Fy 2015 Fy 2016 Fy 2017 Fy 2018 Fy 2019 Fy 2020

Projected Rates and Charges Analyses for Airline Negotiations

Commonwealth Ports Authority

Saipan International Airport, Rota International Airport, Tinian International Airport

PREPARED BY: RICONDO & ASSOCIATES, INC. 105 East Fourth Street, Suite 1700 Cincinnati, OH 45202 (513) 651-4700 (phone) (513) 412-3570 (facsimile)

Ricondo & Associates, Inc. (R&A) prepared this document for the stated purposes as expressly set forth herein and for the sole use of the Commonwealth Ports Authority and its intended recipients. The techniques and methodologies used in preparing this document are consistent with industry practices at the time of preparation. Ricondo & Associates, Inc. is not registered as a municipal advisor under Section 15B of the Securities Exchange Act of 1934 and R&A does not provide financial advisory services within the meaning of such Act. PRELIMINARY DRAFT Page 1 of 28 PREPARED ON 11/04/2015

1.1 Introduction

This document has been created to expedite the process of negotiating a new Airline-Airport Use and Lease Agreement (New Agreement) between Commonwealth Ports Authority (the Authority) and the airlines serving Saipan International Airport, Rota International Airport, and Tinian International Airport (collectively known as “the Airport System”). This document is for discussion purposes only. Neither the Authority nor any of the airlines will be bound by any of the provisions of this document until a mutually acceptable, comprehensive written Agreement has been fully negotiated, executed and delivered. Airlines that execute the Agreement will be known as Signatory Airlines (Airlines). This document presents projected airlines rates and charges resulting from the operation of the Airports by the Authority. The projected airline rates and charges methodology presented herein is based on the provisions and articles in the Agreement and incorporates the estimated rates and charges impacts associated with both the day-to-day operations of the Airports, as well as undertaking capital projects during the time period covered in this document.

Included in this document are revenues and expenses for Fiscal Year (FY) 2016 Budget and Projected FY 2017 through FY 2020 (the Projection Period). The Authority’s FY is the twelve-month period ending September 30th in each year. These projections are based on a review of historical financial operations, estimated future aviation activity levels, discussions with Authority staff and the impacts of the projected Capital Improvement Program (CIP). This report also includes estimated airlines rates and charges, airline cost per enplanement, Airport cash flow, and debt service coverage for the Series A 1998 bonds.

The Authority is proposing, through the rates and charges formulas presented herein, a business agreement with the Airlines that is primarily “compensatory” in nature. It is recognized by the Authority that, with the current financial circumstances in which the Airlines are operating, along with transitioning to operating and maintaining a new airport facility, the business arrangement should reflect the fact that both the Airlines and the Authority are working together to provide adequate facilities at the Airports that do not create an unreasonable burden to the Airlines financially. The proposed business arrangement includes the following key elements.

 A “cost center residual” landing fee rate for the Airfield Cost Center using total landed weight as the divisor.  A “cost center compensatory” average terminal rental rate for the Terminal Cost Center using total rentable square feet as the divisor.  Cost centers have been developed that are consistent with industry practices.

As a result of these assumptions and other described later in this report, the projected impacts to the Airlines for Budget FY 2016 and the Projection Period under the proposed Agreement are shown in Table 1.

PRELIMINARY DRAFT Page 2 of 28 PREPARED ON 11/04/2015 Table 1 Rates and Charges Summary (Fiscal Year Ending September 30)

Estimated Budget PROJECTED FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Old Methodology Rates:

Facility Service Charges

Saipan Main Terminal: Signatory - Per Enplaned Passenger $9.07 Nonsignatory - Per Enplaned Passenger (150%) $13.61 Signatory - Per Deplaned Passenger $2.20 Nonsignatory - Per Deplaned Passenger (150%) $3.30

Saipan Commuter Terminal: Signatory - Per Enplaned Passenger $3.35 Nonsignatory - Per Enplaned Passenger (125%) $4.19

Rota: Signatory - Per Enplaned Passenger $4.95 Nonsignatory - Per Enplaned Passenger (150%) $6.19

Tinian: Signatory - Per Enplaned Passenger $4.95 Nonsignatory - Per Enplaned Passenger (150%) $6.19

Landing Fee

Saipan Main Terminal: Signatory $2.02 Nonsignatory (150%) $3.03

Saipan Commuter Terminal: Signatory $1.40 Nonsignatory (125%) $1.75

Rota: Signatory - Commuter $1.06 Nonsignatory (125%) - Commuter $1.33

Tinian: Signatory - Commuter $1.06 Nonsignatory (125%) - Commuter $1.33

Debt Service Coverage 2.26

Cost Per Enplanement $14.90

New Methodology Rates:

Terminal Rental Rate

Average Rental Rate (per square foot) $41.24 $42.89 $44.66 $46.44 $48.33

Saipan Main: Average Signatory Rental Rate (per square foot) $44.40 $46.18 $48.08 $50.00 $52.03 Average Nonsignatory Rental Rate - 125% (per square foot) $55.50 $57.72 $60.10 $62.50 $65.04

Saipan Commuter: 50% DISCOUNT Average Signatory Rental Rate (per square foot) $22.20 $23.09 $24.04 $25.00 $26.02 Average Nonsignatory Rental Rate - 125% (per square foot) $27.75 $28.86 $30.05 $31.25 $32.52

Rota: 50% DISCOUNT Average Signatory Rental Rate (per square foot) $22.20 $23.09 $24.04 $25.00 $26.02 Average Nonsignatory Rental Rate - 125% (per square foot) $27.75 $28.86 $30.05 $31.25 $32.52

Tinian: 50% DISCOUNT Average Signatory Rental Rate (per square foot) $22.20 $23.09 $24.04 $25.00 $26.02 Average Nonsignatory Rental Rate - 125% (per square foot) $27.75 $28.86 $30.05 $31.25 $32.52

Landing Fee

Average Landing Fee $2.18 $2.25 $2.32 $2.39 $2.47

International Landing Fee $2.28 $2.35 $2.42 $2.50 $2.58

Commuter / Rota / Tinian Landing Fee $1.71 $1.76 $1.82 $1.88 $1.93 Nonsignatory Landing Fee (125%) $2.73 $2.81 $2.90 $2.99 $3.09

Per Use Fee

Per Use Fee - Ticket Counters and Queuing $52.99 $55.10 $57.38 $59.67 $62.09

Per Use Fee - Holdrooms/Gates $185.80 $193.22 $201.19 $209.23 $217.72

Debt Service Coverage 1.92 1.84 1.81 1.79 1.75

Cost Per Enplanement $12.59 $12.95 $13.35 $13.74 $14.14

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 3 of 28 PREPARED ON 11/04/2015

The remainder of this document is presented under the following headings:

 Financial Structure  Activity Projections  Terminal Space  Debt Service  PFC Revenue  Operating Expenses  Non-Aviation Revenues  Airline Rates and Charges

1.2 Financial Structure

Expenses, Debt Service and Capital Expenditures of the Authority are categorized into Cost Centers. The Authority utilizes the cost center structure described below, which is consistent with industry standards.

