of 2009, the Authority had an occupancy rate of over 95% in its building inventory. SUMMARY OF OPERATIONS AND CHANGES IN NET ASSETS Even with the uncertainty in the aviation industry and the slow growth in the economy, the financial condition of the Authority has held steady in recent years. The Authority has effectively dealt with major cost increases in employee health benefits including medical insurance premiums, utility costs, commercial property insurance premiums and other operating expenses. Fortunately, with the diversified revenue base, including building and land rental from the Authority's Industrial Center, total operating Revenue has grown from $1.6 million in 2002 to $2.1 million in 2009. Operating Revenues Operating Expenses 2009 $ 2,098,576 (2,220,128) Excess before Depreciation and other non-operating income and expenses (121,552) Depreciation (1,748,348) Excess (loss) before other non-operating income and expenses (1,869,900) Other Non-Operating Income and (Expenses) net 387,831 Loss before Capital Contributions (1,482,069) Capital Contribu~ions 3,770,558 Increase in Net Assets $ 2,288,489 2008 $ 2,152,370 (2,245,300) 2007 $ 2,483,312 (1,969,015) (92,930) 514,297 (1,606,811) (1,650,187) (1,699,741) (1,135,890) 419,492 668,765 (1,280,249) (467,125) 1,650,041 404,773 $ 369,792 $ (62,352) 18 I I I I I I I I I I I I I I I I I I I I. I I I I I I I I I I I II I I I I I I FINANCIAL 11 ::'1 JI I') SUMMARY OF OPERATIONS HIGHLIGHTS Significant items effecting the Summary of Operations and Changes in Net Assets for 2009 and 2008 are as follows: . Operating revenues have remained steady in recent years despite the downturn in the overall economy. Revenues from aircraft storage and hangar rentals have assisted in offsetting the decrease in revenue derived from the delivery and sale of aviation fuel at the Airport. The fuel flowage fees received by the Authority for each gallon of fuel delivered at the Airport decreased 17% in 2008 and 21 % in 2009 over each prior year. A decrease in corporate and general aviation flying due to the economy and severe winter weather in 2009 resulted in a 31 % decrease in itinerant general aviation operations over 2008. Fortunately, military traffic increased by 17% providing the demand to keep the operations and fuel sales from further downward pressure. Building and land revenue decreased only slightly; less than 1 percent, and has increased nearly 50% in the past five years. . Operating expenses increased by 12.3% from 2007 to 2008 however the Authority in 2009 was able to reduce operating expenses by $25,172 or 1 %. o During 2009, the Authority made a concerted effort to hold and reduce operating costs by reducing travel and meeting expense as well as reducing all dues and subscriptions and cancelling all non-essential items. o In addition, the Authority was able to reduce building maintenance expense by nearly 60% in 2009 by utilizing in-house personnel for items that were previously contracted out to third party vendors. . Depreciation expense increased due to new construction moving from construction in progress to an asset in service and very capital intensive years in 2008 and 2009. . Capital contributions increased by $2.1 million as a result of contributions from six grants from the Federal Aviation Administration Airport Improvement (AlP) grant programs and one new grant from the Kansas Department of Transportation. During 2009 these grants funded. the Authority's construction of a significant portion of a multi-year taxiway rehabilitation project and a mill and inlay project on the Airport's primary runway. Ad-valorem tax revenue (mill levy) received by the Authority as a local taxing entity increased by 5.6% from 2008 to 2009 and 4.6% from 2007 to 2008. Interest received on investments and a financing lease decreased by $110,902 or 60% from 2008 to 2009 which was due to a reduction in bond proceeds on deposit as well as a decrease in investment interest rates. 19 FINANCIAL 1\ 21111<) FINANCIAL POSITION SUMMARY The changes in net assets may serve over time as a useful indicator of a government's financial position. The Authority's assets exceeded liabilities by $28,065,307 at the close of2009. A condensed summary of the Authority's total net assets at December 31 is shown below. 2009 2008 2007 ASSETS Current and other assets Capital assets Total assets 4,524,282 47,774,283 52,298,565 3,752,996 42,562,780 46,315,776 14,685,187 35,215,229 49,900,416 LIABILITIES Long-term debt outstanding Other liabilities Total liabilities 17,276,448 3,262,510 20,538,958 21,015,879 3,477,511 24,493,390 13,260,869 10,972,389 24,233,258 NET ASSETS: Invested in capital assets, net of related debt Restricted Unrestricted 26,410,681 24,471,896 13,515,783 1,304,922 11,891,243 1,654,626 TOTAL NET ASSETS $ 28,065,307 $ 25,407,026 $ 25,776,818 By far the largest portion of the Authority's net assets (94%) reflects its investment in capital assets including land, buildings, airfield infrastructure and machinery and equipment, less any related debt used to acquire those assets that is still outstanding. The Authority uses these capital assets to provide services to citizens; 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 should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 20 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IT\X\CIAL 1\ 21111') REVENUES The following chart shows the major sources and the percentage of total operating revenues for the year ended December 31, 2009: Other revenue 1% Building and land rent 67% A summary of revenues for the past three years is shown below. Total revenue decreased by 2.6% from 2008 to 2009 and 13.3% from 2007 to 2008. As discussed above the decrease is a result of decreased airfield revenue and interest income on deposits. In addition the Authority did not have any significant sales of available land or buildings in recent years. 2009 2008 2007 Operating Revenue: Airfield $667,636 $680,474 $622,666 Building and land rent 1,402,230 1,407,984 1,525,071 Gain (loss) on sale of assets 0 16,321 281,803 Other revenue 28,710 47,591 53,772 Total Operating 2,098,576 2,152,370 2,483,312 Non-Operating Income: Mill Levy 1,327,647 1,256,816 1,201,602 Interest Income 74,313 185,215 241,478 Total Non-Operating 1,401,960 1,442,031 1,443,080 TOTAL REVENUE $3,500,536 $3,594,401 $3,926,392 21 FIN.\'\CI,\1 I" :'I)I)'! EXPENSES The following chart shows the major expense categories and the percentage of total operating expenses for the year ended December 31, 2009: Maintenance 38% A summary of expenses for the past three years is shown below. Total expenses decreased by a by 1% from 2009 to 2008 following an increase of 19.1% from 2007 to 2008. The Authority took significant steps to hold operating expenses in 2009 including completing more facility maintenance projects in- house and reducing administrative expenses such as travel and expenses. 2009 2008 2007 Operating Expenses Administrative $ 1,352,357 $ 1,303,374 $ 1,161,530 Maintenance 867,771 941,926 807,485 Total Operating 2,220,128 2,245,300 1,969,015 Non-Operating Expense Interest Expense 987,379 996,985 742,249 Amortization of bond costs 26,750 25,554 32,066 Total Non-Operating 1,014,129 1,022,539 774,315 TOTAL EXPENSES $ 3,234,257 $ 3,267,839 $ 2,743,330 22 I I I I I I I I I I I I I I I I I I I I I I I I I I I ! I I I I I I I I I I I FINANCIAL I) 2()(),) CAPITAL ACQUISITIONS AND CONSTRUCTION ACTIVITIES The Authority acquired $6,959,850 of capital assets during 2009. Significant items included the substantial completion of a 69,000 sq. ft. maintenance repair and overhaul hangar facility. Other major capital improvements included the construction of a multi-year, multi-million dollar Taxiway rehabilitation project. The construction of this project is expected to be complete in 20 I 0 and will be funded primarily through Federal Aviation Administration Airport Improvement Program Grant funds. [n addition, 2009 marked the Authority's second consecutive year to participate in the Defense Reutilization Marketing Office (DRMO) program. The DRMO entity disposes of United States military surplus property. The Authority acquired numerous capital equipment assets having a fair value of $96,051. Additional information can be found in Note [ (C) in the notes to the financial statements. Capital asset acquisitions exceeding $1,000 are capitalized at cost and are depreciated over their useful lives, with the exception of land. The Authority's capital assets are financed using Federal and State grants with matching Authority funds, debt issuance and Authority revenues. Additional information on the Authority's capital assets can be found in Note 1Il (D) in the notes to the financial statements and within the Supplemental Section of this report. DEBT ADMINISTRATION The outstanding long-term debt of the Authority was $21,363,602 at December 31, 2009. This debt consists of general obligation bonds, general obligation temporary notes, financing lease and City of Salina special assessments. Maturities range from 2010 through 2029. Both principal and interest are payable from proceeds of a direct financing lease, the general revenues of the Authority and mill levy revenue. During 2009, the Authority issued $8,105,000 in General Obligation Bonds which included permanently financing $3,925,000 in General Obligation Temporary Notes. Details of the Authority's debt can be found in Note 1Il (E) in the notes to the financial statements. REQUEST FOR INFORMATION This Management Discussion and Analysis is designed to provide detailed information on the Authority's operations and the financial results of those operations to all those with an interest in the Authority's financial affairs. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Manager of Administration and Finance bye-mail: shellis@salair.org or in writing to, Salina Airport Authority, 3237 Arnold Ave., Salina, KS 67401. Respectfully submitted, M~ Executive Director VlUiJuLu<i .