8 Financial Plan - Nashville International Airport · MASTER PLAN UPDATE | Nashville International Airport FINANCIAL PLAN | 8‐5 Table 8‐1 – Capital Improvement Program for PAL

MASTER PLAN UPDATE | Nashville International Airport

FINANCIAL PLAN | 8‐1

8 FinancialPlan

This section presents financial projections for BNA based on the Capital Improvement Program

(CIP) and the aviation activity forecasts presented in Chapter 2. Financial projections were

developed for two planning activity levels (PALs) used for the CIP: PAL 1 (FY 2012 – FY 2016)

and PAL 2 (FY 2017 – FY 2021). The 2012 numbers included in this chapter are as presented in

the 2012 Comprehensive Annual Financial Report (2012 CAFR), while the 2013 amounts are

estimates based on 12 months of actual data and the 2014 amounts are as presented in the

2014 budget (2014 Budget) approved on June 19, 2013. The Airport’s Fiscal Year ends June 30.

8.1 Airport’sFinancialStructure

The MNAA is a metropolitan airport authority created on February 9, 1970, pursuant to state

statute and is an independent political subdivision of the State of Tennessee. The major

purposes of the MNAA are the operation, financing and development of BNA and JWN. The

MNAA also owns MNAA Properties Corporation (MPC), a Tennessee nonprofit corporation,

whose purpose is to support and facilitate the operations of the MNAA and to help the

economic development of the surrounding area. The MNAA has all the powers of a

governmental entity necessary to accomplish its purpose, such as acquiring land and

constructing airport facilities, issuing revenue bonds and other tax‐exempt indebtedness,

maintaining its own police and aircraft rescue and firefighting (ARFF), and setting rates, charges

and rentals for activities on airport properties. Based upon the criteria set forth in

Governmental Accounting Standards Board Statement No. 14, The Financial Reporting Entity, it

has been determined that the MNAA is a component unit of the Metropolitan Government of

Nashville and Davidson County, Tennessee.

The MNAA’s Board of Commissioners consists of 10 members (the Board) who serve without

compensation, nine of whom are appointed by the Metropolitan Government Mayor and

approved by the Metropolitan Government Council, with the 10th being the Mayor (or his

designee). All appointments to the Board are for a term of four years. The terms are staggered

to provide for continuity of MNAA development and management.

The Board legally adopts MNAA operating and capital budgets. In the case of BNA, the annual

capital and operating budgets are additionally reviewed and approved by the signatory airlines,

which are the seven airlines that have committed to the residual lease agreement. Although the

Board approves budget programs, individual expenditures for capital or operating purposes

must comply with the MNAA’s bylaws and policies and procedures for competitive acquisition.



8.1.1 AuthorityAccounting

The MNAA distinguishes operating revenues and operating expenses from non‐operating items.

Operating revenues and expenses generally result from providing services in connection with

the principal ongoing operations. Revenues from space rental and fees, landing fees, parking

and other miscellaneous income are reported as operating revenues. Transactions that are

capital, financing or investment‐related, are reported as non‐operating revenues. Such non‐

operating revenues include passenger facility charges (PFCs) and customer facility charges

(CFCs). Expenses from employee wages and benefits, purchases of services, materials and

supplies and other miscellaneous expenses are reported as operating expenses. Interest

expense and financing costs are reported as non‐operating expenses.

8.1.2 AirlineAgreements

In 1975, the Authority entered into long‐term lease agreements with some of the airlines

(signatory airlines) serving BNA. Signatory airlines as of June 30, 2012, include American

Airlines, American Eagle, Continental Express doing business as ExpressJet, Delta Air Lines, Inc.,

Frontier Airlines, Republic, Southwest Airlines, United Airlines, and US Airways. Under the terms

of the airline agreements, terminal rents and landing fees charged to the signatory airlines are

residual cost in nature, which takes into account all eligible revenues, expenses and debt

service of the MNAA. This residual cost agreement is designed to minimize the landing fees and

terminal rents of the signatory airlines while assuring the payment of all net operating costs

and debt service relating to the MNAA. Costs recovered through rentals and fees include

expenses of operating and maintaining the airport plus 110% of debt service on all bonds

outstanding.

In 1987, the lease agreements were amended and restated for a 30‐year period through

September 30, 2017, which terminates during the projection period. The methodologies

outlined in the current airline agreements were assumed to be in place throughout the

projection period. However, management believes it will be successful at negotiating new

airline lease agreements with a shorter duration and more favorable terms than the current

long‐term lease agreements.

8.1.3 GeneralResolution

All of the MNAA’s bonds, except for the Series 2003 PFC Bonds, were issued under the Airport

Improvement Revenue Bond Resolution adopted by the Board on August 15, 1991 (as amended

and supplemented from time to time) (General Resolution). The 2003 PFC Bonds were issued

under the PFC Resolution and were secured by an additional pledge of and lien on PFC revenues

less operating expenses. The MNAA is also using PFC revenues that were approved under PFC



Program Application for its annual debt service costs on the 2009A bonds and the Series 2010A

bonds. Although the Consolidated Rental Car (CONRAC) Facility Series 2010 Bonds were issued

under the General Resolution, the CFCs are not part of airport revenues or net revenues as

defined in the General Bond Resolution. Therefore, airport revenues derived by the MNAA from

the operation of BNA are not pledged for payment of and do not constitute security for the

CONRAC Series 2010 Bonds. All other bonds are secured by a pledge of and lien on net

revenues derived by the MNAA from the operation of the airports

8.2 FundingSourcesoftheCIP

All airports receiving federal AIP funding are required to maintain a current Capital

Improvement Program (CIP) with the FAA, which identifies projects to be undertaken at an

airport over a specified period of time. This plan further estimates the order of implementation

as well as total project costs and funding sources. It incorporates all projects recommended as

part of this Master Plan Update from FY 2012 through FY 2021.

The recommended CIP for PAL 1 and its corresponding cost estimates are based on a planning

level of detail and are presented in Table 8‐1. While accurate for master planning purposes,

actual project costs will likely vary from these planning estimates once project design and

engineering estimates are developed. The cost estimates presented in the table are in 2012

dollars inflated at 3.2% annually, which reflects the 5‐year average (2007‐2012) of Engineering

News‐Record’s Construction Cost Index, and also include contingencies, design costs, and

construction management costs. As shown in the table, the CIP for PAL 1 is estimated to cost

approximately $151.2 million in 2012 dollars and approximately $161.7 million in inflated

dollars.