The Authority has identified the following Direct Cost Centers:

 Airfield. The Airfield cost center includes the portion of the Airports provided for the landing, taking off, and taxiing of aircraft, including runways, taxiways, approach and runway protection zones, safety areas, infield areas, landing and navigational aids, and land areas required by or related to aeronautical use of the Airports.  Main Terminal. The Main Terminal cost center includes the Saipan International Airport main terminal passenger building and associated curbside entrance areas and adjoining landscaped areas. This cost center also includes the aircraft aprons at the Main Terminal.  Commuter Terminal. The Commuter Terminal cost center includes the Commuter Terminal building and associated curbside entrance areas, and aircraft aprons at the Commuter Terminal.  Rota Terminal. The Rota Terminal cost center includes the Rota Terminal building, associated curbside entrance areas, and aircraft aprons at the Rota Terminal.  Tinian Terminal. The Tinian Terminal cost center includes the Tinian Terminal building, associated curbside entrance areas, and aircraft aprons at the Tinian Terminal.

Indirect Cost Centers have expenditures that will be allocated to Direct Cost Centers:

 ARFF. The ARFF cost center includes all aircraft rescue and firefighting functions of the Airport System.  Security. The Security cost center includes all functions of the Airport System related to security.  Administrative. The Administrative cost center includes the administrative functions of the Airport System.

PRELIMINARY DRAFT Page 4 of 28 PREPARED ON 11/04/2015

For 2016, Operating Expenses in indirect cost centers will be allocated on the following basis.

Allocation of Indirect Operating Expenditures

Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Allocation % for Saipan ARFF Operating Expenses: Main Terminal 39% 39% 39% 39% 39% Commuter Terminal 5% 5% 5% 5% 5% Airfield 56% 56% 56% 56% 56% Total 100% 100% 100% 100% 100%

Allocation % for Saipan Security Operating Expenses: Main Terminal 75% 75% 75% 75% 75% Commuter Terminal 5% 5% 5% 5% 5% Airfield 20% 20% 20% 20% 20% Total 100% 100% 100% 100% 100%

Allocation % for Saipan Administrative Operating Expenses: 1/ Main Terminal 78% 78% 78% 78% 78% Commuter Terminal 4% 4% 4% 4% 4% Airfield 18% 18% 18% 18% 18% Total 100% 100% 100% 100% 100%

1/ The Administrative Cost Center is allocated to Direct Cost Centers based on each Direct Cost Center's proportionate share of expenses after allocation of ARFF and Security indirect operating expenses.

Source: Commonwealth Ports Authority

Prepared by: Ricondo & Associates, Inc.

ARFF and Security Cost Centers are allocated at each airport based on an approximation of effort expended in each Direct Cost Center and are consistent with industry standards. It is the intent of the Authority to review these allocations periodically throughout the term of the Agreement to ensure that expenses are properly allocated to the appropriate Direct Cost Centers. The Administrative Cost Center is allocated to Direct Cost Centers based on each Direct Cost Center’s proportionate share of expenses after allocation of ARFF and security indirect operating expenses.

1.3 Activity Projections

Table 2 presents projected enplanements and landed weights for the Airports for the Projection Period.

PRELIMINARY DRAFT Page 5 of 28 PREPARED ON 11/04/2015 Table 2 Activity (Page 1 of 2) (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Enplanements:

Saipan:

CO/AM Airlines 4,500 4,545 4,590 4,636 4,682 Dynamic Airlines 00000 Delta Air Lines 88,133 89,014 89,904 90,803 91,711 Asiana Airlines 178,233 180,015 181,815 183,633 185,470 Pacific Orient, Inc. 670 676 683 690 697 Pacific Airport 00000 China Eastern Airlines 57,563 58,139 58,720 59,307 59,900 Oren Air 00000 Sichuan Airlines 86,223 87,085 87,956 88,835 89,724 Vladivostok Airlines 00000 Jeju Airlines 78,895 79,684 80,481 81,286 82,099 Miscellaneous Airlines 263 265 268 271 273 Cape Air 35,477 35,832 36,190 36,552 36,918 Star Marianas 35,372 35,726 36,083 36,444 36,808 Arctic Circle 638 645 651 658 664 Freedom Air 00000

Total 565,966 571,625 577,342 583,115 588,946

Rota:

Freedom Air 00000 Arctic Circle 619 625 632 638 644 Star Marianas 4,790 4,838 4,887 4,936 4,985 CO/AM Airlines 1,313 1,326 1,339 1,353 1,366 Cape Air 2,579 2,604 2,630 2,657 2,683

Total 9,301 9,394 9,488 9,583 9,679

Tinian:

Freedom Air 00000 Star Marianas 30,170 30,471 30,776 31,084 31,395 Miami Air International 00000 Miscellaneous Airlines 328 332 335 338 342

Total 30,498 30,803 31,111 31,422 31,736

Total Enplanements 605,765 611,822 617,941 624,120 630,361

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 6 of 28 PREPARED ON 11/04/2015 Table 2 Activity (Page 2 of 2) (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Landed Weight (000 lbs):

Saipan:

CO/AM Airlines 4,610,206 4,656,308 4,702,871 4,749,899 4,797,398 Dynamic Airlines 00000 Delta Air Lines 159,939,156 161,538,548 163,153,933 164,785,472 166,433,327 Asiana Airlines 294,440,856 297,385,265 300,359,117 303,362,708 306,396,335 Pacific Orient, Inc. 12,513,026 12,638,156 12,764,538 12,892,183 13,021,105 Pacific Airport 00000 China Eastern Airlines 79,453,508 80,248,043 81,050,524 81,861,029 82,679,639 Oren Airlines 00000 Sichuan Airlines 128,924,561 130,213,806 131,515,944 132,831,104 134,159,415 Micronesian Air 8,113,584 8,194,720 8,276,667 8,359,433 8,443,028 Jeju Airlines 74,838,334 75,586,717 76,342,584 77,106,010 77,877,070 Miscellaneous Airlines 2,973,157 3,002,889 3,032,918 3,063,247 3,093,879 Vladivostok Airlines 00000 Cape Air 36,996,381 37,366,345 37,740,008 38,117,408 38,498,582 Star Marianas 71,225,846 71,938,105 72,657,486 73,384,061 74,117,901 Arctic Circle 1,293,931 1,306,871 1,319,939 1,333,139 1,346,470 Freedom Air 00000