~ Michelle R. Swanson Manager of Administration and Finance 23 FINANCIAL FY 2009 SALINA AIRPORT AUTHORITY STATEMENTS OF NET ASSETS ASSETS December 31 2009 2008 CURRENT ASSETS Cash $ 2,037,114 $ 1,871,999 Accounts receivable 193,158 69,326 Prepaid expenses 1,018 5,247 Inventory - A vgas 2,031 Taxes receivable 1,849,957 1,281,413 Total Current Assets 4,083,278 3,227,985 LONG-TERM ASSETS Capital Assets Land Buildings, improvements and equipment, net of depreciation Construction in progress 10,045,937 9,675,910 26,503,254 11,225,092 24,065,550 8,821,320 Total Capital Assets 42,562,780 47,774,283 Other Long-Term Assets Net investment in finance lease Bond issue costs, less accumulated amortization of $287,668 and $235,364 respectively Total Other Long-Term Assets 309,881 443,123 131,123 441,004 81,888 525,011 Total Noncurrent Assets 43,087,791 48,215,287 TOTAL ASSETS $ 52,298,565 $ 46,315,776 (continued) See notes to financial statements. I I I I I I I I I I I I I I I I I I I 24 I. I I I I I I I I I I I I I I I I I I I FINANCIAL FY 2009 SALINA AIRPORT AUTHORITY STATEMENTS OF NET ASSETS ( continued) LIABiLITIES AND NET ASSETS December 31 2009 2008 $ 46,766 $ 67,558 399,522 535,691 58,048 50,839 55,868 47,220 16,070 16,070 1,849,957 1,281 ,413 2,768 3,578 27,3] 0 91,817 385,245 320,59] 28,102 33,296 8,102,733 8]4,437 10,972,389 3,262,510 CURRENT LIABILITIES: Accounts payable-operations Accounts payable-capital purchases Accrued payroll and expenses Accrued property tax Accrued special assessments Deferred tax revenue Deferred maintenance agreement Unearned rental income Accrued interest Unearned interest - financing lease Current maturities of long-term debt Total Current Liabilities LONG-TERM LIABiLITIES Bonds and note payable, less current maturities 13,260,869 17,276,448 Total Liabilities 24,233,258 20,538,958 NET ASSETS invested in capital assets, net of related debt Unrestricted 24,471,896 1,304,922 26,410,681 1,654,626 Total Net Assets 28,065,307 25,776,818 TOT AL LIABILITIES AND NET ASSETS $ 52,298,565 $ 46,315,776 See notes to financial statements. 25 FINANCIAL FY 2009 SALINA AIRPORT AUTHORITY STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NETASSETS January 1 to December 31 2009 2008 OPERATING REVENUES Airfie Id Building and land rent Gain on sale of assets Other revenue $ 667,636 $ 680,474 ] ,402,230 ],407,984 ] 6,321 28,710 47,591 2,098,576 2,152,370 Total Operating Revenues OPERATING EXPENSES Administrative Maintenance 1,352,357 1,303,374 867,771 941,926 2,220,128 2,245,300 (121,552) (92,930) 1,748,348 1,606,811 (1,869,900) (1,699,741) Total Operating Expenses OPERATING INCOME BEFORE DEPRECIATION DEPRECIATION OPERATING LOSS NON-OPERATING INCOME AND (EXPENSES) Mill levy Interest on investments and financing lease Interest expense 1,327,647 ] ,256,816 74,313 185,2]5 (1,014,129) (1,022,539) 387,831 419,492 (1,482,069) ( 1,280,249) 3,770,558 1,650,041 Total Non-Operating Income and (Expenses) LOSS BEFORE CAPITAL CONTRIBUTIONS CAPITAL CONTRIBUTIONS NET ASSETS Increase (decrease) in Net Assets 2,288,489 369,792 TOTAL NET ASSETS, beginning of year 25,407,026 25,776,818 TOTAL NET ASSETS, end of year $ 28,065,307 $ 25,776,818 See notes to financial statements. 26 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I FINANCIAL FY 2009 SALINA AIRPORT AUTHORITY STATEMENTS OF CASH FLOWS (DIRECT METHOD) January 1 to December 31 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from providing services Cash paid to employees for services Cash paid to suppliers for goods and services $ 1,974,744 (830,298) (1,457,074) " Net Cash Provided (Used) in Operating Activities (312,628) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of property, plant and equipment (6,999,968) Purchases in satisfaction of maintenance agreement (3,445) Proceeds from capital grants 3,674,507 Proceeds from property tax 1,327,647 Principal payments on debt (4,739,437) Proceeds of new borrowing 8,012, 154 Principal received on financing lease 133,242 Interest received on financing lease 56,204 Bond issue costs paid (75,986) Interest paid on long-term debt (922,725) Net Cash Provided (Used) in Capital and Related Financing Activities 462,193 CASH FLOWS FROM INVESTING ACTIVITIES Interest received on deposits 15,550 INCREASE (DECREASE) IN CASH 165,115 CASH BALANCE - January 1 1,871,999 CASH BALANCE - December 31 $ 2,037,114 $ 2,426,455 (790,936) (1,475,036) 160,483 (8,663,391 ) (7,912) 1,552,002 1,256,816 (3,946,317) 122,855 66,592 (1;249,490) (10,868,845) 125,309 (10,583,053) 12,455,052 $ 1,871,999 The Authority received capital equipment having a fair value of $98,093 in 2008 and $96,05] in 2009. This non-cash transaction is included in CAPITAL CONTRIBUTIONS on the STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS and in Equipment acquisitions in Note D but it is not included in this STATEMENT OF CASH FLOWS. ( continued) See notes to financial statements. 27 FINANCIAL FY 2009 SALINA AIRPORT AUTHORITY STATEMENTS OF CASH FLOWS (DIRECT METHOD) (continued) RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES OPERA TING LOSS ADJUSTMENTS RECONCILING OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation Basis of assets sold CHANGES IN ASSETS AND LIABILITIES: Decrease (increase) in accounts receivable Decrease (increase) in prepaid expense (Increase) in inventory (Decrease) in accounts payable - operations Increase in accrued payroll expenses Increase in accrued property tax and special assessments Increase (decrease) in unearned rental income NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES See notes to financial statements. January 1 to December 3] 2009 2008 $(1,869,900) $ (1,699,741) 1,748,348 1,606,811 ]9,198 (123,832) 248,701 4,229 (3,026) (2,031 ) (20,792) (43,857) 7,209 11 ,440 8,648 14,771 (64,507) 6,186 $ (312,628) $ 160,483 28 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I FINANCIAL 1\ 2 (J(J'j Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2009 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Salina Airport Authority was established by the City of Salina, pursuant to Chapter 27, Article 3, of the Kansas Statutes Annotated for the purpose of acquiring surplus federal governinent property, specifically the former Schilling Air Force Base, located near the City of Salina. The Authority operates, maintains, and develops the Salina Municipal Airport and the Salina Airport Industrial Center. The Authority is controlled by a five-member Board of Directors appointed by the Salina City Commission and, in accordance with Governmental Accounting Standards Board (GASB) Statement No. 14, the Authority is considered to be a component unit of the City of Salina. The Authority is discreetly presented in the City's comprehensive annual financial reports. B. Measurement Focus, Basis of Accounting and Basis of Presentation The Authority consists of an enterprise fund. Enterprise funds are classified as proprietary funds by the GASB and are accounted for using a total economic resource measurement focus. The enterprise fund is used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent of the Authority is that the costs of providing services on a continuing basis be recovered through user fees and rents. The financial statements are prepared on the accrual basis of accounting. Under the accrual basis, revenues are recognized as earned and expenses as incurred. It is the Authority's policy to follow all Financial Accounting Standards Board (FASB) standards issued after November 30, 1989, for its proprietary activities unless those new FASB pronouncements conflict with GASB guidance. Revenues from airlines, fuel flowage fees, building and land rents, rental car commissions and the sale of assets, related to economic development, are reported as operating revenues. Transactions, which are capital, financing or investing related, are reported as non-operating revenues. All expenses related to operating the Airport and Industrial Center are reported as operating expenses. Interest expense and financing costs are reported as non-operating expenses. C. Assets, Liabilities and Equity 1. Cash and Investments The Authority's cash and cash equivalents are considered to be cash on hand, demand deposits and short- term investments with original maturities of three months or less from date of acquisition. The Authority held no investments during these years. 29 30 I I I I I I I I I I I I I I I I I I I FINANCIAL 1'\ 21111l) 2. Receivables Accounts Receivable. The Authority records revenues when services are provided. All receivables are shown net of an allowance for uncollectibles. Property taxes receivable. The determination of assessed valuations and the collections of property taxes for all political subdivisions in the State of Kansas is the responsibility of the various counties. The office of the County Appraiser annually determines assessed valuations and the County Clerk spreads the annual assessment on the tax rolls. The County Treasurer is the tax collection agent for all taxing entities within the county. In accordance with state statutes, property taxes are levied November 1 of the current year and are a revenue source to be used to finance the budget of the ensuing year. One-half of the property taxes are due December 20, prior to the fiscal year for which they are budgeted, and the second half is due the following May 10. Collection of current year property tax by the County Treasurer is not completed, apportioned nor distributed to the various subdivisions until the succeeding year, such procedure being in conformity with governing state statutes. Consequently, current year property taxes receivable are not available as a resource that can be used to finance the current year operations of the Authority. It is the Authority's practice to record uncollected current year property tax as an account receivable and to record the same amount as deferred revenue. It is not practicable to apportion delinquent taxes held by the County Treasurer and, further, the amounts thereof are not material in relationship to the financial statements taken as a whole. 3. Inventories The Authority maintains no significant inventory of office and maintenance supplies. These items are expensed as purchased and no inventory is recorded in these financial statements. The Authority uses the consumption approach in valuing inventories of A vgas sold for retail. That is, the purchase is recorded as an asset on the cost basis and the expenditure is deferred until the inventory is consumed under the FIFO method. 