Table 8‐1 – Capital Improvement Program for PAL 1

(Page 1 of 2) Project Costs Project Costs Funding Sources

Year Project 2012 Dollars Inflated1

Federal2

State PFC CFC Other MNAA

2012 Total $19,946,000 $19,946,000 $7,762,500 $1,210,200 $2,450,000 $0 $6,050,000 $2,473,300

Improve Stormwater Collection & Treatment System $7,000,000 $7,000,000 $5,250,000 $875,000 $875,000 $0 $0 $0

Hydrant System Valve Replacement #5 & #6 240,000 240,000 0 216,000 0 0 0 24,000

ERP Systems Implementation 1,400,000 1,400,000 0 0 0 0 0 1,400,000

MNAA Data Center Relocation (Construction) 1,200,000 1,200,000 0 0 0 0 0 1,200,000

Reconstruct Taxiways B & T3 6,500,000 6,500,000 4,875,000 0 1,625,000 0 0 0

HVAC Improvements (AHUs) 575,000 575,000 0 0 0 0 517,500 57,500

Switchgear Upgrade (Phase 2) 1,500,000 1,500,000 0 1,350,000 0 0 0 150,000

Replace Concourse Roof (Phase 3) 1,440,000 1,440,000 0 1,296,000 0 0 0 144,000

Lightning Protection System for Terminal/Concourses 960,000 960,000 0 864,000 0 0 0 96,000

Energy Phase 2 (Chiller, Lighting, Quarry Design) 1,500,000 1,500,000 0 0 0 0 1,500,000 0

Express Parking location within Economy Parking Lot 975,000 975,000 0 0 0 0 975,000 0

Directtional Signage 200,000 200,000 0 0 0 0 200,000 0

Kiosks for Group Arrivals 70,000 70,000 0 0 0 0 0 70,000

VOIP Integration with Network 250,000 250,000 0 0 0 0 0 250,000

Land Acquisition East of Runway 2R‐20L (Phase 1) 500,000 500,000 0 0 0 0 500,000 0

Build‐Out Space for Business Center 60,000 60,000 0 0 0 0 0 60,000

Westside Cargo Building Utilities Metering 75,000 75,000 0 0 0 0 0 75,000

Outbound Baggage and Check‐In Counter Replacement 350,000 350,000 0 0 350,000 0 0 0

CSF Build‐Out (Phase I) 800,000 800,000 0 0 0 0 800,000 0

1400 Murfreesboro Pike Renovatio 0 0 0 0 0 0 0 0

Customer Waiting Area ‐ Parking Lot 40,000 40,000 0 0 0 0 0 40,000

New License Plate Inventory Sytstem 80,000 80,000 0 0 0 0 0 80,000

PDC Survey SUV (MEQ 6367) 40,000 40,000 0 0 0 0 0 40,000

Operations Vehicle (MEQ 6469) 35,000 35,000 0 0 0 0 0 35,000

IT Vehicle (MEQ 6371) 30,000 30,000 0 0 0 0 0 30,000

Maintenance Pick Up (Airfield Electric) (MEQ 6374) 46,000 46,000 0 0 0 0 0 46,000

Maintenance Pick Up (Grounds) MEQ 6349 40,000 40,000 0 0 0 0 0 40,000

DPS Sedan (2) (MEQ 6464, MEQ 6465) 50,000 50,000 0 0 0 0 0 50,000

DPS K‐9 Vehicles (1) (MEQ 6462) 45,000 45,000 0 0 0 0 0 45,000

Tractor (MEQ 6386) 85,000 85,000 0 0 0 0 0 85,000

ERP Systems Implementation 1,400,000 1,491,000 0 0 0 0 0 1,491,000

MNAA Data Center Relocation 1,200,000 1,278,000 0 0 0 0 0 1,278,000

Reconstruct 13‐31 West 12,300,000 13,100,000 9,825,000 0 3,275,000 0 0 0

Radio Systems Replacement 1,820,000 1,938,000 0 1,744,200 0 0 0 193,800

Computer Aided Dispatch‐AOC 400,000 426,000 0 383,400 0 0 0 42,600

Parking Lot Revenue Control System Replacement (Phase 1 1,625,000 1,731,000 0 1,557,900 0 0 0 173,100

Construct New Triturator 95,000 101,000 0 0 0 0 0 101,000

Operations Part 139 Online Training Program and CFR 1542 480,000 511,000 0 0 511,000 0 0 0

Upgrade GPS Survey Equipment 60,000 64,000 0 57,600 0 0 0 6,400

Cargo Apron Slab Replacement (Phase 1) 500,000 533,000 0 479,700 0 0 0 53,300

Office Reconfiguration 400,000 426,000 0 383,400 0 0 0 42,600

CSF Build Out, PH 1 400,000 426,000 0 383,400 0 0 0 42,600

Security Checkpoint Timing 185,000 197,000 0 0 0 0 0 197,000

Pedestrian Pathway Landscaping 375,000 399,000 0 0 0 0 0 399,000

Alternative Energy Project ‐ CONRAC (Design) 200,000 213,000 0 0 0 213,000 0 0

Replace Skylight Over Checkpoint 500,000 533,000 0 0 0 0 533,000 0

Multi Purpose Truck Tractor Snow Plow 365,000 389,000 0 0 0 0 0 389,000

Airport Monument Sign 300,000 320,000 0 0 0 0 0 320,000

Donelson Pike Digital Signage 350,000 373,000 0 0 0 0 0 373,000

TDEC Sustainability Grant 400,000 426,000 0 213,000 0 0 213,000 0

2013

2014



Table 8‐1 – Capital Improvement Program for PAL 1

(Page 2 of 2) Project Costs Project Costs Funding Sources

Year Project 2012 Dollars Inflated1

Federal2

State PFC CFC Other MNAA

Relocate Airport Operations Center 1,000,000 1,099,000 0 989,100 0 0 0 109,900

Reconstruct Taxiways T1, T2 & Connector 7,000,000 7,694,000 5,770,500 961,750 961,750 0 0 0

Taxiway Lima & Juliet East 7,300,000 8,023,000 6,017,250 1,002,875 1,002,875 0 0 0

Camera System Upgrade (Phase 2) 1,050,000 1,154,000 0 1,038,600 0 0 0 115,400

Replace Outbound Baggage System & Ticket Counters 15,025,000 16,514,000 0 13,211,200 0 0 0 3,302,800

Switchgear Upgrade (Phase 3), Units 6 & 7 1,600,000 1,759,000 0 0 0 0 0 1,759,000

Parking Lot Revenue Control System Replacement (Phase II 3,000,000 3,297,000 0 2,967,300 0 0 0 329,700

Land Acquisition East of R/W 2R‐20L 500,000 550,000 0 0 0 0 0 550,000

Replace T‐2 Elevator 500,000 550,000 0 0 0 0 0 550,000

Replace Columns Apron Level 300,000 330,000 0 297,000 0 0 0 33,000

Terminal Generator Replacement (Phase 1) 925,000 1,017,000 0 915,300 0 0 0 101,700

Hydrant System Valve Replacement 240,000 264,000 0 237,600 0 0 0 26,400

CFS Build‐Out Phase 2 400,000 440,000 0 396,000 0 0 0 44,000


Quarry Geothermal Water Project (Energy) 10,500,000 11,541,000 0 0 0 0 11,541,000 0

Alternative Energy Project ‐ Construction 2,750,000 3,023,000 0 0 0 3,023,000 0 0