Total 875,323 884,076 892,917 901,846 910,864

Rota:

Freedom Air 00000 Arctic Circle 1,293,931 1,306,871 1,319,939 1,333,139 1,346,470 Star Marianas 12,696,185 12,823,147 12,951,378 13,080,892 13,211,701 CO/AM Airlines 1,773,156 1,790,888 1,808,796 1,826,884 1,845,153 Miscellaneous Airlines 1,456,420 1,470,984 1,485,694 1,500,551 1,515,556 Micronesian Air Cargo Services 5,781,814 5,839,633 5,898,029 5,957,009 6,016,579 Cape Air 4,528,678 4,573,965 4,619,705 4,665,902 4,712,561

Total 27,530 27,805 28,084 28,364 28,648

Tinian:

Freedom Air 00000 Star Marianas 61,889,568 62,508,464 63,133,548 63,764,884 64,402,533 Miami Air International 00000 Miscellaneous Airlines 15,150 15,302 15,455 15,609 15,765 Micronesian Air Cargo 1,130,794 1,142,102 1,153,523 1,165,058 1,176,708

Total 63,036 63,666 64,303 64,946 65,595

Landed Weight by Airport:

Total Landed Weight 965,888 975,547 985,303 995,156 1,005,107

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 7 of 28 PREPARED ON 11/04/2015

The activity projections have been developed for all airlines and the main assumptions are:

 Enplanements. The enplanements are projected to grow by 1.0 percent annually throughout the Projection Period.  Landed Weights. The landed weights are projected to grow by 1.0 percent annually throughout the Projection Period.

1.4 Terminal Space

Total terminal space differentiated into airline preferential space, airline joint use space, other rentable space and non-rentable space for each airport.

The other rentable space includes concessions, Federal Inspections Services (FIS), Transportation Security Administration (TSA), U.S. Customs and Border Protection (CBP), other miscellaneous rentable and Authority administrative space. Joint Use space is allocated to Airlines based on each Airline’s percentage of enplanements.

The following Tables 3A-3D present terminal space for the Airport System:

1.5 Debt Service

Debt service consists of projected debt service on the Airport’s Series A 1998 bond. Table 4 presents the projected debt service at the Airports from FY 2016 throughout the Projection Period. Debt service at the Airports is expected to remain level at approximately $1.4 million throughout the Projection Period.

1.6 Passenger Facility Charge (PFC) Revenue

Table 5 presents estimated PFC Revenue at the Airport System for the Projection Period. The Authority collects the maximum rate of $4.50 per enplanement and under FAA regulation is able to keep $4.39 per enplaned passenger after a $0.11 per enplanement administrative fee is paid. Historically, the Airport System has eligible enplanements of approximately 90.0 percent of total enplanements.

CPA has authority to pay 30.2 percent of annual Debt Service and coverage payments from PFC revenues based on 1998 PFC-eligible projects. Total PFC Revenue to be used for debt service between FY 2016 and FY 2020 is approximately $500 thousand per year. The remaining PFC revenues received annually reimburse CPA for PFC-eligible projects originally funded with CPA funds.

PRELIMINARY DRAFT Page 8 of 28 PREPARED ON 11/04/2015 Tabel 3A Saipan Main Terminal by Space Type (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Airline Rentable Space (square feet):

Leased Preferential Space

Ground Floor - Leased Airline Ticket Counters 2,799 2,799 2,799 2,799 2,799 Ground Floor - Leased Airline Ticket Offices 5,303 5,303 5,303 5,303 5,303 Ground Floor - Leased Ticket Queuing / Lobby 18,107 18,107 18,107 18,107 18,107 Second Floor - Area A Airline Offices Leased 2,385 2,385 2,385 2,385 2,385

Total Leased Preferential Space 28,594 28,594 28,594 28,594 28,594

Unleased Preferential Space

Second Floor - Area A Airline Offices Space 1,200 1,200 1,200 1,200 1,200 Ground Floor - Ticket Counters 00000 Ground Floor - Queuing / Lobby 00000 Second Floor - Holdroom B Gate #1 6,109 6,109 6,109 6,109 6,109 Second Floor - Holdroom B Gate #2 6,109 6,109 6,109 6,109 6,109 Second Floor - Holdroom B Seating Area 00000

Total Unleased Preferential Space 13,418 13,418 13,418 13,418 13,418

Total Preferential Space 42,012 42,012 42,012 42,012 42,012

Joint Use Space

Basement - BHS 12,179 12,179 12,179 12,179 12,179 Ground Floor - Area B Baggage Claim 5,354 5,354 5,354 5,354 5,354 Ground Floor - Arrivals Corridor Secure Circulation 28,700 28,700 28,700 28,700 28,700 Second Floor - Holdroom B Gate #3 6,109 6,109 6,109 6,109 6,109 Second Floor - Holdroom B Gate #4 6,109 6,109 6,109 6,109 6,109 Second Floor - Holdroom A Gate #5 6,380 6,380 6,380 6,380 6,380 Second Floor - Holdroom A Gate #6 6,380 6,380 6,380 6,380 6,380

Total Joint Use Space 71,210 71,210 71,210 71,210 71,210

Total Airline Rentable Space 113,222 113,222 113,222 113,222 113,222

Other Rentable Space

Ground Floor - ATM 144 144 144 144 144 Ground Floor - Pacific Airport Services Offices 2,104 2,104 2,104 2,104 2,104 Ground Floor - Pacific Oriental Inc. Offices 1,300 1,300 1,300 1,300 1,300 Ground Floor - CPA AOA 2,456 2,456 2,456 2,456 2,456 Ground Floor - TSA Offices 2,790 2,790 2,790 2,790 2,790 Ground Floor - DFS 1st Floor Storage 17,000 17,000 17,000 17,000 17,000 Ground Floor - Area B Concessions 2,667 2,667 2,667 2,667 2,667 Ground Floor - Area B Customs 5,354 5,354 5,354 5,354 5,354 Ground Floor - CBP 12,884 12,884 12,884 12,884 12,884 Second Floor - TSA Screening 2,335 2,335 2,335 2,335 2,335 Ground Floor - Ramp to TSA Screening Checkpoint 4,636 4,636 4,636 4,636 4,636 Second Floor - Holdroom A Concessions 3,091 3,091 3,091 3,091 3,091 Second Floor - Area A Office Space 6,479 6,479 6,479 6,479 6,479 Second Floor - Area B Office Space 3,372 3,372 3,372 3,372 3,372 Second Floor - Holdroom B Seating Area 6,500 6,500 6,500 6,500 6,500 Second Floor - Concessions Space 18,142 18,142 18,142 18,142 18,142 Second Floor - Concessions Other Rentable Space 20,070 20,070 20,070 20,070 20,070