4. Prepaid items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 5. Restricted Assets Certain proceeds of leasehold revenue bonds are classified as restricted assets on the Statement of Net Assets because their use is limited by applicable bond covenants. II I I I. I I I I I I I I I I I I I I I FINANCIAL l'r 2()()') 6. Capital Contributions and Net Assets Airport Improvement Program - Certain expenditures for airport capital improvements are significantly funded through the Federal Aviation Administration's Airport Improvement Program (AlP), with certain matching funds of the Authority. Capital funding provided under the AlP grant program is considered earned as the related allowable expenditures are incurred. Grants received under the AlP program are reported in the Statement of Revenues, Expenses and Changes in Net Assets, as non- operating revenues and expenses as capital contributions. Defense Reutilization Marketing Office Program - The Authority is a participant in the Defense Reutilization Marketing Office (DRMO) program. The DRMO entity disposes of United States military surplus property. The property is first offered for reutilization with the Department of Defense, transferred to other federal agencies or donated to state and local governments. The Authority's policy is to record fixed assets having a cost (or by implication fair value) in excess of $1,000 at acquisition. The Authority's capitalization policy with respect to fixed assets is to expense fixed assets costing $1,000 or less. Freight or other expenses necessary to put the asset into service equal to or greater than $1,000, are capitalized. The Authority records donated assets having an original cost of $5,000 or less at $1 in order to meet the tracking requirement and will memo in the asset file the original cost because the Authority believes the fair value of these is less than $1,000 each. The Authority estimates the donated items to have a value equal to 20% of cost. Items having an original cost ofless than $5,000 will be valued at $1 with memo of original cost. Items having an original cost of more than $5,000 will be valued at 20% of original cost rounded to the nearest $1,000 with a memo to the file of the original cost. If the Authority receives reliable written information indicating this procedure has produced a value significantly different from fair value, an adjustment to that value will be made. Donated DRMO property with a value in excess of $1,000 is reported in the Statement of Revenues, Expenses and Changes in Net Assets, as non-operating revenues and expenses as capital contributions. The Federal Aviation Administration, as the oversight agency, requires that the Airport track all the contributed property and the property must be held for at least one year prior to disposition. 7. Capital Assets Capital assets purchased or constructed are recorded at cost. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets' lives are not included in capital assets cost. Capital assets donated to the Authority are recorded at their estimated fair value at the date of donation. Donated assets include property and equipment transferred to the Authority from the United States of America, September 9, 1966 and recorded at fair value at that date. The Authority maintains a capitalization threshold of $1 ,000. 31 32 I I I I I I I I I I I I I I I I I I I FINANCIAL 1\ :::111 I'} Capital assets are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Equipment Vehicles Airfield Years 5 -50 5 -10 7-10 10 - 30 8. Compensated Absences Substantially all full-time employees receive compensation for vacations, holidays, illness. and certain other qualifying absences. The number of days compensated for various categories of absence is generally based on length of service. Liabilities relating to these absences are recognized as incurred and included in accrued expenses. Per the Authority's compensation policy, the paid time off is not able to accrue beyond a one year period, therefore all such liabilities are recorded as current. The amount accrued for such liabilities at December 31, 2009 and 2008 was $53,778 and $47,350 respectively. Balance Balance January 1, December 31, 2009 Net Change 2009 $ 47,350 $ 6,428 $ 53,778 Balance Balance January 1, December 31, 2008 Net Change 2008 $ 37,573 $ 9,777 $ 47,350 II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Cash-Basis Law (KSA 10-1113) The Authority was in compliance with this law at all times during the year. B. Depository Security (KSA 9-1402) The Authority's funds were adequately secured at all times during the year. I I I I I I I I I I I I I I I I I I I I FINANCIAL /1 2(1)l) III. DETAILED NOTES A. Deposits As of December 31, 2009 and 2008, the Authority had cash and cash equivalents as listed below: December 31. 2009 2008 Cash Balances Cash $ 2,037,114 $ 1,871,999 Less undeposited and petty cash (2,568) (6,034) Add uncleared checks 3,021 165,324 Bank Balance 2,037,567 2,031,289 Less FDIC Coverage 438,647 525,148 Balances Securable by Collateral $ 1,598,920 $ 1,506,141 Security Provided by Depositories $ 9,824,013 $ 3,911,225 The Authority did not have any activity in investment-type assets. The Authority's policies relating to deposits and investments are governed by various Kansas Statutes (KSA). Those statutes specifY the type of deposits and investments as well as the securing of those deposits and investments. Interest rate risk - In accordance with Kansas Statute 12-1675, The Authority manages its exposure to interest rate fluctuations by limiting all time investments to maturities of less than two years. Credit risk - State law limits the amount of credit risk by restricting governments to specific investment types as listed in KSA 12-1675. The Authority's policy is to place idle funds in certificates of deposit, United States obligations, and the Kansas Municipal Investment Pool (KMIP). The KMIP was rated AAAf/Sl+ by Standard & Poor's as of March 15, 2004. The KMIP is permitted to invest in fully collateralized certificates of deposit, certain obligations of the United States, certain repurchase/reverse repurchase agreements, and other types of investments. Maturity information released by the KMIP at September 30, 2005 showed that the investment pool consisted of investment with a maturity date of 365 days or less. Custodial credit risk - The Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. Kansas Statutes 9-1402 and 9-1405 require that governments obtain security for all deposits. The Authority manages its custodial credit risk by requiring the financial institutions to grant a 33 34 I I I I I I I I I I I I I I I I I I I FINANCIAL I'. :!IIIJ') security interest in securities held by third-party custodial banks. Monies in the Kansas Municipal Investment Pool are not required to have pledged securities. Concentration of credit risk - This is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The Authority manages this risk by placing funds with financial institutions only after contacting all eligible institutions in the taxing area and monies in the Kansas Municipal Investment Pool are diverse according to the policies of the investment pool. B. Receivables Receivables as of year-end, including the applicable allowance for uncollectible accounts, are as follows: December 31, 2009 2008 Receivables Accounts $ 193,854 $ 69,410 Less: allowance for uncollectibles ( 696) (84) 193,158 69,326 Taxes 1,849,957 1,281,413 Totals $ 2,043,115 $ 1,350,739 C. Net Investment in Financing Lease Net investment in financing lease is as follows: December 31, 2009 2008 Total lease payments receivable Less: unearned income Net investment in financing lease $ 348,892 (39,011) $ 309,881 $ 568,338 (125,215) $ 443,123 Activity in net investment in financing leases was as follows: Beginning Balance Less: Collected principal Ending Balance December 31, 2009 2008 $ 443,123 $ 565,978 (133,242) (122,855) $ 309,881 $ 443,123 II I I I I I I II I I I I I I I I I I I FINANCIAL 1\ :'I)(j() D. Capital Assets The following is a summary of the changes in capital assets during the current and preceding year: Balance Balance January 1, December 31, 2009 Additions Dispositions Reclassifv 2009 Capital Assets Non-Depreciable Land $ 9,675,911 $ 366,106 $ 3,920 $ 10,045,937 Construction in progress 8,821,320 2,584,100 (180,328) 11,225,092 Total Non-Depreciable 18,497,231 2,950,206 (176,408) 21,271,029 Depreciable Buildings and improvements 14,276,411 1,088,374 79,516 15,444,301 Airfield and improvements 26,681,124 2,759,561 $ 96,893 29,537,578 Equipment 3,245,380 161,709 3,407,089 Total Depreciable 44,202,915 4,009,644 176,409 48,388,968 Total Non-Depreciable & Depreciable $ 62,700,146 $ 6,959,850 $ $ $ 69,659,997 Accumulated depreciation Buildings and improvements $ (5,062,636) (562,008) $ (5,624,644) Airfield and improvements (13,379,144) (937,187) (14,316,331) Equipment (1,695,586) (249,153) (1,944,739) Total Accumulated Depreciation (20,137,366) (1,748,348) (21,885,714) Total Capital Assets $ 42,562,780 $ 5,211,502 $ $ $ 47,774,283 35 36 I I I I I I I I I I I I I I I I I I I FINANCIAL I" ::'()()l) Balance Balance January 1, December 31, 2008 Additions Dispositions Reclassifv 2008 Capital Assets Non-Depreciable Land $ 8,961,999 $ 713,912 $ 9,675,911 Construction in progress 2,232,408 7,539,694 (950,782) 8,821,320 Total Non-Depreciable 11,194,407 8,253,606 (950,782) 18,497,231 Depreciable Buildings and improvements 13,719,216 155,637 401,558 14,276,411 Airfield and improvements 25,793,670 338,230 549,225 26,681,124 Equipment 3,096,442 226,087 (77,149) 3,245,380 Total Depreciable 42,609,328 719,954 (77,149) 950,782 44,202,915 Total Non-Depreciable & Depreciable $ 53,803,735 $ 8,973,560 $ (77,149) $ $ 62,700,146 Accumulated depreciation Buildings and improvements $ (4,550,753) (511,883) $ (5,062,636) Airfield and improvements (12,510,286) (868,858) (13,379,144) Equipment (1,527,467) (226,070) 57,951 (1,695,586) Total Accumulated Depreciation (18,588,506) (1,606,811) 57,951 (20,137,366) Total Capital Assets $ 35,215,229 $ 7,366,749 $ (19,198) $ $ 42,562,780 I I I I I I I I I I I I I I I I I I I FINANCIAL 11 2011'J E. Long-Term Liabilities Following is a summary of changes in long-term liabilities during the current and preceding years: Current Balance Balance Maturities January 1, December 31, December 31, 2009 Additions Reductions 2009 2009 Long-term Liabilities General obligation bonds $ 6,525,000 $ 8,012,154 $ 755,000 $ 13,782,154 $ 990,000 Financing Lease payable 358,831 35,331 323,500 37,705 Special assessment debt 232,054 24,106 207,948 25,028 General obligation temporary notes 10,975,000 3,925,000 7,050,000 7,050,000 Total Long-Term Liabilities $ 18,090,885 $ 8,012,154 $ 4,739,437 $ 21,363,602 $ 8,102,733 Current Maturities (814,437) (8,102,733) Long Term Liability Net $ 17,276,448 $ 13,260,869 Current Balance Balance Maturities January 1, December 31, December 31, 2008 Additions Reductions 2008 2008 Long-term Liabilities General obligation bonds $ 7,490,000 $ 965,000 $ 6,525,000 $ 755,000 Financing Lease payable 391,932 33,101 358,831 35,331 Special assessment debt 255,270 23,216 232,054 24,106 General obligation temporary notes 13,900,000 2,925,000 10,975,000 Total Long-Term Liabilities $ 22,037,202 $ $ 3,946,317 $ 18,090,885 $ 814,437 Current Maturities (1,021,323) (814,437) Long Term Liability Net $ 21,015,879 $ 17,276,448 37 Interest Rates Bonds Outstandine I I I I I I I I I I I I I I I I I I I FINANCIAL 1'\ 2()(J') The following is a detailed listing of the Authority's long-term debt including general obligation bonds, temporary notes, financing lease and special assessment debt at December 31,2009: Financing Lease, due December 2016 425,000 6.609% 323,500 Special Assessment Debt Airport Industrial Center, due 2016 565,235 3.79% 184,523 Hangar 600 Sanitary Sewer, due 2021 27,599 4.47% 23,425 Total Special Assessment Debt 207,948 Total Long Term Debt $ 21,363,602 Interest Expense in 2009 is as follows: General Obligation Bonds 481,513 