Cafrcomprehensive Annual Financial Report
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Comprehensive Annual Financial Report Fiscal years ended June 30, 2018 and June 30, 2017 CAFR Prepared by Office of the City Controller, Chris Brown THE AIRPORT SYSTEM FUND An enterprise fund of the City of Houston, Texas Airport System Fund An Enterprise Fund of the City of Houston, Texas Comprehensive Annual Financial Report Fiscal Years Ended June 30, 2018 and June 30, 2017 Prepared by: Office of City Controller Chris Brown City Controller Beverly Riggans Interim Deputy Director Controller CITY OF HOUSTON, TEXAS AIRPORT SYSTEM FUND COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Page Introductory Section (unaudited) Airport Locations and Service Area --------------------------------------------------------------------------------------------------------------------- i Certificate of Achievement------------------------------------------------------------------------------------------------------------------------------- ii Transmittal Letter----------------------------------------------------------------------------------------------------------------------------------------- iii List of Principal Officials-------------------------------------------------------------------------------------------------------------------------------- vi Organizational Chart------------------------------------------------------------------------------------------------------------------------------------ viii Financial Section Independent Auditors’ Report--------------------------------------------------------------------------------------------------------------------------- 1 Management’s Discussion and Analysis (unaudited) ------------------------------------------------------------------------------------------------ 4 Financial Statements: Statements of Net Position------------------------------------------------------------------------------------------------------------------------- 12 Statements of Revenues, Expenses and Changes in Net Position---------------------------------------------------------------------------- 14 Statements of Cash Flows------------------------------------------------------------------------------------------------------------------------- 15 Notes to the Financial Statements---------------------------------------------------------------------------------------------------------------- 19 Required Pension System and Other Post-Employment (OPEB) cost and Net OPEB Obligation Supplementary Information (unaudited)------------------------------------------------------------------------------------------------- 52 Statistical Section (unaudited) Total Annual Revenues and Total Annual Expenses Charts---------------------------------------------------------------------------------------- 55 Total Annual Revenues and Expenses ---------------------------------------------------------------------------------------------------------------- 56 Changes in Net Position and Passenger Facility Charge Collections ---------------------------------------------------------------------------- 57 Pledged Revenues---------------------------------------------------------------------------------------------------------------------------------------- 58 Pledged Revenues for Consolidated Rental Car Facility-------------------------------------------------------------------------------------------- 60 Outstanding Debt----------------------------------------------------------------------------------------------------------------------------------------- 61 Summary of Certain Fees and Charges---------------------------------------------------------------------------------------------------------------- 62 Passenger Statistics -------------------------------------------------------------------------------------------------------------------------------------- 63 Passenger Statistics by Carrier-------------------------------------------------------------------------------------------------------------------------- 64 Originating Passenger Enplanements------------------------------------------------------------------------------------------------------------------ 66 Aircraft Operations, Landing Weight and Cargo Activity------------------------------------------------------------------------------------------ 67 Performance Measures----------------------------------------------------------------------------------------------------------------------------------- 68 Cash Available by Days Funded------------------------------------------------------------------------------------------------------------------------ 69 Airport Information--------------------------------------------------------------------------------------------------------------------------------------- 70 Employee Staffing by Function------------------------------------------------------------------------------------------------------------------------- 71 Service Area/Service Area Population/Principal Employers--------------------------------------------------------------------------------------- 72 Demographic and Economic Statistics --------------------------------------------------------------------------------------------------------------- 73 Compliance Section Independent Auditors’ Report on Compliance with Requirements Applicable to the Passenger Facility Charge Program and Internal Control over Compliance in accordance with Requirements Issued by the Federal Aviation Administration-------------------- 74 45 69 George Bush 290 8 Intercontinental Airport 90 SC-5, 11 OCT 2018 to 08 NOV SC-5, 11 OCT 2018 to 08 NOV SC-5, 11 OCT 2018 to 08 NOV 59 10 10 Downtown Houston 610 8 Hobby SC-5, 11 OCT 2018 to 08 NOV SC-5, 11 OCT 2018 to 08 NOV Airport SC-5, 11 OCT 2018 to 08 NOV 69 Ellington 59 Airport 45 288 KWWSVIOLJKWDZDUHFRPUHVRXUFHVDLUSRUW()'$3'$,53257',$*5$0SGI KWWSVIOLJKWDZDUHFRPUHVRXUFHVDLUSRUW+28$3'$,53257',$*5KWWSVIOLJKWDZDUHFRPUHVRXUFHVDLUSRUW,$+$3'$,53257',$*5$0SGI$0SGI (Unaudited)INTRODUCTORY INTRODUCTORYCOMPLIANCE STATISTICALFINANCIAL SECTIONSECTION SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT HOUSTON AIRPORT SYSTEM Metropolitan Statistical Area (MSA) of Houston-The Woodlands-Sugar Land, TX includes 9 counties. Consolidated Statistical Area (CSA) of Houston- Woodlands, TX adds Matagorda, Trinity, Walker, Washington, and Wharton counties. i ii Office of the City Controller City of Houston, Texas Chris B. Brown November 29, 2018 To the Citizens, Mayor and Members of the City Council of the City of Houston, Texas: I am pleased to present you with the Comprehensive Annual Financial Report (CAFR) for the City of Houston, Texas, Airport System Fund (the Fund) for the fiscal years ended June 30, 2018 and June 30, 2017, including the independent auditors’ report. The Controller’s Office and the Houston Airport System share responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the Fund. The CAFR includes four sections: Introductory, Financial, Statistical, and Compliance. The Introductory Section includes this transmittal letter, a list of principal officials, and the Fund’s organizational chart. The Financial Section includes Management’s Discussion and Analysis and financial statements with accompanying notes, as well as the independent auditors’ report on the financial statements. The Statistical Section includes selected financial trends, revenue capacity, debt capacity, demographic, economic, and operating information, generally presented on a ten-year basis. The Compliance Section includes the independent auditors’ report on the Passenger Facility Charge Program. The Financial Section described above is prepared in accordance with Generally Accepted Accounting Principles (GAAP) for governments as prescribed by the Governmental Accounting Standards Board (GASB). The Management’s Discussion and Analysis offers readers an overview and analysis of the financial activities of the Fund and should be read as an introduction to the financial statements. In addition, the notes to the financial statements offer additional important information and are essential to a full understanding of this report. The Reporting Entity and Its Services The Houston Airport System (HAS), under the administrative control of the Mayor, manages and operates the Fund. The City Controller, as the chief financial officer of the City of Houston (the City), maintains the books of account, prepares financial statements, and, with the Mayor, co-signs all warrants, contracts, and orders for payment of any public funds or money relating to the Fund. The Fund is an enterprise fund of the City and is included in the City’s Comprehensive Annual Financial Report, which is a matter of public record. An enterprise fund is used to account for services provided to the general public on a continuing basis with costs recovered primarily through user charges. The City’s Airport System includes the following: George Bush Intercontinental Airport (Intercontinental); William P. Hobby Airport (Hobby); and Ellington Airport. United Airlines is the dominant air carrier operating at Intercontinental and Southwest Airlines is the dominant air carrier operating at Hobby. Economic Conditions and Major Initiatives Economic Conditions Houston is the nation’s fourth most populous city and lies within the fifth largest metropolitan statistical