Total Other Rentable Space 111,324 111,324 111,324 111,324 111,324

Total Rentable Space (square feet) 224,546 224,546 224,546 224,546 224,546

Non Rentable Space

Basement - Mechanical 821 821 821 821 821 Ground Floor - Ticketing Restrooms 1,000 1,000 1,000 1,000 1,000 Ground Floor - Customs/Baggage Claim Restroom 500 500 500 500 500 Ground Floor - Arrivals Restrooms 500 500 500 500 500 Ground Floor - Storage under Seating Area 6,500 6,500 6,500 6,500 6,500 Ground Floor - Employee Exit from CBP 2,400 2,400 2,400 2,400 2,400 Ground Floor - Other / Mechanical 11,929 11,929 11,929 11,929 11,929 Second Floor - Holdroom A Restroom 500 500 500 500 500 Second Floor - Holdroom B Restroom 500 500 500 500 500 Second Floor - Secure Area 1,200 1,200 1,200 1,200 1,200

Total Non Rentable Space 25,850 25,850 25,850 25,850 25,850

Total Terminal Area (square feet) 250,396 250,396 250,396 250,396 250,396

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 9 of 28 PREPARED ON 11/04/2015 Table 3B Saipan Commuter Terminal by Space Type (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Airline Rentable Space (square feet):

Leased Preferential Space:

Ticket Counters 102 102 102 102 102 Ticket Offices 546 546 546 546 546 Bag Makeup 246 246 246 246 246

Total Leased Preferential Space 894 894 894 894 894

Unleased Preferential Space:

Ticketing Counters 102 102 102 102 102 Ticket Offices 481 481 481 481 481 Bag Makeup 369 369 369 369 369 Total Unleased Preferential Space 952 952 952 952 952

Total Preferential Space 1,845 1,845 1,845 1,845 1,845

Airline Joint Use Space

Holdrooms / Common Area 5,118 5,118 5,118 5,118 5,118 Total Joint Use Space 5,118 5,118 5,118 5,118 5,118 Total Airline Rentable Space 6,963 6,963 6,963 6,963 6,963

Other Rentable Space

Restaurant 925 925 925 925 925 Snack Bar 111 111 111 111 111 Total Other Rentable Space 1,036 1,036 1,036 1,036 1,036

Total Rentable Space (square feet) 7,999 7,999 7,999 7,999 7,999

Non Rentable Space

Restrooms 574 574 574 574 574 Total Non Rentable Space 574 574 574 574 574

Total Useable Space 8,573 8,573 8,573 8,573 8,573

Non Useable Space

Meter. Room 90 90 90 90 90 Electrical Room 154 154 154 154 154

Total Non Useable Space 244 244 244 244 244

Total Terminal Space (square feet) 8,817 8,817 8,817 8,817 8,817

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 10 of 28 PREPARED ON 11/04/2015 Table 3C Rota Airport Terminal by Space Type (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Airline Rentable Space (square feet):

Leased Preferential Space:

Ticket Counters 435 435 435 435 435 Ticket Offices 440 440 440 440 440 Bag Makeup 562 562 562 562 562 Total Leased Preferential Space 1,437 1,437 1,437 1,437 1,437

Unleased Preferential Space:

Ticketing Counters 217 217 217 217 217 Ticket Offices 239 239 239 239 239 Bag Makeup 281 281 281 281 281 Total Unleased Preferential Space 737 737 737 737 737

Total Preferential Space 2,174 2,174 2,174 2,174 2,174

Airline Joint Use Space

Baggage Claim 1,301 1,301 1,301 1,301 1,301 Queuing Area 1,670 1,670 1,670 1,670 1,670 Unclaimed Baggage Space 141 141 141 141 141 Holding Room 1,789 1,789 1,789 1,789 1,789 Total Joint Use Space 4,901 4,901 4,901 4,901 4,901

Total Airline Rentable Space 7,075 7,075 7,075 7,075 7,075

Other Rentable Space

Unidentified Rentable Space 234 234 234 234 234 Customs Border Patrol 1,594 1,594 1,594 1,594 1,594 TSA Passenger Screening 498 498 498 498 498 TSA Cargo Screening 843 843 843 843 843 Customs Border Patrol 1,897 1,897 1,897 1,897 1,897 Immigration Space 279 279 279 279 279 Restaurant 1,414 1,414 1,414 1,414 1,414 Snack Bar 441 441 441 441 441 Ports Police 314 314 314 314 314 TSA STO 606 606 606 606 606

Total Other Rentable Area 8,120 8,120 8,120 8,120 8,120

Total Rental Space (square feet) 15,195 15,195 15,195 15,195 15,195

Non-Rentable Space

PAD Space 6767676767 Hall Space 7878787878 X-Ray 00000 Storage Space 4242424242 Stairs 328 328 328 328 328 Men's Restroom Space 709 709 709 709 709 Women's Restroom Space 618 618 618 618 618 Toil Restroom 0 0 0 0 0 Janitor's Closet 107 107 107 107 107 Electrical Room 170 170 170 170 170 Mechanical Space 1,000 1,000 1,000 1,000 1,000 Total Non-Rentable Space 3,119 3,119 3,119 3,119 3,119

Total Rota Terminal Space (square feet) 18,314 18,314 18,314 18,314 18,314

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 11 of 28 PREPARED ON 11/04/2015 Table 3D Tinian Airport Terminal by Space Type (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Airline Rentable Space (square feet):

Leased Preferential Space:

Check In Space 284 284 284 284 284 Check In Offices 422 422 422 422 422 Baggage Ready Space 173 173 173 173 173

Total Leased Preferential Space 879 879 879 879 879

Unleased Preferential Space:

Ticketing Counters 00000 Ticket Offices 00000 Bag Makeup 00000

Total Unleased Preferential Space 00000

Total Preferential Space 879 879 879 879 879

Airline Joint Use Space

Holdroom 1,527 1,527 1,527 1,527 1,527 Arrival Area 1,827 1,827 1,827 1,827 1,827