Special Assessment Debt 8,964 Financing Lease 22,363 Temporary Notes 474,539 987,379 Add: Amortization of bond costs 26,750 Total Debt Interest Expense $ 1,014,129 General Obligation Bonds General Obligation 1999-B, due 2010 General Obligation 2001-A, due 2012 General Obligation 2002-A, due 2012 General Obligation 2005-A, due 2020 General Obligation 2007-A, due 2022 General Obligation 2009,:A, due 2029 General Obligation 2009-B, due 2026 Total General Obligation Debt General Obligation Temporary Notes 2007-1, due 2010 Orieinal Issue $ 555,000 1,385,000 2,635,000 3,635,000 1,005,000 2,025,000 6,080,000 10,975,000 3.90% to 5.20% 4.45% to 5.60% 2.45% to 3.70% 4.75% to 5.25% 4.60% to 6.00% 4.20% to 4.25% 3.00% to 5.50% $ 70,000 500,000 885,000 3,415,000 900,000 1,932,154 6,080,000 13,782,154 5.60% 7,050,000 38 I I I I I I I I I I I I I I I I I I I FINANCIAL I') ::'1111') Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies and rental revenues: Bonds Year Outstandine: Interest Due Total 2010 990,000 723,614 1,713,614 2011 1,040,000 592,272 1,632,272 2012 1,090,000 548,424 1,638,424 2013 635,000 501,950 1,136,950 2014 665,000 475,503 1,140,503 2015-2019 3,805,000 1,914,865 5,719,865 2020-2024 2,855,000 1,040,500 3,895,500 2025-2029 2,795,000 379,240 3,174,240 $ 13,875,000 $ 6,176,368 $ 20,051,368 Annual debt service requirements for General Obligation Temporary Notes payable from general obligation bonds and capitalized interest funds: Year 2010 Notes Outstandine: 7,050,000 Total 7,444,800 Interest Due 394,800 Annual debt service requirements for Financing Lease payable rental revenues: Year Principal Due Interest Due Total 2010 37,705 20,767 58,472 2011 40,238 18,234 58,472 2012 42,941 15,531 58,472 2013 45,826 12,646 58,472 2014 48,905 9,567 58,472 2015-2016 107,886 9,058 116,944 $ 323,501 $ 85,803 $ 409,304 39 40 I I I I I I I I I I I I I I I I I I I FINANCIAL 11 211119 Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: Year Loan Principal Interest Due Total 2010 25,029 8,041 33,070 2011 25,988 7,082 33,070 2012 26,984 6,086 33,070 2013 28,018 5,052 33,070 2014 29,091 3,978 33,069 2015-2019 68,033 5,800 73,833 2020-2021 4,805 325 5,130 $ 207,948 $ 36,364 $ 244,312 F. Capital Contributions and Net Assets Since its inception, the Authority has received capital contributions through Federal and State grants as follows: Inception to Date 2009 2008 Federal $ 25,877,678 $3,120,218 $ 1,650,041 State 1.515,610 500,000 Total $27.393.288 $3.620.218 $ 1.650.041 The Authority has designated $90,000 to be used as an insurance increase reserve or to accelerate future debt service payments. As of December 31,2009, the reserve had been funded but not used. IV. OTHER INFORMATION A. Defined Benefit Pension Plan Plan description - The Authority participates in the Kansas Public Employees Retirement System (KPERS). The plan is a cost-sharing multiple-employer defined benefit pension plan as provided by Kansas statutes (KSA 74-4901 et seq). KPERS provides retirement benefits, life insurance, disability income benefits and death benefits. Kansas law establishes and amends benefit provisions. KPERS issues a publicly available financial report that includes financial statements and required supplementary information. Those reports may be obtained by writing to KPERS (611 S. Kansas Avenue, Suite 100, Topeka, Kansas 66603-3803) or by calling 1 (888) 275-5737 Funding policy - KSA 74-4919 establishes the KPERS member-employee contribution rate at 4% of covered salary. The employer collects and remits member-employee contributions according to the I I I I I I I I I I I I I I I I I I I FINANCIAL /1 2()(J<) provision of section 414(h) of the Internal Revenue Code. State law provides that the employer contribution rates be determined annually based on the results of an annual actuarial valuation. KPERS is funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer contribution rates. The KPERS employer rate established for calendar year 2009 was 6.53%. The Authority employer contributions to KPERS for the years ending December 31, 2009, 2008 and 2007 were $52,641 $45,687 and $27,612 respectively, equal to the required contributions for each year. B. Deferred Compensation Plan The Authority offers its employees a deferred compensation plan ("Plan") created in accordance with Internal Revenue Code Section 457. The Plan, available to all Authority employees, 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. Plan assets are transferred to a plan agent in a custodial trust and are not available to the claims of the Authority's general creditors. C. Flexible Benefit Plan (I.R.C. Section 125) The Authority has adopted by resolution a salary-reduction flexible benefit plan ("Plan") under Section 125 of the Internal Revenue Code. All Authority employees working more than 20 hours per week are eligible to participate in the Plan beginning after thirty days of employment. Each participant may elect to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the Plan include various insurance and disability benefits. D. Risk Management The Authority is exposed to various levels of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. There has been no significant reduction in the Authority's insurance coverage from the previous year. In addition, there have not been settlements in excess of the Authority's coverage in any of the prior three years. E. Contingent Liabilities The Authority receives significant financial assistance from numerous federal and state governmental agencies in the form of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit. Any disallowed claims resulting from such audits could become a liability of the Authority. However, in the opinion of management, any such disallowed claims would not have a material effect on any of the financial statements of the Authority at December 31, 2009. F. Other postemployment benefits (OPEB) As a component unit of the City of Salina, the Authority participates in the City's defined benefit health care plan that is administered by the City. The Employee Benefit Plan (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA 12-5040 requires all local governmental entities in the state that provide a group health care plan to make participation available to 41 42 I I I I I I I I I I I I I I I I I I I FINANCIAL 1\ 21)11') all retirees and dependents until the retiree reaches the age of 65 years. No separate financial report is issued for the Plan. The OPEB cost, actuarial valuations of the ongoing plan and net OPEB obligations for the Authority as a sub-group of the plan, are calculated and recorded in the City's CAFR. G. Environmental Matter The U.S. Department of Defense transferred property located at the former Schilling Air Force Base to the Authority on or about September 9, 1966. The property is now known to contain areas of extensive soil and groundwater contamination, as a result of the use and disposal of chlorinated solvents during military operations at the former base during its period of active military duty from 1942 to 1965. The U.S. Department of Defense is responsible for the investigation and remediation of contamination caused by military activities at current and former military bases. The U.S. Army Corps of Engineers (USACE) is the lead agency for the Department at formerly used defense sites. The Corps has investigated the soil and groundwater contamination at the former base under the regulatory oversight of the U.S. Environmental Protection Agency and the Kansas Department of Health and Environment. The former base is not designated as a National Priority List Superfund site, but investigation and remediation is required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act. Potential liability for contamination under the Act extends broadly to parties associated with the release or presence of hazardous substances, including not only those entities involved with contaminant use and disposal, but in some cases other current and former owners and operators of contaminated sites. As a current owner of extensive amounts of property at the former base, the Authority is potentially liable under the act although the Authority believes that it has defenses to such liability. Based on presently known information, the Authority has determined that while a possible liability exists, it is not probable and at this time no reasonable estimate of the possible liability can be made. Therefore, no liability relating to that matter has been recorded. The Authority is under no administrative orders from the U.S. Environmental Protection Agency or the Kansas Department of Health and Environment. The Authority is considered to be a Potentially Responsible Party for the former base site, primarily due to its status as a property owner. The Salina Airport Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at Salina) collectively own over 90% of the nearly 4,000 acres of the former Schilling Air Force Base property. Beginning in August 2007, the four local public entities including the Salina Airport Authority, the City of Salina, the Salina School District and Kansas State University at Salina initiated negotiations with the U.S. Federal Government. The negotiation objectives include transferring the responsibility for completing the cleanup from the USACE to the Salina Public Entities. The local objective is to reach a settlement agreement with the United States of America that provides the Salina Public Entities sufficient funds to complete cleanup operations over a 30-year period. During calendar year 2008, the Salina Public Entities prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation included consultation with the EP A and KDHE. The Salina Public Entities' CTC was completed in June of2008 and submitted to the USACE. I I I I I I I I I I I I I I I I I I I FINANCIAL 11 200') Subsequently, on January 23,2009, the Salina Public Entities delivered a demand letter to the USACE. The letter demands that settlement negotiations begin immediately with the U.S. Department of Justice. On May 14, 2009 the Authority was notified that the USACE referred the former SAFB demand letter to the u.S. Department of Justice on May 12,2009. The current status is that the Salina Public Entities delivered on or about May 7, 2010, a settlement offer and a draft of a lawsuit complaint to the attorney for the U.S. Department of Justice. The Salina Public Entities filed suit against the United States on May 27, 2010. The suit was filed for several reasons but primarily to avoid a potential statute of limitations issue. The Salina Public Entities do not intend to cut off settlement negotiations by the filing of suit, and this has been communicated to the United States. The goal is for the parties to reach agreement on a settlement Consent Decree that will specify terms, conditions and funding enabling the Salina Public Entities to proceed with site clean-up operations. H. Rental Income Under Operating Leases A significant portion of the operating revenue of the Authority is generated through the leasing of airport and building space to airport fixed base operators and others on a fixed fee as well as a contingent rental basis. Ownership risks are retained by the Authority, and accordingly, such leases are treated as operating leases. The following is a schedule of minimum future rentals on non-cancellable operating leases to be received in each of the next five years and thereafter: Years Ended December 31 2010 2011 2012 2013 2014 Later Years Total 725,316 827,478 612,994 569,467 429,672 662,598 $ 4,606,347 I. Major Customers The Authority receives significant operating and financing lease revenue from Hawker Beechcraft Corporation, Kansas State University-Salina, Flower Aviation, America Jet, CA V Aerospace, and the Kansas National Guard. Rent from these six tenants equals 60% of operating and capital lease revenue for the year ended December 31, 2009. 