Excavator (MEQ 6297) 225,000 247,000 0 222,300 0 0 0 24,700

Sweeper (MEQ 6383) 125,000 137,000 0 123,300 0 0 0 13,700

Moving Sidewalks to CONRAC 2,400,000 2,638,000 0 0 0 2,638,000 0 0

Taxiway Sierra South & November 4,400,000 4,991,000 3,743,250 0 1,247,750 0 0 0

Taxiway Lima Reconstruction 10,000,000 11,343,000 8,507,250 0 2,835,750 0 0 0

Switchgear Phase IV Units 4 & 5 1,500,000 1,701,000 0 1,530,900 0 0 0 170,100

Terminal Door Replacements 400,000 454,000 0 408,600 0 0 0 45,400

Replace Moving Sidewalks ‐ ST Garage (Levels 2&3) 700,000 794,000 0 714,600 0 0 0 79,400

Terminal Generator Replacement (Phase 2) 925,000 1,049,000 0 944,100 0 0 0 104,900

Hydrant System Valve Replacement 11 & 12 240,000 272,000 0 244,800 0 0 0 27,200

Crane Truck (MEQ 6244) 200,000 227,000 0 204,300 0 0 0 22,700

FIDS Replacement 2,500,000 2,836,000 0 2,552,400 0 0 0 283,600

Upgrade of Terminal Wide PA Server & Visual Paging 1,550,000 1,758,000 0 1,582,200 0 0 0 175,800

CSF Build‐Out Phase 3 400,000 454,000 0 408,600 0 0 0 45,400


CONRAC Lighting Improvements 2,500,000 2,836,000 0 0 0 2,836,000 0 0

Extreme Duty Dump Truck Snow Plow 300,000 340,000 0 306,000 0 0 0 34,000

Total CIP for PAL 1 $151,192,000 $161,749,000 $51,750,750 $43,631,625 $15,134,125 $8,710,000 $22,829,500 $19,693,000

1 Project costs were inflated at 3.2% which reflects the 5‐year average (2007‐2012) of Engineering News‐Record’s Construction Cost Index.

2 Federal funds include funds from FAA AIP (entitlement and discretionary).

MNAA

2015

2016

Source: RW Armstrong

Table 8‐2 presents the CIP’s estimated funding sources for PAL 1 and PAL 2. Potential funding

sources for any proposed improvements at BNA can be found at a variety of agencies, both

federal and state. Many of the available funds come in the form of grants, should the project

meet eligibility requirements. Additional financing options are available, such as PFCs, CFCs,

other funds, and MNAA funds.



Table 8‐2 – Funding Sources of the CIP Project Costs Project Costs Funding Sources

2012 Dollars Inflated1 Federal2 State PFC CFC Other MNAA

PAL 12012 $19,946,000 $19,946,000 $7,762,500 $1,210,200 $2,450,000 $0 $6,050,000 $2,473,300

2013 26,086,000 26,086,000 10,125,000 4,601,000 2,850,000 0 4,492,500 4,017,500

2014 23,355,000 24,875,000 9,825,000 5,202,600 3,786,000 213,000 746,000 5,102,400

2015 55,440,000 60,936,000 11,787,750 22,955,425 1,964,625 5,661,000 11,541,000 7,026,200

2016 26,365,000 29,906,000 12,250,500 9,662,400 4,083,500 2,836,000 0 1,073,600

$151,192,000 $161,749,000 $51,750,750 $43,631,625 $15,134,125 $8,710,000 $22,829,500 $19,693,000

PAL 2 2017‐21 $120,968,783 $151,036,000 $53,907,250 $27,193,575 $28,179,375 $0 $0 $41,755,800

Total CIP $272,160,783 $312,785,000 $105,658,000 $70,825,200 $43,313,500 $8,710,000 $22,829,500 $61,448,800

2 Federal funds include funds from FAA AIP (entitlement and discretionary).

1 Project costs were inflated at 3.2% which reflects the 5‐year average (2007‐2012) of Engineering News‐Record’s Construction Cost Index.

MNAA

Source: RW Armstrong

The following sections will list available sources and detail the eligibility requirements for each.

The amount of funding available from these sources will depend primarily on future levels of

aviation activity at BNA and future federal reauthorizations.

8.2.1 FederalGrants

Grants administered by the FAA through the AIP represent a critical capital funding source to

implement the projects recommended in this Master Plan Update. Although the future status

of the AIP is currently uncertain, for the purpose of this Master Plan Update, it is assumed that

the AIP will continue to be authorized and appropriated at levels consistent with H.R. 658, the

FAA Modernization and Reform Act of 2012.

The U.S. DOT classifies BNA as a medium hub primary airport; therefore, the AIP formula

stipulates that BNA is entitled to receive 75% in federal funding for AIP‐eligible projects. AIP

funds can be used for most airport improvement needs but not operating costs. Note,

however, that AIP funds are not available for revenue‐generating projects at primary airports.

The PFC legislation, which is further described later in this chapter, stipulates that if a medium‐

to large‐hub airport institutes a PFC of $1.00, $2.00, or $3.00, they must forego 50% of their AIP

entitlement funds and if the PFC is $4.00 or $4.50, they must forego 75% of their AIP

entitlement funds. Depending on the PFC application number, the MNAA has approval to assess

a $3.00 or a $4.50 PFC through August 2017. As a result, the 50% or 75% reduction applies to

BNA’s entitlement grants.

As shown on Table 8‐2, federal grants are estimated to be approximately $105.7 million from FY

2012 through FY 2021. Of this amount, approximately $43.5 million is funded with entitlement



grants and approximately $62.2 million with discretionary grants, both of which are described

below.

Entitlement Grants: The FAA’s AIP consists of entitlement funds and discretionary funds.

Entitlement funds are distributed through grants by a formula currently based on the number

of enplanements and the amount of landed weight of arriving cargo at individual airports for

the most recent calendar year. In cases where entitlement funds are not used during the

current federal fiscal year, these funds are redistributed to other airport sponsors as

discretionary funds and become “protected entitlement” funding in the next federal fiscal year.

Table 8‐3 presents the AIP entitlement calculation for BNA based on the aviation activity

forecasts presented in Table 3‐38 of the Master Plan Update. As shown in the table, it is

estimated that the Airport will receive approximately $20.9 million in entitlement AIP grants

during PAL 1 and approximately $22.6 during PAL 2.