Total Joint Use Space 3,354 3,354 3,354 3,354 3,354

Total Airline Rentable Space 4,233 4,233 4,233 4,233 4,233

Other Rentable Space

Unidentified Space 263 263 263 263 263 Holdroom Areas 150 150 150 150 150 Concession Space 516 516 516 516 516 Administration Space 460 460 460 460 460 Security Space 175 175 175 175 175 Unoccupied Office Space (IMG) 9898989898 Check-In Area 749 749 749 749 749

Total Other Rentable Area 2,411 2,411 2,411 2,411 2,411

Total Rentable Space (square feet) 6,644 6,644 6,644 6,644 6,644

Non-Rentable East Wing Space: 1/ Airline 1 Space 151 151 151 151 151 Airline 2 Space 138 138 138 138 138 Airline 3 Space 153 153 153 153 153 Check In Space 406 406 406 406 406 Baggage Screening Area 779 779 779 779 779 VIP Lounge 538 538 538 538 538 Men's Restroom Space 267 267 267 267 267 Women's Restroom Space 270 270 270 270 270 Corridor 4,363 4,363 4,363 4,363 4,363 Concessions 419 419 419 419 419 Holdroom 6,850 6,850 6,850 6,850 6,850 Mechanical Space 361 361 361 361 361 Janitor's Closet 69 69 69 69 69 Electrical Room 247 247 247 247 247 PAT DN 66 66 66 66 66 IMG Space 131 131 131 131 131 Office 272 272 272 272 272

Total Non-Rentable East Wing Space 15,480 15,480 15,480 15,480 15,480

Non-Rentable West Wing Space: Customs Area Office 2/ 197 197 197 197 197 Customs Broder Patrol 2/ 1,780 1,780 1,780 1,780 1,780 Baggage Area 2/ 1,330 1,330 1,330 1,330 1,330 X-Ray 235 235 235 235 235 Hall Space 165 165 165 165 165 PAT DN 117 117 117 117 117 Men's Restroom Space 353 353 353 353 353 Women's Restroom Space 346 346 346 346 346 Toil Restroom 122 122 122 122 122

Total Non-Rentable West Wing Space 4,639 4,639 4,639 4,639 4,639

Total Non-Rentable Space 20,119 20,119 20,119 20,119 20,119

Total Tinian Terminal Space (square feet) 26,763 26,763 26,763 26,763 26,763

1/ Tinian east wing terminal identified as non-rentable until end of construction. 2/ Customs Area Office, Customs Border Patrol, and Baggage Area space is identified as non-rentable space but may be used if international fligh

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 12 of 28 PREPARED ON 11/04/2015 Table 4A Debt Service (Fiscal Year Ending September 30)

Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Debt Service:

1998 A Series $1,386,250 $1,380,156 $1,391,250 $1,379,531 $1,375,313 Less: Capitalized Interest 00000

Total Debt Service $1,386,250 $1,380,156 $1,391,250 $1,379,531 $1,375,313

Percent Allocation by Cost Center:

Saipan International Airport:

Main Terminal Building 47% 47% 47% 47% 47% Commuter Terminal Building 1%1%1%1%1% Airfield 29% 29% 29% 29% 29%

Total Saipan projects 78% 78% 78% 78% 78%

Rota International Airport:

Terminal Building 19% 19% 19% 19% 19% Airfield 3% 3% 3% 3% 3%

Total Rota projects 22% 22% 22% 22% 22%

Tinian Airport:

Terminal Building 0%0%0%0%0% Airfield 1% 1% 1% 1% 1%

Total Tinian projects 1% 1% 1% 1% 1%

Total Airport Projects 100% 100% 100% 100% 100%

Debt Service by Cost Center:

Saipan International Airport:

Main Terminal Building $653,840 $650,965 $656,198 $650,671 $648,681 Commuter Terminal Building 12,793 12,736 12,839 12,731 12,692 Airfield 408,508 406,712 409,981 406,528 405,284

Total Saipan Debt Service $1,075,140 $1,070,414 $1,079,018 $1,069,929 $1,066,657

Rota International Airport:

Terminal Building $267,928 $266,750 $268,894 $266,629 $265,814 Airfield 35,127 34,973 35,254 34,957 34,850

Total Rota Debt Service $303,055 $301,723 $304,148 $301,586 $300,664

Tinian Airport:

Terminal Building $0$0$0$0$0 Airfield 8,055 8,020 8,084 8,016 7,991

Total Tinian Debt Service $8,055 $8,020 $8,084 $8,016 $7,991

Airport:

Terminal Building $934,560 $930,452 $937,931 $930,031 $927,186 Airfield 451,690 449,704 453,319 449,501 448,126

Total Airport Debt Service $1,386,250 $1,380,156 $1,391,250 $1,379,531 $1,375,313

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 13 of 28 PREPARED ON 11/04/2015 Table 4B Debt Service (Fiscal Year Ending September 30)

Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

PFC Eligible Debt Service & Coverage by Cost Center:

Saipan International Airport:

Terminal 5.9% $102,783 $102,331 $103,153 $102,284 $101,972 Airfield 19.0% 328,494 327,050 329,679 326,902 325,902

Total Saipan Debt Service 24.9% $431,277 $429,381 $432,832 $429,186 $427,874

Rota International Airport:

Terminal 3.3% $56,785 $56,536 $56,990 $56,510 $56,337 Airfield 1.7% 28,673 28,547 28,776 28,534 28,446

Total Rota Debt Service 4.9% $85,458 $85,082 $85,766 $85,044 $84,784

Tinian Airport:

Terminal 0.0% $0 $0 $0 $0 $0 Airfield 0.4% 6,575 6,546 6,599 6,543 6,523

Total Tinian Debt Service 0.4% $6,575 $6,546 $6,599 $6,543 $6,523

Airport:

Terminal 9.2% $159,568 $158,866 $160,143 $158,795 $158,309 Airfield 21.0% 363,741 362,143 365,053 361,979 360,872

Total Airport Debt Service 30.2% $523,309 $521,009 $525,197 $520,773 $519,180

Net Debt Service by Cost Center:

Saipan International Airport:

Main Terminal Building $551,057 $548,635 $553,045 $548,386 $546,709 Commuter Terminal Building 12,793 12,736 12,839 12,731 12,692 Airfield 80,014 79,662 80,302 79,626 79,382

Total Saipan Debt Service $643,863 $641,033 $646,186 $640,743 $638,783

Rota International Airport:

Terminal $211,143 $210,214 $211,904 $210,119 $209,477 Airfield 6,455 6,426 6,478 6,423 6,404