43 44 I I I I I I I I I I I I I I I I I I I FINANCIAL 1\ 21J1i') J. Non-Operating Income and (Expense) Net non-operating income and expense consisted of the following for the years ended December 31, 2009 and 2008: Mill Levy Interest and investment income Financing lease Other interest December 31. 2009 2008 $ 1,327,647 $ 1,256,816 Total 58,763 15,550 $ 1,401,960 59,906 125,309 $ 1,442,031 Interest expense General obligation bonds $ (481,513) $ (292,886) Special assessment debt (8,964 ) (9,854) Financing lease (22,363) (24,636) Temporary notes (474,539) (669,609) Amortization of bond issue costs (26,750) (25,554) Total (1,014,129) (1,022,539) Net non-operating income $ 387,831 $ 419,492 K. Commitment Under Operating Lease The Authority has entered into a certain non-cancellable operating lease agreement which will expire in 2013, for the rental of office equipment. Minimum rentals, on an annual basis are as follows: Years Ended December 31 2010 2011 2012 2013 Total 11,400 11,400 11 ,400 1,900 $ 36,100 L. Subsequent Events The Salina Airport Authority's management has evaluated events and transactions occurring after December 31,2009 through June 3, 2010. The aforementioned date represents the date the financial statements were available to be issued. I. I. I I I I I I I I I I I I I I I I I UI c -a -a - (D 3 (D ~. fIIIt. AI - A '\ - ~ .... o 11II 3 AI fIIIt. -. o ~ ( The Wildcats of the Women in Aviation, International K-State at Salina chapter held a "Plane Wax Weekend" fundraiser, in November at the Salina Airport Authority's Hangar 600. During the weekend fundraiser, pilots enjoyed a five cent per gallon discount, at the newly opened self-fueling station. Major credit and branded debit cards are accepted for payment at the pump. Women in Aviation, International is a nonprofit organization which encourages the advancement of women who are striving for challenging and fulfilling careers in the aviation and aerospace industries. " y ~ , , '-____________________________________.1 SALINAAirport =,t/~= I I I I I I I I I I I I I I I I I I I I I I I I I I I I I 'I I I I I I I I I (THIS PAGE rNTENTlONALL Y LEFT BLANK) SUPPLEMENTAL FY 2009 SALINA AIRPORT AUTHORITY SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS January 1 to December 31 2009 2008 OPERATING REVENUES Airfield Fuel flowage fees Hangar rent Landing fees Ramp rent Total Airfield $ 165,443 388,781 8,445 104,966 667,635 $ 210,292 383,667 7,789 78,726 680,474 Building and land rent Agri land rent Building rents Land rents Tank rent Total Building and Land Rents 58,788 1,097,387 237,695 8,361 1,402,231 72,567 1,094,135 231,036 10,246 1,407,984 Gain on sale of assets 16,321 Other revenue ARFF training Commissions Sale of A vgas Less Cost of A vgas Othe'r income Total Other Revenue 7,935 19,554 6,650 17,603 3,364 (3,146) 4,239 28,710 20,102 47,591 Total Operating Revenue 2,098,576 2,152,370 (continued) 45 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I SUPPLEMENTAL FY 2008 SALINA AIRPORT AUTHORITY SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS January 1 to December 31 2009 2008 OPERATING EXPENSES Administrative AlE, consultants, brokers Airport promotion Computer network administration Dues and subscriptions Employee retirement FICA and medicare Industrial development Insurance, property Insurance, medical Kansas unemployment tax Legal and accounting Office salaries Office supplies Other administrative Postage Property appraisals Property taxes Special events Telephone Travel and meetings 61,432 27,818 14,630 34,374 52,641 61,772 30,000 160,069 205,017 581 34,059 443,768 9,082 14,459 3,803 154,500 3,427 20,073 20,852 Total Administrative Expenses 1,352,357 ( continued) 61,975 34,241 22,455 27,503 45,687 59,262 30,000 151,138 183,649 784 35,767 398,236 10,863 25,161 4,573 3,300 119,426 52,822 13,515 23,017 1,303,374 46 SUPPLEMENTAL FY 2009 SALINA AIRPORT AUTHORITY SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (continued) MAINTENANCE EXPENSES Airfield maintenance Airport security Building maintenance Equipment fuel and repairs Fire services Grounds maintenance Maintenance salaries Other maintenance expenses Snow removal expense Utilities January 1 to December 31 2009 2008 50,518 30,5]9 (988) 4,796 48,474 1 16,297 105,174 123,425 31,084 12,600 2,298 ] 4, 152 393,739 404,140 22,786 25,132 15, 105 17,172 199,58] 193,693 867,771 941,926 2,220,128 2,245,300 (121,552) (92,930) 1,748,348 1,606,811 (1,869,900) (1,699,741) 1,327,647 1,256,816 58,763 59,906 15,550 125,309 (987,379) (996,985) (26,750) (25,554) 387,831 419,492 (1,482,069) (1,280,249) 3,770,558 1,650,041 2,288,489 369,792 25,776,818 25,407,026 $28,065,307 $25,776,818 Total Maintenance Expenses Total Operating Expenses OPERA TING lNCOME BEFORE DEPRECIATION DEPRECIA TION EXPENSE OPERA TING LOSS NON-OPERATING INCOME (EXPENSE) Mill levy Interest income-capital lease Interest income Interest expense Amortization of bond costs Tota] Non-Operating Income (Expense) LOSS BEFORE CAPITAL CONTRIBUTION CAPIT AL CONTRIBUTIONS lNCREASE IN NET ASSETS NET ASSETS, January 1 NET ASSETS, December 31 47 I I I I I I I I I I I I I I I I I I I I I I I I I I I I 'I I I I I I I I I I SUPPLEMENTAL FY 2009 SALINA AIRPORT AUTHORITY CAPIT AL EXPENDITURES January I to December 31 2009 AIRPORT IMPROVEMENTS ASC Vehicle Traffic Study AIP-28 Txy. Rehab Contr. Ph 1 AIP-29 Txy. Rehab. Const. Ph. 2 AIP-30 Txy. Rehab. (PS&E) AIP-32 North GA Connector-ARRA Heave repair Rwy 17-35(N 4800') Pvmt. Rehab. Rwy 17/35 Pvmt Removal AlE AlE Services (helipad siting & update to ALP) Demolition Bldg. 1] 03 & 1088 Total Airport Improvements 8,993 146,093 684,202 52,]00 721,678 12,30] 1,099,642 9,550 6,885 18,117 2,759,561 BUILDINGS Bldg. #207 SAA MX Design Hangar # 603-Bldg. Design Bldg. 824 Environmental assesment Bldg. 824 Duro-last roofing Bldg. 498 Duro-last roofing Pumphouse 305 cleaning & lining of 4 tanks Hangar 409 Improvements Pumphouse #305 Term. Bldg. 120 domestic water filtering $ heating Term. Bldg. 120 electrical improvments Bldg. 394 Duro-last roofing Bldg. 313 Duro-last roofing Bldg. 120 Duro-last roofing Bldg. 1080 & L8B I S6 Acq. Bldg. 1021 Conklin roofing Bldg. 1021 Duro-last roofing Total Buildings 11,200 324,817 1,730 28,000 51,000 112,854 270,506 35,880 9,145 1,573 31,273 56,000 86,600 36,286 16,810 14,700 1,088,374 (continued) 48 SUPPLEMENTAL FY 2009 SALINA AIRPORT AUTHORITY CAPIT AL EXPENDITURES ( continued) January 1 to December 31 2009 EQUIPMENT Computer software - Authority admin Term. B120-Video survellance cameras & system HPDC Notebook computer Avionics Travsceiver (DRMO truckmount) 1 Graco Lindriver airfield paint machines 2- Yanmar 5500 Watt Diesel generators 2009 John Deere 61000 tractor Truck Lift Fork (6K) - orange Semitrailer, Van Truck, Lift, Fork (4K) - yellow Tractor, wheeled (tow vehicle, green) Maintenance platform (ac/ms B-1 stands, yellow) Semi-trailer, low bed (green) Truck, van (diesel - I cyl, van/hilift body) Crance, wheel mounted Tractor, wheeled, Air (Bobtail) Tug Other Misc. DRMO Equipment Total Equipment 9,895 2,752 1,104 1,239 9,078 6,730 34,860 7,000 6,000 2,000 5,000 5,000 2,000 9,000 12,000 3,000 45,051 161,709.00 CONSTRUCTION IN PROGRESS AIP-31 Txy. Alpha Rehab. Ph. 3 of 3 1,881,888 468,548 11,407 103,619 41,859 22,080 21,772 20,790 671 9,789 1,677 2,584,100 AIP-33 AlE ARFF Station Bldg. No. 412 Imps. Bldg. 703 Conklin roofing system Bldg. 730 Conklin roofing system Hangar 600-B1dg Construction Hangar 600-Civil Engeering Hangar 600-0ther Hangar 600-Civil Construction Hangar 600-Architectural Total Construction in Progress LAND Environmental-SAFB KS ARNG RSMS Expansion tract fencing Total Land 351,910 14,196 366,106 TOTAL CAPITAL EXPENDITURES $ 6,959,850.00 49 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I SUPPLEMENTAL FY 2009 Date of isue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGA nON REFUNDING BONDS SERIES J 999 - B December 31, 2009 Schedule of Bond Interest and Principal Payments Due in Year Bond Interest 2010 3,640 $ 3,640 June 29, J 999 $ 555,000 3.90% to 5.20% September I, 20 J 0 $ 485,000 $ 70,000 Bond Principal 70,000 $ 70,000 50 SUPPLEMENTAL FY 2009 Date of issue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2001 - A December 31, 2009 Schedule of Bond Interest and Principal Payments October 3 1, 2001 $ 1,385,000 4.45% to 5.60% September I, 2012 $ 885,000 $ 500,000 Due in Bond Bond Year Interest Principal 2010 27,514 160,000 2011 18,867 165,000 2012 9,800 175,000 $ 56,181 $ 500,000 51 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I SUPPLEMENTAL FY 2009 Date of issue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGA nON IMPROVEMENT BONDS SERIES 2002 - A December 31, 2009 Schedule of Bond Interest and Principal Payments August 29, 2002 $ 2,635,000 2.45% to 3.70% September I, 20 12 $ 1,750,000 $ 885,000 Due in Bond Bond Year Interest Principal 2010 31,880 285,000 2011 21,905 295,000 2012 11,285 305,000 $ 65,070 $ 885,000 52 SUPPLEMENTAL FY 2009 Date of issue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGA nON IMPROVEMENT BONDS SERIES 2005 - A December 31, 2009 August I, 2005 $ 3,635,000 4.75% to 5.25% September I, 2020 $ 220,000 $ 3,415,000 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2010 173,124 235,000 2011 160,787 245,000 2012 147,926 260,000 2013 134,275 275,000 2014 119,838 290,000 2015-2020 383,362 2,110,000 $ 1,119,312 $ 3,415,000 53 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I 'I I I I I I I I I SUPPLEMENTAL FY 2009 Date of issue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGA nON IMPROVEMENT BONDS SERIES 2007-A December 31, 2009 December 15,2007 $ J ,005,000 4.6% to 6.0% September 1, 2022 $ 105,000 $ 900,000 Schedule of Bond Interest and PrincipaJ Payments Due in Bond Bond Year Interest