Albany County Airport Authority As of December 31, 2014 Authority Board Members
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ALBANY COUNTY AIRPORT AUTHORITY New York’s Tech Valley Airport COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2014 A COMPONENT UNIT OF THE COUNTY OF ALBANY LOCATED IN THE TOWN OF COLONIE NEW YORK Albany County Airport Authority As of December 31, 2014 Authority Board Members Rev. Kenneth J. Doyle Dorsey M. Whitehead Chair Treasurer Term Expires: December 31, 2015 Term Expires: December 31, 2016 Anthony Gorman Lyon M. Greenberg, MD Patricia M. Reilly Secretary Member Member Term Expires: December 31, 2016 Term Expires: December 31, 2017 Term Expires: December 31, 2016 Robert S. Hite, Esq. Paula T. Wilkerson Member Member Term Expires: December 31, 2017 Term Expires: December 31, 2016 Authority Management John A. O’Donnell, PE Chief Executive Officer William J. O’Reilly, CPA Chief Financial Officer Peter F. Stuto, Esq. Airport Counsel ALBANY COUNTY AIRPORT AUTHORITY COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended December 31, 2014 Prepared by the Finance Department William J. O’Reilly, CPA Chief Financial Officer Margaret Herrmann Chief Accountant A Component Unit of the County of Albany Town of Colonie, New York www.albanyairport.com CUSIP #012123XXX Introduction ALBANY COUNTY AIRPORT AUTHORITY TELEPHONE: 518-242-2222 ALBANY INTERNATIONAL AIRPORT ADMIN FAX: 518-242-2641 ADMINISTRATION BUILDING FINANCE FAX: 518-242-2640 SUITE 200 SITE: www.albanyairport.com ALBANY, NEW YORK 12211-1057 Chairman’s Message March 23, 2015 In 2014 the US Domestic Airlines faced some unusual challenges including horrible first Quarter weather conditions leading to substantially higher cancellations and 3rd quarter network outages related to FAA Control Center outage in Chicago. As the year ended, jet fuel prices declined sharply and the Airline Industry ended 2014 with Pre-Tax Profits of $9.5 billion equal to 6% of Revenue and showed signs of growth. According to the Airlines for America, an industry trade association, domestic airline seat capacity grew to its highest level since 2009 and another ninety thousand seats per day were added in the first quarter of 2015. Albany International Airport will also see increased airline activity in 2015 as well with the expected introduction of JetBlue service at Albany in late 2015. During 2014, the Authority continued to operate the Albany International Airport prudently based upon its assessment of passenger traffic and airline capacity. The Authority operated in accordance with its adopted operating budget while advancing capital projects as planned and meeting all debt service requirements. Based upon its financial performance for 2014, the Authority was able to provide $1.7 million in rates and charges credits to the airlines that are a party to the Airport Use and Lease Agreement. These settlement credits provide the Airlines with a good down payment on their 2015 Airport costs at Albany International Airport. During 2014 the Albany County Airport Authority began its expansion of its largest Maintenance Repair and Overhaul (MRO) facility which enabled it locate one its regional Airline’s MRO operations and associated jobs to Albany. The Albany County Airport Authority also adopted a $120.5 million five year capital plan for 2015-2019 that was approved by the County and will include parking expansion. Also during the 2014 the Paradies Shops began their $1.4 million renovation of the three retail, news and gift stores in the terminal and HMS Host began a significant mid-contract refreshment of four of the six food and beverage concessions under their contract. But perhaps the most significant construction project to begin in 2014 was a $1.3 million project to double the size of the baggage handling room for Southwest Airlines. This expanded baggage handling room will allow for Southwest Airlines to handle more bags and more passengers at Albany. During 2015, the Airport Authority will continue to nurture the development of air service at the Airport, plan and execute its capital plan one project at a time, and operate the Airport in accordance with its adopted budget. In the coming year, we will continue our mission to provide travelers with outstanding service in full recognition that our success as an airport is dependent on, not only the quantity and quality of air service, but the skills and dedication of all the employees at Albany International Airport. Rev. Kenneth J. Doyle Chairman 1 ALBANY COUNTY AIRPORT AUTHORITY TEL: 518-242-2222 ALBANY INTERNATIONAL AIRPORT ADMIN FAX: 518-242-2641 ADMINISTRATION BUILDING FINANCE FAX: 518-242-2640 SUITE 200 SITE: www.albanyairport.com ALBANY, NEW YORK 12211-1057 March 23, 2015 TO THE MEMBERS OF THE AUTHORITY: The Comprehensive Annual Financial Report (CAFR) of the Albany County Airport Authority (Authority) for the fiscal year ended December 31, 2014 is hereby submitted to the Authority Board and all others interested in the financial condition of Albany International Airport (Airport). This report is published in accordance with the requirements of the State of New York (State) enabling legislation creating the Authority, Article 9, Section 2800 of the Public Authorities Law, and the master bond resolution covering the issuance of indebtedness by the Authority. Pursuant to those requirements, this Comprehensive Annual Financial Report of the Authority has been prepared in accordance with accounting principles general accepted in the United States of America (GAAP). This report consists of four sections: Introductory, Financial, Statistical, and Compliance. The basic financial statements included in the Financial Section have been audited by Marvin and Company, P.C. This report is management’s representations concerning the financial position and changes in net financial position of the Authority. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the Authority has established a comprehensive internal control framework that has been designed to both protect the Authority’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Authority’s financial statements in conformity with GAAP. Because the cost of internal controls should not exceed anticipated benefits, the Authority’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this report is complete and reliable in all material respects. This introductory letter of transmittal should be read in conjunction with Management’s Discussion and Analysis (MD&A) which provides an introduction, overview and analysis of the 2014 basic financial statements. The MD&A is located immediately following the report of the independent auditor in the Financial Section. The MD&A is required supplementary information to the basic financial statements, but is not a part of the basic financial statements and was not audited. 2 INDEPENDENT REVIEW FINANCIAL AUDIT The goal of an independent audit is to provide reasonable assurance that the basic financial statements of the Authority for the year ended December 31, 2014 are free of material misstatement. The independent audit involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and any significant estimates made by management and evaluating the overall financial statement presentation. The independent auditor concludes, based upon their audit, that there is a reasonable basis for rendering an unmodified (“clean”) opinion and that the Authority’s financial statements for the year ended December 31, 2014 are presented in conformity with GAAP. The independent auditor’s report is the first component of the Financial Section. SINGLE AUDIT The independent audit of the financial statements is part of the broader mandated provisions of the Single Audit Act of 1996 and the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations, relative to financial funds received from the U.S. Government, the New York State Department of Transportation Draft Part 43 of the Codification of Rules and Regulations, relative to State transportation funds received, and also, in conformity with the provisions of the Passenger Facility Charge Audit Guide for Public Agencies. The standards governing these provisions require the independent auditor to report on the fair presentation of the financial statements and on the Authority’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal and state grant awards. The independent auditor’s reports are included in the Compliance Section. As a recipient of federal and state financial assistance, the Authority also is responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. As part of the Authority’s single audit, tests were made to determine the adequacy of the internal control structure, including that portion related to federal assistance awards, as well as to determine that the Authority has complied with applicable laws and regulations. The results of the