Total Rota Debt Service $217,597 $216,641 $218,382 $216,543 $215,880

Tinian Airport:

Terminal $0 $0 $0 $0 $0 Airfield 1,480 1,474 1,485 1,473 1,468

Total Tinian Debt Service $1,480 $1,474 $1,485 $1,473 $1,468

Airport:

Terminal $774,992 $771,586 $777,788 $771,236 $768,878 Airfield 87,948 87,562 88,266 87,522 87,254

Net Debt Service $862,941 $859,147 $866,053 $858,758 $856,132

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 14 of 28 PREPARED ON 11/04/2015 Table 5 PFC Revenues (Fiscal Year Ending September 30)

Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Enplanements 605,765 611,822 617,941 624,120 630,361 Eligible Enplanements (90%) 90% 547,546 553,021 558,551 564,137 569,778

PFC Revenue per Enplanement $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 Administrative Fee $0.11 $0.11 $0.11 $0.11 $0.11 $0.11

PFC Revenues $2,403,726 $2,427,763 $2,452,040 $2,476,561 $2,501,326 Interest Revenues 1.5% 18,028 18,208 18,390 18,574 18,760

Adjusted PFC Revenues $2,421,753 $2,445,971 $2,470,431 $2,495,135 $2,520,086

Starting Balance $0$0$0$0$0 Deposit: Revenues 2,421,753 2,445,971 2,470,431 2,495,135 2,520,086 Expend: PFC Debt Service & Coverage 523,309 521,009 525,197 520,773 519,180 Reimburse CPA for PAYG Projects 1,898,444 1,924,962 1,945,234 1,974,362 2,000,906 Ending Balance $0$0$0$0$0

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 15 of 28 PREPARED ON 11/04/2015

1.7 Operating Expenses and Capital Expenditures

Tables 6A and 6B present Operating Expenses and Capital Expenditures at the Airport System for the Projection Period. Operating Expenses at the Airport System are expected to increase at a compound annual growth rate of 4.5 percent through the Projection Period. Capital Expenditures at the Airport System are expected to increase at a compound annual growth rate of 3.0 percent through the Projection Period.

1.8 Non-Aviation Revenues

Table 7 presents Non-Aviation Revenue at the Airport System for the Projection Period. Non-Aviation Revenue includes revenues from cargo landing fees and facility rentals, hangers rentals, fuel flowage fees, FBO rentals, rental car contracts, concessions, other ground transportation fees, investments earnings, and miscellaneous other revenues.

Non-Aviation Revenue at the Airport System is expected to increase at a compound annual growth rate of 2.7 percent through the Projection Period, based on inflationary impacts and enplanement growth.

1.9 Airline Rates and Charges

Rates will be calculated for the Terminal and Airfield at the Airports. The airlines rates and charges presented in these analyses for FY 2016 though the Projection Period reflect the proposed methodology described earlier in this report. The proposed methodology is described in more detail below.

The components of the total requirement for the terminal rental rate and landing fee include the following:

 Operating Expenses. Includes the Operating Expenses (direct and allocated indirect) attributable to the specific rate-setting area.  Debt Service. Includes the portion of Total Debt Service attributable to the specific rate-setting area.  Debt Service Coverage. Includes 25 percent of Total Debt Service attributable to the specific rate- setting area.  Capital Equipment. Includes the capital Equipment attributable to the specific rate-setting area.

1.9.1 LANDING FEE A residual calculation for the Landing Fee is presented in Table 8. The Total Airfield Requirement is equal to the sum of the previously described components for the Airfield Cost Center. Nonsignatory landing fees,1 fuel flowage revenues, and PFC revenues eligible for Debt Service and Coverage attributable to the Airfield are

1 Projections assume all airlines are Signatory.

PRELIMINARY DRAFT Page 16 of 28 PREPARED ON 11/04/2015 Table 6A Operating Expenses (Fiscal Year Ending September 30) Budget PROJECTED CAGR FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 2016-2020

Operating Expenses by Type of Expense :

Salaries and Wages $4,701,045 $4,912,592 $5,133,659 $5,364,673 $5,606,084 4.5% Benefits 619,098 646,958 676,071 706,494 738,286 4.5% Staff Training 95,000 99,275 103,742 108,411 113,289 4.5% Travel 98,050 102,462 107,073 111,891 116,926 4.5% Professional Services/Consulting/Audit Services 72,000 75,240 78,626 82,164 85,861 4.5% Contractual Services 1,228,323 1,283,598 1,341,359 1,401,721 1,464,798 4.5% Insurance 777,143 812,114 848,659 886,849 926,757 4.5% Board Expense 24,050 25,132 26,263 27,445 28,680 4.5% Legal Services 95,000 99,275 103,742 108,411 113,289 4.5% Promotion 24,100 25,185 26,318 27,502 28,740 4.5% Repairs and Maintenance 606,721 634,023 662,555 692,369 723,526 4.5% Supplies and Materials 609,100 636,510 665,152 695,084 726,363 4.5% Fuel 423,800 442,871 462,800 483,626 505,389 4.5% Subscription 4,900 5,121 5,351 5,592 5,843 4.5% Membership Dues 6,500 6,793 7,098 7,418 7,751 4.5% Advertising 14,000 14,630 15,288 15,976 16,695 4.5% Communication 76,850 80,308 83,922 87,699 91,645 4.5% Postage 4,500 4,703 4,914 5,135 5,366 4.5% Utilities 1,860,000 1,943,700 2,031,167 2,122,569 2,218,085 4.5%

Total Operating Expenses $11,340,180 $11,850,488 $12,383,760 $12,941,029 $13,523,376 4.5%

Operating Expenses by Cost Center (Before Allocating Indirect) :

Terminal $3,381,395 $3,533,557 $3,692,567 $3,858,733 $4,032,376 4.5% Airfield 00000N/A Aircraft Rescue & Fire Fighting 2,180,505 2,278,628 2,381,166 2,488,318 2,600,293 4.5% Administrative 1,991,815 2,081,447 2,175,112 2,272,992 2,375,277 4.5% Security 1,328,599 1,388,385 1,450,863 1,516,152 1,584,378 4.5%

Total Operating Expenditures - All Cost Centers $8,882,314 $9,282,018 $9,699,708 $10,136,195 $10,592,324 4.5%

Operating Expenses by Airport (After Allocation of Indirect Expenses) :

Saipan:

Main Terminal $7,113,275 $7,433,372 $7,767,874 $8,117,428 $8,482,713 4.5% Commuter Terminal 337,540 352,729 368,602 385,189 402,522 4.5% Airfield 1,623,470 1,696,526 1,772,869 1,852,648 1,936,018 4.5%

Total Saipan Airport Operating Expenses $9,074,284 $9,482,627 $9,909,345 $10,355,266 $10,821,253 4.5%

Rota Airport:

Terminal $842,019 $879,910 $919,506 $960,884 $1,004,123 4.5% Airfield 171,136 178,837 186,885 195,295 204,083 4.5%

Total Rota Airport Operating Expenses $1,013,155 $1,058,747 $1,106,391 $1,156,178 $1,208,206 4.5%

Tinian Airport:

Terminal $969,188 $1,012,801 $1,058,377 $1,106,004 $1,155,775 4.5% Airfield 283,553 296,313 309,647 323,581 338,142 4.5%

Total Tinian Operating Expenses $1,252,741 $1,309,114 $1,368,024 $1,429,585 $1,493,917 4.5%

Airport:

Terminal $9,262,022 $9,678,813 $10,114,359 $10,569,505 $11,045,133 4.5% Airfield 2,078,159 2,171,676 2,269,401 2,371,524 2,478,243 4.5%

Total Operating Expenses $11,340,180 $11,850,488 $12,383,760 $12,941,029 $13,523,376 4.5%

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 17 of 28 PREPARED ON 11/04/2015 Table 6B Capital Expenditures (Fiscal Year Ending September 30) Budget PROJECTED CAGR FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 2016-2020

Capital Expenditures by Airport:

Saipan International Airport: Main Terminal $184,662 $190,202 $195,908 $201,785 $207,838 3.0% Commuter Terminal 9,719 10,011 10,311 10,620 10,939 3.0% Airfield 00000N/A Aircraft Rescue & Fire Fighting 72,253 74,420 76,653 78,952 81,321 3.0% Administrative 6,539 6,735 6,937 7,145 7,359 3.0% Security 25,724 26,495 27,290 28,109 28,952 3.0%

Total Saipan International Airport Operating Expenses $298,896 $307,862 $317,098 $326,611 $336,410 3.0%

Rota International Airport: Terminal $1,431 $1,474 $1,518 $1,564 $1,611 3.0% Airfield 00000N/A Aircraft Rescue & Fire Fighting 00000N/A Administrative 00000N/A Security 00000N/A

Total Rota International Airport Operating Expenses $1,431 $1,474 $1,518 $1,564 $1,611 3.0%

Tinian Airport: Terminal $24,434 $25,168 $25,923 $26,700 $27,501 3.0% Airfield 00000N/A Aircraft Rescue & Fire Fighting 00000N/A Administrative 00000N/A Security 00000N/A Total Tinian Operating Expenses $24,434 $25,168 $25,923 $26,700 $27,501 3.0%

Airport System:

Main Terminal $210,527 $216,843 $223,348 $230,049 $236,950 3.0% Commuter Terminal 9,719 10,011 10,311 10,620 10,939 3.0% Airfield 00000N/A Aircraft Rescue & Fire Fighting 72,253 74,420 76,653 78,952 81,321 3.0% Administrative 6,539 6,735 6,937 7,145 7,359 3.0% Security 25,724 26,495 27,290 28,109 28,952 3.0% Total Operating Expenses $324,761 $334,504 $344,539 $354,875 $365,522 3.0%

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 18 of 28 PREPARED ON 11/04/2015 Table 7 Non-Aviation Revenues (Fiscal Year Ending September 30) BudgetPROJECTED 2016-2020 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 CAGR

Non-Aviation Revenue: Bus & Taxi Permits (Ground Transportation) $230,866 $236,638 $242,554 $248,617 $254,833 2.5% Space Rental 3,024 3,160 3,302 3,451 3,606 4.5% Office Space Rental 267,454 279,489 292,066 305,209 318,944 4.5% Warehouse Rental 234,600 245,157 256,189 267,718 279,765 4.5% Incinerator - Non-Airline 21,500 22,468 23,479 24,535 25,639 4.5% Public Parking Fee - Commuter 00000N/A Public Parking Fee - Main Terminal 76,5000000-100.0% Prime Concessionaire - Duty Free Shop 2,870,123 2,927,525 2,986,076 3,045,797 3,106,713 2.0% Restaurant 136,585 139,419 142,312 145,267 148,283 2.1% Rent A Car 198,428 214,362 231,811 250,925 271,869 8.2% Advertising 140,343 144,535 148,853 153,299 157,879 3.0% Vending Machine 1,200 1,224 1,248 1,273 1,299 2.0% Bank of Guam- ATM 1,200 1,224 1,248 1,273 1,299 2.0% Currency Exchange 7,200 7,200 7,200 7,200 7,200 0.0% Finger Printing 11,535 11,650 11,767 11,885 12,003 1.0% Ground Lease 27,466 28,757 30,108 31,523 33,005 4.7% Ground Rental 759,945 795,640 833,012 872,140 913,106 4.7% Badges and Citation 32,160 32,810 33,473 34,149 34,839 2.0% Misc Income 5,150 5,250 5,352 5,456 5,562 1.9% ARFF Training Fees 40,000 40,800 41,616 42,448 43,297 2.0% Restaurant Aviation 736,527 758,623 781,381 804,823 828,968 3.0%

Non-Aviation Revenue $5,837,805 $5,931,929 $6,109,047 $6,292,989 $6,484,110 2.7%

Non-Aviation Revenue by Airport: Saipan $5,694,001 $5,783,277 $5,955,363 $6,134,080 $6,319,776 2.6% Rota 90,526 93,818 97,242 100,804 104,511 3.7% Tinian 53,279 54,834 56,442 58,104 59,823 2.9% Total Non-Aviation Revenues $5,837,805 $5,931,929 $6,109,047 $6,292,989 $6,484,110 2.7%

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 19 of 28 PREPARED ON 11/04/2015 Table 8 Calculation of Landing Fees (Fiscal Year Ending September 30)

Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Airfield Expenses:

Operating Expenses $2,078,159 $2,171,676 $2,269,401 $2,371,524 $2,478,243 Debt Service 451,690 449,704 453,319 449,501 448,126 Debt Service Coverage 112,922 112,426 113,330 112,375 112,032

Total Airfield Expenses $2,642,771 $2,733,806 $2,836,050 $2,933,400 $3,038,400

Less: Nonsignatory Landing Fees $0 $0 $0 $0 $0 Fuel Flowage 172,326 177,496 182,821 188,306 193,955 PFC Revenues for Debt Service & Coverage 363,741 362,143 365,053 361,979 360,872