PrincipaJ 2010 45,990 50,000 2011 43,240 50,000 2012 40,490 55,000 2013 37,603 55,000 2014 34,743 60,000 2015-2022 156,140 630,000 $358,206 $ 900,000 54 SUPPLEMENTAL FY 2009 SALINA AIRPORT AUTHORITY TAXABLE GENERAL OBLIGA nON TEMPORARY NOTES SERIES 2007-] December 3 ], 2009 Date of issue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: Schedule of Bond Interest and Principal Payments Due in Year Bond Interest 20]0 6]4,600 $ 614,600 September ],2007 $ 10,975,000 5.6% September 1, 2010 $ 3,925,000 $ 7,050,000 Bond Principal 7,050,000 $ 7,050,000 55 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I SUPPLEMENTAL FY 2009 Date of issue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBUGA nON BONDS SERIES 2009-A December 31 , 2009 Schedule of Bond Interest and Principal Payments Due in Year 2010 20]] 20]2 2013 2014 2015-2029 Bond Interest 107,059 85,648 85,648 85,648 85,648 1,178,790 $ ],628,439 June 1, 2009 $ 2,025,000 4.31 % September 1, 2029 $ $ 2,025,000 Bond Principal 2,025,000 $ 2,025,000 56 SUPPLEMENTAL FY 2009 Date of issue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY TAXABLE GENERAL OBLIGATION BONDS SERIES 2009-B December 31,2009 June I, 2009 $ 6,080,000 4.998% September 1, 2026 $ $ 6,080,000 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2010 334,406 190,000 2011 261,825 285,000 2012 253,275 295,000 2013 244,425 305,000 2014 235,275 3] 5,000 20] 5-2026 1,616,313 4,690,000 $ 2,945,519 $ 6,080,000 57 I I I I I I I I I I I I I I I I I I I II i I I I I I I I II I I I I I I I I I I I SUPPLEMENTAL FY 2009 SALINA AIRPORT AUTHORITY SPECIAL ASSESSMENT DEBT -STREET AND UTILITY IMPROVEMENT Airport Industrial Center Subdivision December 3 I , 2009 Date of loan: Amount of loan: Interest rate: Maturity date: Principal paid: Outstanding balance: September I I, 2002 $ 344,202 3.79% October I, 20 16 $ 159,678 $ 184,524 Schedule of Loan Interest and Principal Payments Due in Loan Loan Year Interest Principal 2010 6,994 23,512 2011 6,102 24.403 2012 5,178 25,328 2013 4,218 26,288 2014 3,221 27,284 2015-2017 3,301 57,709 $ 29,014 $ 184,524 58 SUPPLEMENTAL FY 2009 SALINA AIRPORT AUTHORITY SPECIAL ASSESSMENT DEBT-SANITARY SEWER EXTENSION HANGAR 600 December 31, 2009 Date of loan: Amount of loan: Interest rate: Maturity date: Principal paid: Outstanding balance: April 23, 2007 $ 27,599 4.47% December 20, 2021 $ 4,174 $ 23,425 Schedule of Loan [nterest and Principal Payments Due in Loan Loan Year [nterest Principal 2010 1,047 1,517 2011 979 1,585 2012 908 1,656 2013 834 1,730 2014 757 1,808 2015-2022 2,823 15,128 $ 7.349 $ 23,425 59 I I I I I I I I I I I I I I I I I I I I I II I I I I I II I II I I II I I I I I I SUPPLEMENTAL FY 2009 Date of loan: Amount of loan: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY FINANCING LEASE PA Y ABLE December 3 I, 2009 September 28, 2006 $ 425,000 6.609% September J, 2016 $ 101,500 $ 323,500 Schedule of Loan Interest and Principal Payments Due in Loan Loan Year Interest Principal 2010 20,767 37,704 201 ] 18,234 40,238 2012 15,531 42,941 2013 12,646 45,826 2014 9,567 48,905 2015-2016 9,058 107,886 $ 85,803 $ 323,500 60 SUPPLEMENTAL FY 2009 SALINA AIRPORT AUTHORITY INSURANCE IN FORCE December 31, 2009 Insurance Policv Tvpe of Coverae:e Employers Insurance of Wausau on behalf of USAIG Pol. #WCC-Z91-547496-0 19 Workmen's Compensation and Employer's Liability National Union Fire Ins. Co. of Pittsburgh, P A PoL #AP3229456-15 Bodily Injury & Liability Hangar Keepers Chubb Group of Insurance Companies PoL 3581-68-04 KCO Deluxe Property-Buildings, business personal property and equipment breakdown (including boiler and machinery) Business Income Pol. #(09) 7353-33-80 Vehicles & Equipment Liability Medical payments Uninsured motorists PoL #3581-68-04 KCO Inland Marine - Equipment ITT Hartford PoL #37BPEAG4896 Crime Policy Employee theft - per employee Houston Casualty Company PoL H709-30006 Amount of Coverage $ 500,000 $ 1,000,000 $ 500,000 $28,793,138 $ 1,765,779 $ 1,000,000 $ 5,000 $ 1,000,000 $ 2282,557 $ 100,000 Public Officials and Employment Practices Liability Each wrongful act $ 2,000,000 Aggregate limit $ 2,000,000 Great American Alliance Ins. Co. Pol. # KST 788-29-33-15 Kansas Underground Storage Tank Liability Environmental Incident Annual aggregate Limit of defense American Safety Insurance Pol. # 179EO 1178-09-0 1 Storage Tank Pollution Liability Coverage Per confirmed release limit Policy aggregate limit Limit of defence Indian Harbor Insurance Company Pol. #LEI9517027-01 Law Enforcement Professional Liability Each occurrence Annual aggregate $ 1,000,000 $ 1,000,000 $ 100,000 $ 1,000,000 $ 1,000,000 $ 250.000 $ 1,000,000 $ 1,000,000 61 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I A ( '\ The Hawgsmoke Scholarship Committee awarded three scholarships to area students in November at the Salina Airport Authority's M.J. Kennedy Air Terminal Building. Baker University nursing student, Jenny Baxa and K-State at Salina professional pilot student, Michael Warren were each awarded $500 and K -State at Salina professional pilot student, Travis Altenhofen was awarded $400 to aid them in their academic careers. The Salina community was so eager and generous with their contributions to help host the biennial A-I0 bombing competition, the 442nd Fighter Wing and 303rd Fighter Squadron from Whiteman Air Force Base dedicated the $1400 in left over contributions to a scholarship for students whose parents are or were serving in the military or students in an aviation program. ~ ~ y U) .. m .. -. en .. -. n m . , , , , , , , , , , , , , , , '------------------------------- SA LINAAirport =~~= I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I. S I ^ rIS IIC^L 11 2()(j') STATISTICAL Table of Contents Total Annual Revenues, Expenses and Changes in Net Assets History ............ 63-64 Change in Cash and Cash Equivalents History .................................................. 65-66 General Obligation Debt Service Coverage ....................................................... 67 Capital Expenditure History.................................................... ............. .............. 68 Revenue Bond Coverage........... ........................................ ................................. 69 Local Government Mill Levy Rates, Direct and Overlapping ...........................70 Principal Customers.......... .................................. ................................... ........ ..... 71 Mill Levy Revenue...... ........... ............................................... ............................. 72 Air Traffic, Fuel Flowage, and Enplanement Trends ......................................... 73 Major Employers ........................... ............... ............... ....................... ................ 74 Saline County Population and Demographic Statistics ...................................... 75 Saline County Employment Data ....................................................................... 76 62 STATISTICAL FY 2000 SALINA AIRPORT AUTHORITY TOTAL ANNUAL REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR YEARS ENDED DECEMBER 31, 2000 2001 2002 TOT AL REVENUES OPERATING REVENUES Airfield 12,133 7,250 4,514 Fuel flowage fees 263,264 252,942 278,948 Building and land rent 1 , 121 , 194 1,111,662 1,034,989 Gain (loss) on sale of assets 222,664 86,719 29,455 Other revenue 25,992 33,162 39,173 TOTAL OPERATING REVENUES 1,645,247 1,491,735 1,387,079 TOTAL EXPENSES OPERATING EXPENSES Administrative 740,530 754,003 751,734 Maintenance 386,095 448,189 430,530 TOT AL OPERATING EXPENSES 1,126,625 1,202,192 I ,182,264 OPERA TING INCOME BEFORE DEPRECIATION 518,622 289,543 204,815 DEPRECIATION 906,198 934,270 974,140 OPERATING LOSS (387,576) (644,727) (769,325) NON-OPERATING INCOME AND (EXPENSES) Mill levy 801,237 795,404 817,499 Interest on investments and financing lease 163,512 145,447 147,763 Interest expense (276,092) (249,959) (319,167) TOTAL NON-OPERATING INCOME AND (EXPENSES) 688,657 690,892 646,095 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS 301,081 46,165 (123,230) CAPITAL CONTRIBUTIONS 583,134 583,135 144,005 NET ASSETS Increase in Net Assets 884,215 629,300 20,775 TOTAL NET ASSETS, beginning of year 18,224,183 19,108,398 19,737,698 TOTAL NET ASSETS, end of year $19,108,398 $19,737,698 $19,758,473 * 1999-2002 has been restated to conform to the new financial reporting model as required by the provisions of GASB No. 34. The SAA implemented the new model in 2003. 63 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I STATISTICAL fV 2009 SALINA AIRPORT AUTHORITY TOTAL ANNUAL REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR YEARS ENDED DECEMBER 3[, 2003 2004 2005 2006 2007 2008 2009 190,367 204,310 237,506 263,524 376,553 470,182 502,193 257,475 235,362 259,981 247,740 246,113 210,292 165,443 916,585 890,631 1,106,146 1,294,166 1,525,071 1,407,984 1,402,230 (6,631) 59,943 204,083 10,777 281,803 16,321 29,501 21,874 49,654 70,605 53,772 47,591 28,710 1,387,297 1 ,412, 120 1,857,370 1,886,812 2,483,312 2,152,370 2,098,576 825,064 928,769 1,039,270 1,043,176 1,161,530 [,303,374 1,352,357 475,204 465,326 618,346 627,546 807,485 941,926 867,771 1,300,268 1,394,095 1,657,616 1,670,722 1,969,015 2,245,300 2,220,128 87,029 18,025 199,754 216,090 514,297 (92,930) (121,552) 1,022,474 1,151,664 [ ,392,316 1,580,750 1,650,187 1,606,811 1,748,348 (935,445) (1,133,639) (1,192,562) (1,364,660 ) (1,135,890) (1,699,741) (1,869,900) 987,970 1,036,579 1,058,688 1,184,481 1,201,602 1,256,816 1,327,647 128,640 126,949 118,087 148,936 241,478 185,215 74,313 (344,353) (348,784) (374,851) (500,431) (774,315) (1,022,539) (1,014,129) 772,257 814,744 801,924 832,986 668,765 419,492 387,831 (163,188) (318,895) (390,638) (531,674) (467,125) (1,280,249) (1,482,069) 434,763 2,289,342 3,186,636 1,204,559 404,773 1,650,041 3,770,558 271,575 1,970,447 2,795,998 672,885 (62,352) 369,792 2,288,489 19,758,473 20,030,048 22,000,495 24,796,493 25,469,378 25,407,026 25,776,818 $20,030,048 $22,000,495 $24,796,493 $25,469,378 $25,407,026 $25,776,818 $ 28,065,307 64 S rATISTIC^'- FY 2009 SALINA AIRPORT AUTHORITY CHANGES IN CASH AND CASH EQUIVALENTS FOR YEARS ENDED DECEMBER 3 I, CASH FLOWS FROM OPERATING ACTIVITES Cash received from providing services Cash paid to employees for services Cash paid to suppliers for goods and services NET CASH PROVIDED IN OPERATING ACTIVITIES 2000 2001 2002 $2,997,537 $1,668,782 $1,503,652 (443,968) (463,501) (450,013) (699,812) (750,913) (748,272) 1,853,757 454,368 305,367 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of property, plant and equipment (720,694) Purchases in satisfaction of maintenance agreement Proceeds from capital grants Return of capital grant proceeds Proceeds from property tax Principal payments on debt Proceeds of new borrowing Principal received on financing lease Interest