Table 8‐3 – AIP Entitlement Calculation PAL 1 PAL 2

2012 2013 2014 2015 2016 2017‐2021

Enplanements for Entitlement 4,883,000 5,207,600 5,422,300 5,635,600 5,835,700 32,397,800

FAA Formula1

$7.80 for 1st 50,000 Enplanements $390,000 $390,000 $390,000 $390,000 $390,000 $1,950,000

$5.20 for next 50,000 Enplanements 260,000 260,000 260,000 260,000 260,000 1,300,000

$2.60 for next 400,000 Enplanements 1,040,000 1,040,000 1,040,000 1,040,000 1,040,000 5,200,000

$0.65 for next 500,000 Enplanements 325,000 325,000 325,000 325,000 325,000 1,625,000

$0.50 for the remaining Enplanements 1,942,000 2,104,000 2,211,000 2,318,000 2,418,000 13,700,000

Total Calculated Entitlements $3,957,000 $4,119,000 $4,226,000 $4,333,000 $4,433,000 $23,775,000

Total Calculated Entitlements x 2 $7,914,000 $8,238,000 $8,452,000 $8,666,000 $8,866,000 $47,550,000

50% reduction for $3.00 PFC2 (3,957,000) (4,119,000) (4,226,000) (4,333,000) (4,433,000) (23,775,000)

Additional 25% reduction for $4.50 PFC2 0 0 0 0 0 (3,649,250)

Cargo Entitlements 195,000 168,000 199,000 203,000 207,000 1,098,000

Total Entitlements $4,152,000 $4,287,000 $4,425,000 $4,536,000 $4,640,000 $21,223,750

2 Year Lag in Receipt of Grants3 $3,933,276 $4,077,000 $4,152,000 $4,287,000 $4,425,000 $22,563,000

Cumulative AIP Entitlement Grants $8,010,276 $12,162,276 $16,449,276 $20,874,276 $43,437,276

1 The FAA formula is defined in 49 United States Code § 47114.

2 MNAA is assessing a $3.00 PFC through FY 2017 and a $4.50 PFC beginning FY 2018. As a result, the 50% and 75% reduction applies to BNA’s entitlement grants.

3 The FY 2012 grant amount represents the amounts received from the FAA in 2012.

Discretionary Grants: At the beginning of each federal fiscal year, the FAA sets aside the

amount of discretionary funds to cover the Letter‐of‐Intent (LOI) payment schedules. The total

of discretionary funds in all LOIs subject to future obligation is limited to approximately 50% of

the forecast discretionary funds available for that purpose. The authorizing statute directs the

FAA to allocate certain discretionary funding to specific airport types and “set‐aside” categories



such as noise, reliever airports, military airport program, and projects relating to capacity,

safety, security, and noise. However, the FAA has some discretion in funding specific projects

within these discretionary funding “set‐aside” categories. The FAA approves discretionary

funds for use on specific projects after consideration of project priority and other selection

criteria. The recommended CIP projects include taxiway and apron reconstruction and related

improvements, which meet the eligibility requirements for discretionary funding. As previously

mentioned, BNA currently estimates receiving approximately $62.2 million in discretionary

funding from FY 2012 through FY 2021.

Table 8‐4 presents the federal grants that are assumed to fund the eligible portions of the CIP.

As shown in the table, available entitlement and discretionary grants are sufficient to fund the

eligible portions of the CIP in total; however, annual grant collections in certain years may not

be sufficient to fund certain project costs requiring short‐term funding until the project costs

can be reimbursed.

Table 8‐4 – Application of Federal Grants PAL 1 PAL 2

2012 2013 2014 2015 2016 2017‐2021 Total

Available AIP GrantsEntitlement Grants $3,933,276 $4,077,000 $4,152,000 $4,287,000 $4,425,000 $22,563,000 $43,437,276

Discretionary Grants 6,100,000 5,825,000 5,351,829 7,116,393 7,372,950 30,454,552 62,220,724

Total Available AIP Grants $10,033,276 $9,902,000 $9,503,829 $11,403,393 $11,797,950 $53,017,552 $105,658,000

Federally Eligible Portion of CIP1 $7,762,500 $10,125,000 $9,825,000 $11,787,750 $12,250,500 $53,907,250 $105,658,000

Annual Difference $2,270,776 ($223,000) ($321,171) ($384,357) ($452,550) ($889,698) $0

Cumulative Difference $2,270,776 $2,047,776 $1,726,605 $1,342,248 $889,698 $0

1 Represents federally eligible portion of the CIP as presented in Table 8‐2.

8.2.2 StateGrants

The Tennessee Department of Transportation (TDOT) Aeronautics Division administers federal

and state funding to assist in the location, design, construction and maintenance of Tennessee's

public aviation system. In 1986, the Tennessee General Assembly adopted legislation that

created the State Transportation Equity Fund. This fund allocates receipts from taxes collected

from transportation fuels for distribution to airports, rail and waterways based upon their

contribution to the fund. For aviation, these funds are used for statewide grants to Tennessee

air carrier and general aviation airports. Certain items are covered up to 95% of the total cost of

airport projects, depending on the type of project.

Projects eligible for state funding and the percentage of the state matching participation are

summarized below.



Safety and Security Projects (95% state) Airside Improvements and Enhancements (75% state)

Landside Improvements and Enhancements (50% state)

Each request for funding is evaluated on the basis of demonstrated need, consistency with

state and local plans, compliance with state licensing standards, availability of funds and any

unique circumstances. Airports have a maximum time to secure Transportation Equity Funding

against a project ‐ the fiscal year the project is proposed plus two additional fiscal years. A

project must be started within the above time frame, or dollars will revert back to the

Transportation Equity Fund and made available for other aviation approved projects.

As shown on Table 8‐2, approximately $43.6 million of the CIP is funded with TDOT grants for

PAL 1 and approximately $27.2 million for PAL 2.

8.2.3 PassengerFacilityCharges

PFCs are authorized by Title 14 of the Code of Federal Regulations, Part 158 and are

administered by the FAA. PFCs collected from qualified enplaned passengers are used to fund

eligible projects. An airport operator can impose a PFC of $1.00, $2.00, $3.00, $4.00, or $4.50

per eligible enplaned passenger. Once a PFC is imposed, it is included as part of the ticket price

paid by passengers enplaning at the airport, collected by the airlines, and remitted to the

airport operator, less an allowance for airline processing expenses. The PFC legislation

stipulates that if a medium‐ to large‐hub airport institutes a PFC of $1.00, $2.00, or $3.00, they

must forego 50% of their AIP entitlement funds. This increases to 75% if they charge a $4.00 or

$4.50 PFC.

Projects that are eligible for PFC funding are those that preserve or enhance the capacity,

safety, or security of the air transportation system; reduce noise or mitigate noise effects; or

furnish opportunities for enhanced competition between or among air carriers. PFCs cannot be

used for revenue‐generating facilities at airports, such as restaurants and other concession

space, rental car facilities, public parking facilities, or construction of exclusively leased space or

facilities or other non‐public areas of the terminal.

The MNAA currently has seven open PFC applications (PFC Application 11 and PFC Application

14 through PFC Application 19) with PFC Application 19 expiring November 1, 2017. Table 8‐5

presents the outstanding approved PFC applications.



Table 8‐5 – Open PFC Applications

Application Number

Charge

Effective Date

Expiration Date PFC Rate Amount

PFC Application 111 10/1/03 8/1/09 $3.00 $75,086,772

PFC Application 14 4/1/11 6/1/16 $3.00 $66,013,179

PFC Application 15 6/1/16 9/1/16 $4.50 $6,196,434

PFC Application 16 9/1/16 1/1/17 $4.50 $5,502,500

PFC Application 17 1/1/17 6/1/17 $3.00 $3,084,605

PFC Application 18 6/1/17 8/1/17 $4.50 $1,975,000

PFC Application 19 8/1/17 11/1/17 $4.50 $4,430,000

Source: MNAA financial records

1 Under PFC Application 11, debt service on the Series 2010A Bonds is eligible to be paid from PFC revenues. As a result, PFC Application 11 will remain open until the Series 2010A Bonds are fully matured.