received on financing lease Principal received on long-term note Principal received on refunding debt Bond defeasance and issue costs paid Interest paid on long-term bonds Interest paid on long-term debt NET CASH PROVIDED (USED) IN CAPITAL AND RELA TED FINANCING ACTIVITIES 801,237 (1,408,978) 64,255 125,190 (29,745) (290,972) (571,068) (2,176,229) (19,095) 144,005 795,403 (674,963) 1,385,000 69,668 119,778 (2 I ,266) (221,762) 817,499 (694,761) 3,200,235 75,54\ 113,905 \ (26,119) (262,795) (1,459,707) CASH FLOWS FROM INVESTING ACTIVlTES; Interest received on deposits 880,790 1 , I 72, 186 44,049 30,740 30,921 NET INCREASE (DECREASE) IN CASH AND CASH EQUIV ALENTS 438,099 1,365,898 1,508,4 74 CASH AND CASH EQUIVALENTS, beginning of year 158,631 596,730 1,962,628 CASH AND CASH EQUIVALENTS, end of year $ 596,730 $1,962,628 $3,471,102 65 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I il I I I I I I I I STATISTICAL FY 2009 SALINA AIRPORT AUTHORITY CHANGES IN CASH AND CASH EQUIV ALENTS FOR YEARS ENDED DECEMBER 3\, 2003 2004 2005 2006 2007 2008 2009 $1,374.310 $1,459,696 $2,107,817 $1,993,164 $ 4,588,310 $ 2,426,455 $ 1,974,744 (462,822) (472,178) (504,691 ) (552,966) (638,839) (790,936) (830,298) (837,530) (871,435) (1,157,454) (1,087,149) (1,281,618) (1,475,036) (1,457,074) 73,958 116,083 445,672 353,049 2,667,853 160,483 (312,628) (2,319,249) (4,126,043) (5,948,674) (5,130,780) (3,242,102) (8,663,391) (6,999,968) (9,736) (5,863 ) (1,350) (15,143) (21,601) (7,912) (3,445) 434,763 2,289,342 3,186,636 1,204,559 404,773 1,552,002 3,674,507 987,970 1,036,579 1,058,688 1,184,481 1,201,602 1,256,816 1,327,647 (1,046,750) (988,922) (4,388,400) (1,0]9,673) (1,048,833) (3,946,317) (4,739,437) 3,255,000 J,635,000 3,350,000 ] 2,007,599 8,012,154 81,911 88,823 96,320 104,453 113,279 122,855 ]33,242 107,535 100,623 93,126 84,993 76,167 66,592 56,204 (338,703) (2,102,259) (6,147) (294,691 ) 1,348,701 (22,183) (356,080) (2,646,917) (75,986) (922,725) 462,193 (13,024) (407,795) (657,929) (59,955) (376,499) (1,249,490) 9,054,430 (10,868,845) 25,475 28,960 25,463 182,515 68,896 125,309 15,550 (2,002,826) 1,493,744 (2,175,782) (235,984) 11,904,798 (10,583,053) 165,115 3,471,102 1,468,276 2,962,020 786,238 550,254 12,455,052 1,871,999 $1,468,276 $2,962,020 $ 786,238 $ 550,254 $12,455,052 $ 1,871,999 $ 2,037,114 66 I STATIS"IICAL ry 2009 I I (") (") (") 0\ 0 \/") 0\ 0 00 cO .~ ~ 00 00 ,...., 0\ r- V) V) ,...., 00 00 00 00 q -.:t t-: 0 r- ~ o~ ~ = .- r---: oon ~ r---: '" ._ CJ ......, (") (") V) (") V) Vl = = r- (") (") 0\ N -.:t V) (") (") \/") - 8 = \O~ ~ r-~ 0\ 00 00 V) ~ \0 00 0 -.:tn N N r---: >- ~u \/") \/") (") (") N (") ..... 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EI'l ~ .- "<t .- 00 .- N N .- .s::: ""'" <l) ~ EI'l EI'l EI'l ~ EI'l ~ ~ - ~ ;::l .D ~ .eZ e <l) t:: "'roi:l u 0 ..2~ <l) e- O "E~ '1:l :< ~roi:l <l) <<l '1:l ~~ !: .5 w <a '" crJ ~ E-- a - Q) ..... <l) <<l ~ >- eOJ ~I ~ !: C.l 0 .- N M "<t lrl 'D r-- 00 0'\ ~ < !: '" 0 0 0 0 0 0 0 0 0 0 ;::l <l) .... 0 0 0 0 0 0 0 0 0 0 0 68 crJ U E- ~ N N N ('1 N N N N N N crJ I I I I I I I I I I I I I I I STATISTICAL r'Y 2009 Salina Airport Authority REVENUE BOND COVERAGE Ten Years Ended December 31,2009 Fiscal Pledged Revenue Bond Year Revenue Debt Service Coverae:e 2000 $189,446 $185,013 1.02 2001 $189,446 $164,420 1.15 2002 $189,446 $158,320 1.20 2003 $189,446 $151,923 1.25 2004 $189,446 $150,283 1.26 2005 $189,446 $148,158 1.28 2006 $189,446 $140,557 1.35 2007 $189,446 $67,623 2.80 2008 $189,446 $69,955 2.71 2009 $189,446 $71,955 2.63 Notes: 1. During 1999, the Series 1990-B Bonds were refmanced to remove IRS restrictions and achieve an interest rate savings. Source: Salina Airport Authority Records 69 I I I I I I I I I I I I I I I I I I I I STATISTICAL 1'\ 2(J()l) I I I I ~I trl N r-- """ r-- 0 N 0\ 0- M 0\ ....... r-- 00 N N 0\ trl r-- M r-- 00 trl v: r-: r-- ....... r-- ....... ..,f trl ..0 00 M 00 r...: r...: ..,f 00 N ....... ....... N ....... ....... ....... N N ....... ....... ....... ....... ....... ....... ;:. bO s:: - ~ ~ ::e I. ell .... 0 00 """ ~ ... = .~ M \0 00 M 0\ 0\ M 0 -= CJ ... I. 00 0 r-- trl 00 ....... trl 0- 0- 0\ C) ~ ~ ..... ....... ~ "'l v: \0 trl M M trl trl C) ..... Cl. ell ~ .,.; ..0 ..0 ..0 ..0 ..0 ..0 <<l 0 r:lJr--S trl trl trl "0 Q) ...... Q) 01) "0 ;:1 .D Q) ~ a ~ ell "0 ..... c,., ~ v: v: v: v: v: v: v: v: v: v: a ell C = ..... ell r:IJ ::ld 0 ....... 0 N .... <<l ~ Q) >. ~ ~I a ~ ell "0 = C I. \0 """ \0 trl trl r-- r-- r-- trl s:: ~ ... c..C N N 0 0\ 0\ """ r-- r-- r-- ....... Q) - I. -= """" """ 0C1 r-- r-- 0\ 00 00 00 M "a ell N N N N N N N N ..,f C) ~ r:IJ ... ..... N -< = 01) ~ -< s:: 'C riIil ;:1 ;;> "0 0 Q) ~ If) ~ 'e '0 = 'a ~ ~ ~ """ 00 """ N \0 N N 0- r-- N >- = C N r-- 00 ...... \0 00 trl 0\ """ """ <<l -= trl M \0 \0 ....... C'J ..,f trl trl ... ...: 00 00 r...: ..0 '" .,.; 00 00 Q) r-- = CJ trl trl E ~ r:IJ ~ trl \0 on Ir) trl trl trl trl trl U ... ] ~ ~ ~ ~ ~ 00 's riIil ~ =1 trl 00 N ...... M 0\ 0\ 0- \0 \0 r-- C = \0 ....... 0\ ....... \0 0- 00 trl 00 00 0\ ~ ..0= M N 0 0 0 ~ r-: ~ 0C1 0C1 0 ... ell ..,f ..,f ..,f ..,f ..,f M M M trl trl 0 N Ur:IJ N N N N N N N N N N '" ~ ~ 'C riIil 0 ;9 ~ ;:1 ~ <t: ~ ~ ~ r-- \0 r-- ....... """ 0\ trl Ir) r-- M t:: 0 ~ 0\ = M \0 trl 00 r-- r-- trl r-- """ """ e- ~ ... M 0 ~ 0 00 trl 0\ """ M "'l 0 - N ..,f 00 00 00 r...: r...: '" ~ 0 ell trl ....... r-- N r:IJ N N N N N N N N N M t<l Z ....... .5 M ~ .... "a ...><: .... ~ Q) if) Q) .D Q) U .c E ;9 .- ~ Q) 0 .... C) E o ~ Q) s:: 0 ;:1 ;9;;>0 ~ 0 ;:1 "0 U <t:O{l "0 ~ Q) t:: ~ s:: .5 o w .... "a g~ ~ Q) s:: if) <t: -< i3 Q) 'ii ~ 01) 0 gu>- ~I '" ~ CJ 0 .- N M """ trl \0 r-- 00 0- '"0 := 0 s:: ~ 0 0 0 0 0 0 0 0 0 0 i s:: ;:1 Jj~~ Ii: 0 0 0 0 0 0 0 .0 0 0 ;:1 0 70 N N N N N N N N N N >.x.., if) I I I I I I I I I I I I I I % of Operating & Direct Finance Lease Revenue 18.61 % 11.44% 10.43% 7.52% 6.41% 5.96% 3.76% 2.36% 2.02% 1.79% 1.66% 1.20% 1.18% 1.09% 1.05% 1.02% 0.86% 0.81% 0.76% 0.72% 0.70% 0.68% 0.67% 0.63% 0.61% 0.61% I I I I I I I I I I I I I I I I I I I STA TISTIC AL I Y 2(J(Jl} I Salina Airport Authority Principal Customers Year Ended December 31,2009 Company Kansas Military Board (KS Army National Guard) Hawker Beechcraft Corp. Kansas State University - Salina CA V Aerospace, Inc. JRM Enterprises, Inc, d/b/a America Jet Flower Aviation Schwan's Sales, Inc. Two Rivers Vending Co., Inc. Johnson Rack, Inc. Learjet Inc. Geocore Services AFK Properties, Inc. ~anadian Royal Air Force Federal Aviation Adminis. HRAD Group LLC Air Midwest, Inc. Builders Choice Concrete Kejr, Joe Waddle's Manufacturing & Machine Professional Flight Training, LC United Suppliers, Inc. Scientific Engineering Laas, Brent and Mark ALL TEL Newco No.4 LLC Bostater Realty, Inc. Triangle Trucking Revenue 425,886.00 261,819.62 238,536.00 171,963.60 146,588.45 136,393.82 86,112.00 53,912.33 46,200.00 40,929.52 37,920.00 27,540.00 26,924.25 24,900.00 24,036.00 23,311.98 19,669.00 18,441. 78 17,466.00 16,561.00 15,984.00 15,600.00 15,348.00 14,472.00 14,066.67 13,932.00 Total Operating Lease and Direct Finance Lease Revenue for 2009 was $2,288,022 Source: Salina Airport Authority Records 71 I I I I I I I I I I I I I I I I I I I I STATISTICAL FY 2009 Salina Airport Authority MILL LEVY REVENUE Ten Years Ended December 31, 2009 Fiscal Year Mil Levy Revenue 2000 $ 801,237 2001 $ 795,404 2002 $ 817,499 2003 $ 987,970 2004 $ 1,036,579 2005 $ 1,058,688 2006 $ 1,184,481 2007 $ 1,201,602 2008 $ 1,256,8]6 2009 $ 1,327,647 Source: Salina Airport Authority Records 72 STATISTICAL rV]009 Salina Airport Authority AIR TRAFFIC, FUEL FLOW AGE AND ENPLANEMENT TRENDS Ten Vears Ended December 31,2009 Scheduled Fiscal Air Traffic Fuel Flowage Air Service Year Operations Gallons Enplanements 2000 87,709 4,472,164 10,270 200] 92,870 4,396,429 6,507 2002 95,80] 4,695,093 2,565 2003 86,214 4,358,563 2,3]9 2004 8] ,465 3,843,330 2,974 2005 86,292 4,] 62,887 2,339 2006 81,464 3,817,1l2 2,029 2007 76,479 3,778,792 2,945 2008 71,575 3,] 14,5]5 4,654 2009 65,062 2,48],585 2,839 Note: One air traffic operation equals one aircraft takeoff and landing Source: Salina Airport Authority Records 73 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I STATISTICAL ry 2009 Salina Airport Authority Principal Employers Current Year and Four Years Prior 2009 20061 Percentage of Percentage of Total City Total City Employer Employees Rank Employment Employees Rank Employment Salina Regional Health Center 2,250 1 7.6% 1,600 3 3.7% Schwan Global Supply Chain, [r 1,600 2 5.4% 1,800 1 5.1% USD #305 1,512 3 5.4% 1,659 2 4.7% Exide Technologies 750 4 2.5% 750 4 2.1% Great Plains Manufacturing 650 5 2.2% City of Salina 500 6 1.6% 723 5 2.0% Sunflower Bank 500 7 1.6% 0 Philips Lighting Company 500 8 1.6% 490 7 1.4% Wal-Mart 400 9 1.3% 421 8 1.2% Dillons Stores 385 10 1.3% 0.0% Blue Beacon International 544 6 1.5% Asurion, Inc. 374 9 1.0% Hawker Beachcraft Corp. 350 10 1.0% Total 9,047 30.5% 8,711 23.7% Source: Salina Area Chamber of Commerce 1 - 2000 Historical records not available 74 I S I ^TIS'IIC^'- I, Y 2009 fI.l CJ 0" ...... o~ ...... = ...... 00 CJ Os o = o CJ ~ "0 = = CJ :E Q. CE .C ~ en ] 5 ~ :; ~ ~ < ~~ 1:: = ~ o en E- = ..... ..... 0 ~ < U ~ r:1:l ~ E- .s .: ...... ca';~ enoo....:l ........ = ~ "" 5oo",,"t- t-O",,"MMN .... ~",,"O'IMOOOt-\OM-M I _t-\O\Ot-on"""M,,,,"MN ~ '0 0\ 0\ 0\ 0:: 0:: 0\ o-..~ 0\ O'I~ 0\ .. = ~ = o ... ...... = -6 ... ~ I '$.. '$.. '$.. '$.. '$.. '$.. '$.. '$.. '$.. '$.. =1;l':"",:ooc:on"",:onC:C'!t- ~~oo~~~~~~~~i:6 "" .... I ~ ...... = ~ 5 ~""~I ~ o ...... 0 - = 0'1 Q...... 0 e ~ N ~ = ~ '$..'$..'$..'$..'$..'$..'$..'$..'$.. OO-~~"""t-""':~ MM"""""",,,,".,,fMMM ; ...~ ... ~ r:1:l "0 --- ~ < s= ~ -",,"\OO'IC:~~O'IC'! \0...0...0...0 t-t-t-r--: 00 MMMMMMMMM '; = o ....~ ~ 5 ~ 0 ~ CJ '; = ...... """ o E-- 0000000000 0000000000 oqooq,ooooo Non o 00 on ~oOr--:-M~' 00 """ 0'1 0\0\ t-N 0\ 00 \0 M\OOOO\~N-OonN N N~ 0\ ..0 on ~ r--:- 00 ....: ..0 \O",,"onO-O\onM-O """~ ~. ~ on on ~ \O~ t-~ 0;. q ~~ ~~~"""'(......-l......-oN {;A {;A {;A {;A {;A {;A {;A {;A {;A {;A .. ~ e o CJ = """ = ...... 'a = U '; .. = ~ 0 ~ ~ ~ ~ 0000000000 0000000000 00 on 00 on N \O~~~~t- oo~ 00 0\ 00 00 0'1 M M ..0 NNNNNNMMMM (;A {;A {;A {;A {;A {;A {;A {;A {;A {;A ~~s t- t- \0 0 .i ~Sl(6~~ =-MMM on on on on o ~ t- M M 0 r-: O'I~ M M on on O\OMt- - t- 00 on o;.~on\O M~~~ on on on on ;1 g; g 0 8 8 ~ :g ~ b gg ~O\ooooooooo >--NNNNNNNNN ..... Q) on "'0 :l a:l c...., o c o fI.l en ~ 0;;: ; CS o en 00 r:1:l en = s= ...... r:1:l = ~ ~ en (,) .p en o~ en 100 o .0 ~ ....:l c...., o :l r:1:l Q) 100 :l CD '" I I I I I I I I I I I I I c o .~ (,) :l "'0 I:il c...., o ..... s= Q) a 1:: r:1:l 0- Q) Cl en ~ en a ~ '" Q) :0 ..:s .~ ~ ...... o c c o :l .