Table 8‐6 presents the PFC calculation for BNA based on the aviation activity forecasts

presented in Table 3‐38 of the Master Plan Update. As shown in the table, BNA is estimated to

collect approximately $74.0 million in PFCs for PAL 1 and is projected to collect approximately

$123.1 million in PFCs during PAL 2. Of these amounts, $64.5 million in PAL 1 and $50.7 million

in PAL 2 are required to fund the PFC eligible portion of the CIP and the PFC eligible portion of

debt service. The PFC revenue projections are sufficient to fund the PFC‐eligible portions of the

CIP and debt service; however, annual PFC collections in certain years may not be sufficient

requiring short‐term funding until the project costs can be reimbursed.



Table 8‐6 – Application of PFCs PAL 1 PAL 2

2012 2013 2014 2015 2016 2017‐2021 Total

Enplanements 5,635,600 5,835,700

Enplanements for PFC (92%)1 5,184,752 5,368,844

PFC per Enplanement2 $3.00 $3.00 $4.50

Annual PFCs $15,554,000 $16,107,000 $125,789,000

LESS: Carrier Compensation ($570,000) ($591,000) ($3,278,000)

PLUS: Investment Earnings $75,000 $78,000 $612,000

Total Calculated PFC Revenue3 $16,962,227 $12,947,213 $13,437,545 $15,059,000 $15,594,000 $123,123,000

Cumulative PFC Revenue $16,962,227 $29,909,440 $43,346,985 $58,405,985 $73,999,985 $197,122,985

Total Calculated PFC Revenue $16,962,227 $12,947,213 $13,437,545 $15,059,000 $15,594,000 $123,123,000 $197,122,985

PFC Eligible Portion of CIP4 $2,450,000 $2,850,000 $3,786,000 $1,964,625 $4,083,500 $28,179,375 $43,313,500

PFC Eligible Portion of Debt Service5 $13,136,364 $9,080,495 $9,144,600 $9,030,981 $8,988,456 $22,566,650 $71,947,546

Difference $1,375,863 $1,016,718 $506,945 $4,063,394 $2,522,044 $72,376,975 $81,861,939

4 Represents PFC eligible portion of the CIP as presented in Table 8‐2.

Source: PFC formula as defined in 49 United States Code § 40117

2 Beginning January 1, 2016, MNAA will assess a $4.50 PFC through January 1, 2017 (PFC Applications 15 and 16). At that time, MNAA will assess a $3.00 PFC through June 1, 2017 (PFC Application 17). Beginning June 1, 2017 (PFC Application 18), MNAA will assess a $4.50 PFC, and it is assumed MNAA will continue assessing a $4.50 PFC through PAL 4.

1 Historically, approximately 8% of the enplanements at BNA are nonrevenue generating; and therefore, do not pay a PFC. As a result, it is assumed that approximately 92% of the enplanements are PFC‐revenue generating.

3 The FY 2012 amount represents the PFC revenue plus various transfers related to Record of Decision 11 presented in the 2012 CAFR. The FY 2013 amount represents MNAA's estimate, and the FY 2014 amount represents the amount included in the 2014 Budget.

5 Under PFC Application 11, debt service on the Series 2010A Bonds, is eligible to be paid from PFC revenues. Under PFC Application 14, debt service on the Series 2009A Bonds is eligible to be paid from PFC revenues. The FY 2012 eligible debt service also includes debt service on the Series 2003 PFC Bonds which mature in 2012.

8.2.4 CustomerFacilityCharges

On January 1, 2008, the MNAA began requiring the rental car companies at BNA to charge a

CFC to be used to pay, or to reimburse the MNAA, for costs, fees and expenses associated with

the planning, design, construction, financing, maintenance and operation of the CONRAC and

other costs, fees and expenses that may be paid from CFC proceeds. The CFC was initially $4.00,

with the most recent rate increase to $4.50 effective January 1, 2010. The $4.50 CFC is a per

transaction daily fee and is collected by the on‐airport rental car companies from each of their

customers and subsequently remitted to the MNAA. The MNAA has pledged the CFC proceeds

as collateral security for the payment of the CONRAC Series 2010 bonds issued in February

2010. Additionally, in accordance with the terms of the CONRAC Series 2010 bond agreements,

CFCs must be used to establish bond principal, interest, and reserve funds, as well as various

other funds for the operation and maintenance of the CONRAC facility. CFCs collected in excess

of the various refunded funds can be used by the MNAA for any lawful purpose.



Upon substantial completion of the CONRAC facility, which occurred in November 2011, the

MNAA began leasing the facility to MPC CONRAC LLC under a lease agreement and leasing‐

back the facility from MPC CONRAC LLC under a sublease agreement. In turn, the MNAA will

lease the CONRAC facility to the on‐airport rental car companies under the consolidated rental

car lease agreements. Under these lease agreements, the on‐airport rental car companies have

agreed to collect the CFC on all vehicle rental transactions as specifically set forth in the CFC

enabling resolution and the related lease agreements.

Table 8‐7 presents the CFC calculation for BNA based on the terms in the lease agreement with

the rental cars. As shown in the table, BNA is estimated to collect approximately $53.6 million

in CFCs for PAL 1 and is projected to collect approximately $64.1 million in CFCs during PAL 2.

Of these amounts, $37.5 million in PAL 1 and $31.0 million in PAL 2 are required to fund the CFC

eligible portion of the CIP and the CFC eligible portion of debt service. As shown in the table,

CFCs are sufficient to fund the eligible portions of the CIP and debt service through PAL 2;

however, collections in certain years may not be sufficient to fund certain project costs

requiring short‐term funding until the project costs can be reimbursed.



Table 8‐7 – Application of CFCs PAL 1 PAL 2

2012 2013 2014 2015 2016 2017‐2021 Total

Enplanements 5,635,600 5,835,700

Transaction Days1 2,478,705 2,566,715

Rate per Transaction Day2 $4.50 $4.50

Annual CFCs3 $10,090,579 $10,307,062 $10,500,000 $11,154,000 $11,550,000 $64,123,000

Cumulative CFC Revenue $10,090,579 $20,397,641 $30,897,641 $42,051,641 $53,601,641 $117,724,641

Annual CFCs3 $10,090,579 $10,307,062 $10,500,000 $11,154,000 $11,550,000 $64,123,000 $117,724,641

CFC Eligible Portion of CIP4$0 $0 $213,000 $5,661,000 $2,836,000 $0 $8,710,000

CFC Eligible Portion of Debt Service $5,501,170 $5,648,419 $5,763,010 $5,884,843 $6,001,196 $31,019,398 $59,818,036

Difference $4,589,409 $4,658,643 $4,523,990 ($391,843) $2,712,804 $33,103,602 $49,196,605

1 Based on historical number of transaction days as a percentage of enplanements.

4 Represents CFC eligible portion of the CIP as presented in Table 8‐2.

2 MNAA annually reviews the level of the CFC to determine if CONRAC expenditures have increased; therefore, requiring an increase in the CFC rate.The CFC was initially $4.00 in 2008, with the most recent rate increase to $4.50 effective January 1, 2010.

3 The FY 2012 amount represents the amount presented in the 2012 CAFR; the FY 2013 amount represents MNAA's estimate; and the FY 2014 amount represents the amount included in the 2014 Budget.

8.2.5 OtherFunds

The quarry geothermal water project and the Tennessee Department of Environment and

Conservation sustainability grant are anticipated to be bid under a performance contract. As a

result, the savings in expenses resulting from undertaking the project are assumed to fund the

cost of the project. As shown on Table 8‐2, approximately $22.8 million of the CIP is funded

with other funds for PAL 1.

8.2.6 MNAAFunds

BNA generates revenue through airline charges, terminal concessions, ground and facility

leases, fuel flowage fees, landing fees, ramp fees, and parking revenue. Typically, such

revenues are used to cover operations and maintenance expenses along with debt service

obligations. However, any surplus revenues can be applied directly to the CIP. As shown on

Table 8‐2, approximately $19.7 million in MNAA funding is required to fund the CIP for PAL 1

and approximately $41.8 million for PAL 2. This analysis assumes that all of the local funding

requirement will be funded from BNA revenues; however, the MNAA may consider issuing

bonds to distribute the costs over multiple years.



8.3 FinancialFeasibility

This section of the financial analysis presents the existing debt service, projected operating

expenses, and projected revenues resulting from the daily operation of BNA. In addition, the

expense and revenue increases resulting from the implementation of the CIP are layered into

the projections to determine if it is feasible for BNA to undertake the program within the

planning period.

8.3.1 DebtService

All of the MNAA’s bonds, except for the Series 2003 PFC Bonds, were issued under the Airport

Improvement Revenue Bond Resolution adopted by the Board of Commissioners of the

Authority on August 15, 1991 (as amended and supplemented from time‐to‐time). The 2003

PFC Bonds were issued under the PFC Resolution and were secured by an additional pledge of

and lien on PFC revenues less operating expenses. The MNAA is also using PFC revenues that

were approved under a PFC Program Application for its annual debt service costs on the 2009A

bonds and the Series 2010A bonds. Although the CONRAC Series 2010 Bonds were issued under

the General Resolution, the CFCs are not part of airport revenues or net revenues as defined in

the General Bond Resolution. Therefore, airport revenues derived by the MNAA from the

operation of BNA are not pledged for payment of and do not constitute security for the

CONRAC Series 2010 Bonds. All other bonds are secured by a pledge of and lien on net

revenues derived by the MNAA from the operation of the airports created by the MNAA.

Table 8‐8 presents the Airport’s debt service requirements for the planning period. As shown in

the table, all of the Bonds with the exception of the Series 2003B (Pension) Bonds and the

Series 2010 CONRAC Bonds are due to mature during the planning period. According to Section

8.2, the funding sources identified for the CIP are sufficient to fund the project costs.

Management expects additional bonds may be necessary in 2016 and later to fund unspecified

capital projects and business development activities not included in the CIP.



Table 8‐8 – Debt Service Requirements PAL 1 PAL 2

2012 2013 2014 2015 2016 2017‐2021

Series 2003 PFC Bonds $3,955,939 $2,195 $0 $0 $0 $0

Series 2003B (Pension) 2,109,842 1,383,871 1,380,519 1,368,043 1,369,515 7,014,153

Series 2008A Bonds 665,740 661,250 359,974 747,780 1,738,800 11,787,800

Series 2009A Bonds 4,789,488 4,834,088 4,867,688 4,844,050 4,837,656 18,351,775

Series 2010A Bonds 4,390,937 4,244,212 4,276,913 4,186,931 4,150,800 4,214,875

Series 2010B Bonds 16,292,600 16,649,775 17,351,800 17,443,800 329,500 0

Series 2010C Bonds 3,737,175 3,446,950 3,193,800 2,812,300 1,844,200 26,100

Series 2010 CONRAC 5,501,170 5,648,419 5,763,010 5,884,843 6,001,196 31,019,398

Total Existing $41,442,891 $36,870,760 $37,193,703 $37,287,747 $20,271,667 $72,414,101

Additional Bonds1 0 0 0 0 19,516,000 126,524,000

Total Debt Service $41,442,891 $36,870,760 $37,193,703 $37,287,747 $39,787,667 $198,938,101

Source: MNAA financial records MAC Consulting, LLC., additional debt service

1 Revenue bonds are assumed to be issued in 2016 to fund unspecified capital projects and business development activities not included in the CIP

8.3.2 OperatingExpenses

The FY 2012 operating expenses reflect the actual expenses presented in the 2012 CAFR. The

FY 2013 operating expenses reflect estimates based on 12 months of actuals and the FY 2014

operating expenses are from the 2014 Budget.

Table 8‐9 presents historical and projected operating expenses by line item and cost center for

PAL 1 and PAL 2.



Table 8‐9 – Operating Expenses PAL 1 PAL 2

Actual Estimated Budgeted Projected Projected Projected

FY 2012 2013 2014 2015 2016 2017‐2021

By Line ItemSalaries and wages $30,492,172 $30,504,537 $34,535,230 $35,399,000 $36,282,000 $196,189,000

Contractual services 23,137,291 24,578,264 26,886,883 27,557,000 28,246,000 152,983,000

Materials and supplies 3,099,569 3,351,201 3,982,314 4,081,000 4,183,000 22,768,000

Utilities 5,715,803 5,546,393 7,493,471 7,681,000 7,874,000 43,158,000

Other 2,793,221 3,452,035 4,952,387 5,077,000 5,205,000 28,082,000

Total $65,238,056 $67,432,430 $77,850,285 $79,795,000 $81,790,000 $443,180,000

By Cost CenterAirfield $6,790,500 $7,743,259 $7,461,257 $8,507,000 $8,719,000 $46,968,000

Ramp 424,700 441,366 495,646 467,000 479,000 2,581,000

Main Terminal 7,723,407 6,782,490 8,926,263 7,712,000 7,904,000 43,911,000

North Concourse 2,063,800 2,116,282 2,317,649 2,456,000 2,518,000 14,797,000

South Concourse 6,705,900 6,738,211 7,530,155 7,967,000 8,165,000 43,987,000

Non Rate‐Settling Cost Center 41,529,750 43,610,822 51,119,316 52,686,000 54,005,000 290,936,000

Total $65,238,056 $67,432,430 $77,850,285 $79,795,000 $81,790,000 $443,180,000

Percent Increase 3.4% 15.4% 2.5% 2.5%

CAGR FY 2014 ‐ FY 2016 2.5%

CAGR FY 2014 ‐ FY 2021 2.6%

Source: MNAA Financial Records, FY 2012 ‐ FY 2014 MAC Consulting, LLC, FY 2015 ‐ FY 2021

As shown in the table, operating expenses are budgeted to be approximately $77.9 million in FY

2014 and are forecast to be approximately $81.8 million in FY 2016, reflecting a compound

annual growth rate of 2.5%. FY 2014 budgeted operating expenses increased primarily as a

result of increases in salaries and wages in administration (primarily due to other

postemployment benefits), maintenance, planning, design, and construction (PDC), and

department of public safety; and contractual services in PDC and operations. FY 2015 through

FY 2021 operating expenses are projected based on the following:

Estimates of future operating expenses are based on a review of historical trends.