~ ~ E ~c.8 en .s :l II en r:1:l s=___ Q) s= U ;,; en ~ ;::J 0 ... l::: I I I I I 75 I I I I I I I I I I I I ,I I I I I II I STATISTICAL FV 2009 Lareest Taxpavers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their 2009 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. %of Type of Assessed Total Company Business Valuation Valuation Schwan's Sales (Tony's Pizza) Frozen Pizza $10,144,446 2.27% [POFA Salina Central Mall LLC Regional Shopping Center 8,704,250 1.94% Hospital and Medical Salina Regional Health Center Offices 5,584,461 1.25% We star Energy Utility 5,191,056 L.16% Wal-Mart Stores Discount Retail 3,813,855 0.85% Gateway Adams Inc. (Midstate Plaza) Shopping Center 3,556,009 0.79% Kansas Gas Service Utility 3,499,873 0.78% Southwestern Bell Telephone Utility 3,455,419 0.77% Sunflower Bank Financial Institution 2,749,200 0.61% Great Plains Manufacturing Agricultural Equipment 2526,984 0.56% $49,225,553 10.99% Tax Collections Tax statements are mailed November 1 each year and may be paid in full or one-half on or before December 20 with the remaining one-half due on or before May 10 of the following year. Taxes that are unpaid on the due dates are penalized at a statutorily prescribed rate until paid or until the property is sold for taxes. Real estate bearing unpaid taxes is advertised for sale in July of each year and is sold by the County for taxes and all legal charges on the first Tuesday in September. Properties that are sold and not redeemed within two years after the tax sale are subject to foreclosure sale, except homestead properties which are subject to foreclosure sale after three years. Personal property taxes are assessed, due and may be paid in the same manner as real estate taxes. Motor vehicle property taxes are based on valuations provided by the Kansas Department of Revenue and the county average tax rate for the county in which the vehicle is registered. Motor vehicle taxes are payable to the county treasurer at the time of the vehicle's annual registration. Vehicle registration dates are assigned by the State in a manner such as to equal registration over a twelve-month period. Motor vehicle taxes are distributed by the county to the state, city and other taxing jurisdictions based on their proportionate tax levies. Delinquent personal and motor vehicle taxes are penalized at the same rate as delinquent real property taxes. Source: City of Salina 76 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I A ( \ Salina Airport Authority representatives attended the Third Annual Kansas Unmanned Systems Symposium to discuss the future of unmanned aerial systems in Kansas, particularly Salina, with state- wide industry professionals in Wichita. Although their use in Operation Iraq Freedom has generated a fair amount of buzz among the UAS community, the Symposium was humming with enthusiasm for what these flying machines bring to the table as emergency first responders put them to work locally. Tornados, floods, wildfires and ice storms have presented the UAS community with a broad range of unique challenges. ~ ~ y n o :I " -. D) ::s n ft) SA LINAA irport =,(J~= I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I CLUBlNE& RETTELE CHARfERED Certified Public Acrountants fill Robert I. Clubine, C.P.A. David A. Rettele, C.P.A. Jay D. Langley, C.P.A. Jon K. Bell, C.P.A. Leslie M. Corbett, C.PA Stacy J. Osner, C.PA Marci K. Fox, C.PA John T. Millikin, C.P.A. Linda A. Suelter, C.PA 218 South Santa Fe P.O. Box 2267 Salina, Kansas 67402-2267 Salina 785/825-5479 Salina Fax 785 / 825-2446 Ellsworth 785/472-3915 Ellsworth Fax 785 / 472-5478 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS To the Board of Directors Salina Airport Authority We have audited the financial statements of Salina Airport Authority as of and for the years ended December 31, 2009 and 2008, and have issued our report thereon dated June 3, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the Kansas Municipal Audit Guide, prescribed by the Director of Accounts and Reports, Department of Administration of the State of Kansas. Internal Control Over Financial Reporting In planning and performing our audit, we considered Salina Airport Authority's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Salina Airport Authority's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Salina Airport Authority's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 77 Compliance and Other Matters As part of obtaining reasonable assurance about whether Salina Airport Authority's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the audit committee, management, others within the organization, the City Commission and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. CLUBINE AND RETTELE, CHARTERED ~ CUl/- <UItt June 3, 2010 78 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I CLUBlNE& RETIELE rnARfERED Certified Public Acrountants v Robert I. Clubine, C.PA David A. RetteJe, C.P.A. Jay D. Langley, C.P.A. Jon K. Bell, C.PA Leslie M. Corbett, C.PA Stacy J. Osner, C.P.A. Marci K. Fox, C.P.A. John T. Millikin, C.PA Linda A. Suelter, C.P.A. 218 South Santa Fe P.O. Box 2267 Salina, Kansas 67402-2267 Salina 785 / 825-5479 Salina Fax 785 / 825-2446 Ellsworth 785/472-3915 Ellsworth Fax 785/472-5478 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-I33 To the Board of Directors Salina Airport Authority Compliance We have audited the compliance of Salina Airport Authority, with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-I33 Compliance Supplement that are applicable to each of its major federal programs for the year ended December 31, 2009. Salina Airport Authority's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grant agreements applicable to each of its major federal programs is the responsibility of Salina Airport Authority's management. Our responsibility is to express an opinion on Salina Airport Authority's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-I33, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-l33 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Salina Airport Authority's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Salina Airport Authority's compliance with those requirements. In our opinion, Salina Airport Authority complied in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended December 31, 2009. Internal Control Over Compliance The management of Salina Airport Authority is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered Salina Airport Authority's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-l33, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Salina Airport Authority's internal control over compliance. 79 A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, detected and corrected, in a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses as defined above. This report is intended solely for the information and use of the audit committee, management, others within the organization, the City Commission and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. CLUBINE AND RETTELE, CHARTERED CIMk~ tiM.d ~ June 3, 2010 80 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I SALINA AIRPORT AUTHORITY Salina, Kansas SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS F or the Year Ended December 31, 2009 Federal CFDA Number Federal Grantor / Pass-through Grantor / Program or Cluster Title U.S. Department of Transportation Airport Improvement Program 20.106 ARRA - Airport Improvement Program 20.106 U.S. Department of Homeland Security Law Enforcement Officer Reimbursement Agreement Program 97.090 Total Expenditures of Federal Awards Pass-through Entity Identifying Number N/A N/A N/A See notes to the schedule of expenditures of federal awards. Schedule 1 Federal Expenditures $ 2,429,409 690,809 16,988 $ 3,137,206 81 SALINA AIRPORT AUTHORITY Salina, Kansas NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS For the Year Ended December 31, 2009 Note 1 Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of Salina Airport Authority and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-I33, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. 82 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I SALINA AIRPORT AUTHORITY Salina, Kansas Schedule 2 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS For the Year Ended December 31, 2009 There are no prior audit findings. 83 SALINA AIRPORT AUTHORITY Salina, Kansas Schedule 3 SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2009 SECTION I - SUMMARY OF AUDITORS' RESULTS Financial Statements 1. Type of auditor's report issued: Unqualified 2. Internal control over financial reporting: Material weaknesses identified? -yes ---.2Lno Significant deficiencies identified that are not considered to be material weaknesses? -yes ---.2Lnone reported 3. Noncompliance material to financial statements noted? -yes ---.2Lno F ederal Awards 1. Internal control over major programs: Material weaknesses identified? -yes Lno Significant deficiencies identified that are not considered to be material weaknesses? -yes Lnone reported 2. Type of auditor's report issued in compliance for major programs: Unqualified 3. Any audit findings disclosed that are required to be reported in accordance with Section 51O(a) ofOMB Circular A-l33: -yes Lno 4. Identification of major programs: 20.106 Airport Improvement Program 5. Dollar threshold to distinguish between Type A and Type B programs: $300,000 6. Auditee qualified as a low-risk auditee? LYes no SECTION II - FINANCIAL STATEMENT FINDINGS None. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None. 84 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I SALINA AIRPORT AUTHORITY Salina, Kansas Schedule 4 CORRECTIVE ACTION PLAN For the Year Ended December 31, 2009 None required. 85 (THIS PAGE lNTENTIONALL Y LEFT BLANK) I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I A '\ ( The Salina Airport Authority announced the official opening of the looLL Av gas self service fueling station in October. By offering a self fueling station, the Airport Authority hopes to achieve a Board stated goal of "growing and sustaining general aviation operations at the Municipal Airport." The station, located just south of the National Guard hangar, takes all major credit and branded debit cards. Accessory equipment including a ladder, steps and chocks are available for fueling convenience. A hazardous material spill kit is also located on site for safety and a self fueling training slide show is available on the Airport Authority's website. ~ ~ y r-----------------------------------, , , , , , (I) AI - -. ::s AI .. -. .. -a o ::l ... c .. :r o .. -. .. 'II( I\) Q Q CD , , , , , L.__________________________________--' SA LINAA irport =,4~= SA LINAA7!;JIti !J~e~++t A~M~ ~4t' Airl!9rt /~AviatiOn Service SLMcenter '~ ~ I I I I I I \ - I I I I . I I I, I I I i_ iii ....... ~Mlf .................. .....~ ~1IIlo~...~~ ~~ 3237 Arnold I Salina, KS 67401 I 785-827-3914 www.salinaairport.com I www.flysalina.com