The anticipated effects of inflation assumed at 2.5% annually, reflecting a 10‐year average of the Consumer Price Index.

Increase in operating expenses in the north concourse (concourses A and B) by an additional 10% in FY 2017 due to the completion of additional concession space. The percent increase was based on the increase in space anticipated in that year.



Increase in operating expenses in the terminal by an additional 5% in FY 2019 due to the completion of the international arrivals building. The percent increase was based on the increase in space anticipated in that year.

8.3.3 OperatingRevenues

Major sources of revenue at BNA are derived from non‐airline and airline sources. Non‐airline

revenues account for 65.0% of total revenue in the 2014 Budget and include items such as the

operation of public parking facilities; terminal concession revenues generated from fees paid by

concessionaires such as rental car, restaurant, news/gift shop, and advertising; ground rentals;

and cargo and hangar rentals. A summary of major non‐airline tenant leases is presented in

Table 8‐10.



Table 8‐10 – Major Non‐airline Tenants

Vehicle Parking Rental CarCentral Parking Systems Avis

First Transit, Inc. (airport shuttle) Advantage Car RentalBudget

Ground Transportation Burgner (Thrifty)Hotel Shuttles Dollar

Taxi Cab Companies Enterprise

Limousine Companies Hertz

Vanguard (Alamo/National) Ground Handlers

Dynair/Swissport Fixed Base OperatorsAtlantic Aviation

Non‐airline Terminal Tenants Signature Flight Support 24 Hour FlowerA T & T Private Hangar RentalsCareHere Medical Clinic Nashville HangarClear Channel Airports Owl Hill HoldingsCountry Western Tours/Grayline Tours SATA Inc.CTN Superior Shine Delaware North (Food & Beverage) Other Airport TenantsFifth Third Bank 118th Airlift Wing

First Class Seats Aeronautical RadioGraycliff Aircraft Services International Green Bean Coffee Company Embraer Aircraft Maintenance FederalHMSHost (Food & Beverage) FAA

Hudson Group (News & Gift) Marisol

i‐Tech/Edge 1 Cellular Metro Air ServicesJarmon Limousine Metro Government

Massage Bar Inc Monells DiningNashville Nails State of TennesseeNew Zoom Systems TN Aeronautics Commission

Opryland Hotel TN Dept of TransportationSecurity Point Media Tower Group InternationalSmarte Carte US Customs

SunTrust Bank US Govt Weather ServiceTSA US Postal ServiceWright Travel Business Center US DEA

Source: MNAA

Airline revenues account for 35.0% of total FY 2014 budgeted revenues and include revenues

generated from ramp fees, main terminal rentals, north concourse (concourses A and B), south

concourse (Concourse C) rentals, and landing fees. While the signatory rates are based on a

residual formula, the non‐signatory rates are based on a compensatory formula. The existing

airline agreements expire September 30, 2017, which occurs during the planning period. For

purposes of this analysis, it was assumed that similar methodologies for calculating airline rates

and charges would be used by BNA following the expiration of the leases. However,

management believes it will be successful in negotiating new airline lease agreements with a



shorter duration and more favorable terms than the current long‐term airline lease

agreements.

Table 8‐11 presents historical and projected operating revenues for PAL 1 and PAL 2.



Table 8‐11 – Operating Revenues PAL 1 PAL 2


2012 2013 2014 2015 2016 2017‐2021

Signatory AirlineRamp Rental Signatory $562,790 $872,359 $1,031,200 $914,000 $576,000 $3,695,000

Main Terminal Rent Signatory 5,327,924 8,541,879 10,599,450 9,686,000 7,812,000 57,141,000

North Concourse Rent Signatory 1,849,131 3,201,309 3,822,300 3,659,000 2,662,000 18,469,000

South Concourse Rent Signatory 5,824,781 8,936,285 10,848,800 10,437,000 8,364,000 53,524,000

Landing Fees Signatory 2,567,472 7,821,389 8,778,825 8,314,000 10,745,000 77,460,000

Subtotal $16,132,098 $29,373,221 $35,080,575 $33,010,000 $30,159,000 $210,289,000 Percent Increase 82.1% 19.4% ‐5.9% ‐8.6%

Parking $32,467,763 $34,020,204 $32,152,000 $33,421,000 $34,611,000 $192,204,000 Percent Increase 4.8% ‐5.5% 3.9% 3.6%

Concession

Car Rental Companies $9,846,729 $10,616,122 $10,200,000 $10,601,000 $10,977,000 $60,942,000 Terminal

Restaurant 3,107,900 3,393,233 3,350,000 3,482,000 3,606,000 20,014,000

News & Gift Shop 2,348,950 2,348,950 2,348,950 2,441,000 2,528,000 14,034,000

Advertising 689,714 655,440 630,000 655,000 678,000 3,764,000 Other Terminal 681,277 734,719 738,000 767,000 794,000 4,405,000 New Concessions 0 0 0 0 0 3,994,000

Ground TransportationGround Transportation 554,935 690,608 800,002 831,000 861,000 4,775,000 Parking Decals 476,607 531,081 475,000 485,000 495,000 2,628,000 Taxi Cab 420,309 444,814 443,002 460,000 476,000 2,642,000 Ground Transportation Permits 90,665 102,119 92,400 96,000 99,000 550,000

Air Cargo Ground Handling 20,640 5,894 11,400 12,000 12,000 60,000

Subtotal $18,237,726 $19,522,980 $19,088,754 $19,830,000 $20,526,000 $117,808,000 Percent Increase 7.0% ‐2.2% 3.9% 3.5%

Space RentalLand/Building Rental $2,618,652 $3,004,117 $2,912,600 $2,971,000 $3,031,000 $16,090,000 Other Terminal Tenants Rent 1,059,831 1,073,537 1,064,000 1,085,000 1,107,000 5,878,000 Main Terminal Rent Non‐Signatory 746,187 1,312,644 1,932,103 1,721,000 1,591,000 6,855,000 Cargo Rentals 713,993 684,667 685,600 700,000 714,000 3,787,000 Fixed Base Operators Rent 665,993 675,292 675,000 689,000 703,000 3,731,000 Rental Car 592,908 241,153 236,700 241,000 246,000 1,305,000 Hangar Rent ‐ South GA Area 170,695 203,900 204,000 208,000 212,000 1,121,000 Overnight Parking 139,200 92,800 96,000 98,000 100,000 530,000 Signatory Undeveloped Terminal Rent 60,868 60,868 60,000 61,000 62,000 325,000

Subtotal $6,768,327 $7,348,978 $7,866,003 $7,774,000 $7,766,000 $39,622,000 Percent Increase 8.6% 7.0% ‐1.2% ‐0.1%

Other

Landing Fees Non Signatory $1,771,057 $1,943,115 $2,300,252 $3,086,000 $3,968,000 $20,807,000 Reimbursable Services Rendered 1,573,430 1,273,453 1,350,000 1,377,000 1,405,000 7,458,000 Non‐Signatory Cargo Landing Fees 1,007,126 823,920 789,000 1,006,000 1,321,000 7,360,000 Fixed Base Operators Fuel Sales 382,233 389,368 397,270 405,000 413,000 2,191,000 Concession CAM Fees 322,243 351,218 336,000 343,000 350,000 1,856,000 MPC & CFC Intercompany Revenue 220,156 209,049 102,000 104,000 106,000 560,000 Canine Reimbursement 159,695 393,754 302,500 309,000 315,000 1,671,000 LEO Reimbursement 161,191 156,106 132,000 135,000 138,000 735,000 IPB Intercompany Revenue 109,366 109,366 109,000 111,000 113,000 595,000 Other 879,220 810,867 299,000 305,000 310,000 1,640,000

Subtotal $6,585,717 $6,460,216 $6,117,022 $7,181,000 $8,439,000 $44,873,000 Percent Increase ‐1.9% ‐5.3% 17.4% 17.5%

Total $80,191,631 $96,725,599 $100,304,354 $101,216,000 $101,501,000 $604,796,000

Percent Increase 20.6% 3.7% 0.9% 0.3%

CAGR FY 2014 ‐ FY 2016 0.6%

CAGR FY 2014 ‐ FY 2021 5.4%

Source: MNAA Financial Records, FY 2012 ‐ FY 2014, MAC Consulting, LLC, FY 2015 ‐ FY 2021



As shown in the table, operating revenues are budgeted to be approximately $100.3 million in

FY 2014 and are forecast to be approximately $101.5 million in FY 2016, reflecting a compound

annual growth rate of 0.6%. FY 2014 operating revenues are budgeted to increase

approximately 3.7% over FY 2013 estimates, primarily as a result of increases in signatory airline

rentals. According to Table 8‐9, FY 2014 operating expenses are budgeted to increase 15.4%

over FY 2013 estimates; therefore, airline revenues also increase.

FY 2015 through FY 2021 operating revenues are projected based on the following:

Historical trends, lease provisions, and inflation. FY 2016 airline revenues decrease over FY 2015 as a result of the Series 2010B Bonds

maturing in 2015 with a final interest payment in 2016.

Revenues from parking, terminal concessions, and rental cars are projected to increase with prospective enplanement growth.

It was assumed that BNA would renegotiate concession leases that expire during the planning period with terms and conditions that would implement changes in rate structures and business practices, as necessary, to maintain positive financial performance.

Terminal concession revenues were increased by 3.5% in FY 2017 due to a CIP project that will provide additional concession space. The percent increase was based on the increase in concession space anticipated in that year adjusted to account for possible decreases in existing concessions.

8.4 ProFormaCashFlow

Table 8‐12 presents the pro forma cash flow of BNA for PAL 1 and PAL 2 based on the

projection of operating revenues and operating expenses discussed above, as well as the

MNAA’s share of the CIP. As a result of the analysis discussed herein, net income remains

positive during the planning period, providing BNA sufficient funds for its share of the CIP as

presented in Table 8‐2.



Table 8‐12 – Net Income PAL 1 PAL 2


FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 2017‐2021

Operating Revenue $80,191,631 $96,725,599 $100,304,354 $101,216,000 $101,501,000 $604,796,000

LESS: Operating Expenses (65,238,056) (67,432,430) (77,850,285) (79,795,000) (81,790,000) (443,180,000)

PLUS: Other postemployment benefits 5,178,081 1,000,000 1,000,000 1,000,000 1,000,000 8,500,000

PLUS: Pension Benefits 2,953,508 3,500,000 3,000,000 5,000,000 5,000,000 0

Adjusted Operating Expenses ($57,106,467) ($62,932,430) ($73,850,285) ($73,795,000) ($75,790,000) ($434,680,000)

Net Revenues $23,085,164 $33,793,169 $26,454,069 $27,421,000 $25,711,000 $170,116,000

LESS: CIP Funded with MNAA Revenues (2,473,300) (4,017,500) (5,102,400) (7,026,200) (1,073,600) (41,755,800)

Change in Working Capital & Other Items (723,000) 0 0 0 0 0

PLUS: Interest Income 330,000 309,200 180,000 182,000 183,000 942,000

PFCs 12,522,227 12,947,213 13,437,545 15,059,000 15,594,000 123,123,000

CFCs 10,090,579 10,307,062 10,500,000 11,154,000 11,550,000 64,123,000

Cash Various Transfers 4,440,000 3,000,000 0 3,000,000 1,300,000 0

Transfer from Capital Items Funded 3,205,000 (2,478,320) 2,513,729 (1) 0 0

Net Income $50,476,670 $53,860,824 $47,982,944 $49,789,799 $53,264,400 $316,548,200

Debt Service $41,442,891 $36,870,760 $37,193,703 $37,287,747 $39,787,667 $198,938,101

Debt Service Coverage Ratio 121.8% 146.1% 129.0% 133.5% 133.9%

The table also presents the estimated debt service coverage ratio. According to the General

Resolution, the MNAA is obligated to impose rates, rentals, fees and charges sufficient to

produce revenues after deducting operating expenses (net revenue), which, together with

other available funds, will at least equal 110% of debt service on all bonds outstanding. As

shown on the table, the debt service coverage ratio exceeds the requirements of the General

Resolution.

8.5 Summary

The financial feasibility of future projects will be determined by the provisions of existing and

future leases, funding levels and participation rates of federal grant programs, the availability of

PFC and CFC revenues, bonding capacity, and the ability to generate internal cash flow from

operations at BNA.

The financial projections for PAL 1 and PAL 2 were prepared on the basis of available

information and assumptions set forth in this chapter. It is believed that such information and

assumptions provide a reasonable basis for the projections to the level of detail appropriate for

an airport master plan. Based on these assumptions, the CIP could be financed in the future by

BNA and result in key financial indicators that are consistent with the historical results of BNA

and industry comparables. However, some of the assumptions used to develop the projections

may not be realized, and unanticipated events or circumstances may occur. Therefore, the

actual results will vary from those projected, and such variations could be material. The



financial results for PAL 3 (FY 2022 – 2026) and PAL 4 (2027‐2031) were not included in this

chapter due to the unpredictable nature of data occurring more than 10 years in the future.

Documents

8 Financial Plan - Nashville International Airport · MASTER PLAN UPDATE | Nashville International Airport FINANCIAL PLAN | 8‐5 Table 8‐1 – Capital Improvement Program for PAL