Subtotal Airfield Revenues $536,068 $539,639 $547,874 $550,284 $554,826

Net Airfield Requirement $2,106,703 $2,194,167 $2,288,175 $2,383,116 $2,483,574

Landed Weight:

Saipan Main Terminal Landed Weight 802,803 810,831 818,939 827,128 835,400 Saipan Commuter Terminal Landed Weight 72,520 73,245 73,977 74,717 75,464 Rota Landed Weight 27,530 27,805 28,084 28,364 28,648 Tinian Landed Weight 63,036 63,666 64,303 64,946 65,595

Total Landed Weight 965,888 975,547 985,303 995,156 1,005,107

Landing Fees:

Average Landing Fee $2.18 $2.25 $2.32 $2.39 $2.47

International Landing Fee $2.28 $2.35 $2.42 $2.50 $2.58 Commuter / Rota / Tinian Landing Fee $1.71 $1.76 $1.82 $1.88 $1.93

Landing Fee Revenues:

International Landing Fees $1,828,166 $1,904,066 $1,985,645 $2,068,033 $2,155,209 Commuter / Rota / Tinian Landing Fees 278,537 290,101 302,531 315,083 328,365

Total Landing Fees $2,106,703 $2,194,167 $2,288,175 $2,383,116 $2,483,574

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 20 of 28 PREPARED ON 11/04/2015

deducted to yield the Airfield Requirement. Dividing the Airfield requirement by the total landed weight yields the International Landing Fee. The Landing Fee is differentiated so that the Landing Fee for the Commuter Airfield, Rota Airfield, and Tinian Airfield is 25 percent less than the landing fee for the Main Terminal.

1.9.2 TERMINAL RENTAL RATE A compensatory calculation for the Terminal Rental Rates is presented in Table 9A. The Terminal Requirement is equal to the sum of the previously described components for the Main Terminal Cost Center, Commuter Terminal Cost Center, Rota Terminal Cost Center and Tinian Terminal Cost Center less PFC revenues eligible for Debt Service and Coverage attributable in the Main Terminal Cost Center, Commuter Terminal Cost Center Rota Terminal Cost Center and Tinian Terminal Cost Center. Dividing the Terminal Requirement by the total rentable space in the terminal building yields the Average Terminal Rental Rate. The Average Terminal Rental Rate is then differentiated so that the terminal rental rate for Saipan Main Terminal is twice the terminal rental rate for the Commuter Terminal, Rota Terminal and Tinian Terminal. Nonsignatory airlines will be charged a 25 percent premium above the Signatory Airline rental rates at each respective airport.

Tables 9B-9D provide detail of joint use space at the Airport System allocated based on airlines proportionate enplanements.

1.9.3 PER USE FEES A Per Use Fee has been developed for Saipan Main Terminal to appropriately charge airlines utilizing shared space within the Main Terminal Building. Ticket Counters/Queuing Space and Holdrooms/Gates that can be utilized by more than one airline will collect use fees based on turns operated by the airlines. A calculation for the Per Use Fees at the Saipan Main Terminal is presented in Table 10.

The average leased airline space used for the Ticket Counters/Queuing Space - Per Use Fee is the sum of the total ticket counters space and the total queuing space (ticketing lobby area) divided by the total number of ticket counters in the terminal building. The Average Terminal Rental Rate is applied to the Average Leased Ticket Counter/Queuing Space to calculate the annual cost of average ticket counter/queuing space. The Per Use Fee is equal to the annual cost of average ticket counter/queuing space divided by the days of the year, divided by the average turns per day.

The Holdrooms/Gates – Per Use Fee equals the average Holdroom B gate size multiplied by the Average Terminal Rental Rate, divided by the days of the year and the average turns per day.

1.9.4 CASH FLOW AND COST PER ENPLANEMENT Table 11 presents the Cash Flow, Coverage Calculation and Cost Per Enplanement at the Airports.

PRELIMINARY DRAFT Page 21 of 28 PREPARED ON 11/04/2015 Table 9A Calculation of Average Terminal Rental Rate (Fiscal Year Ending September 30)

Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Terminal Expenses: Operating Expenses $9,262,022 $9,678,813 $10,114,359 $10,569,505 $11,045,133 Debt Service 934,560 930,452 937,931 930,031 927,186 Debt Service Coverage 233,640 232,613 234,483 232,508 231,797 Capital Equipment 220,246 226,854 233,659 240,669 247,889

Total CPA Expenses $10,650,468 $11,068,731 $11,520,432 $11,972,713 $12,452,005

Less: PFC Revenues for Debt Service & Coverage $159,568 $158,866 $160,143 $158,795 $158,309

Terminal Requirement $10,490,900 $10,909,865 $11,360,289 $11,813,918 $12,293,697

Total CPA Terminal Rentable Space (square feet) 254,384 254,384 254,384 254,384 254,384

Average Rental Rate (per square foot) $41.24 $42.89 $44.66 $46.44 $48.33

Total CPA Leased Terminal Space 116,386 116,386 116,386 116,386 116,386

Total Terminal Airline Rental Revenue $4,799,813 $4,991,498 $5,197,577 $5,405,122 $5,624,631

Terminal Rental Rates

Saipan Main: Average Signatory Rental Rate (per square foot) $44.40 $46.18 $48.08 $50.00 $52.03 Average Nonsignatory Rental Rate - 125% (per square foot) $55.50 $57.72 $60.10 $62.50 $65.04

Rota: 50% DISCOUNT Average Signatory Rental Rate (per square foot) $22.20 $23.09 $24.04 $25.00 $26.02 Average Nonsignatory Rental Rate - 125% (per square foot) $27.75 $28.86 $30.05 $31.25 $32.52

Tinian: 50% DISCOUNT Average Signatory Rental Rate (per square foot) $22.20 $23.09 $24.04 $25.00 $26.02 Average Nonsignatory Rental Rate - 125% (per square foot) $27.75 $28.86 $30.05 $31.25 $32.52

Signatory Airline Leased Space:

Saipan Main: Preferential Space 28,594 28,594 28,594 28,594 28,594 Joint Use Space 71,210 71,210 71,210 71,210 71,210

Total Saipan Main Signatory Airline Leased Space 99,804 99,804 99,804 99,804 99,804

Saipan Commuter: Preferential Space 894 894 894 894 894 Joint Use Space 5,118 5,118 5,118 5,118 5,118

Total Saipan Commuter Signatory Airline Leased Space 6,012 6,012 6,012 6,012 6,012

Rota: Preferential Space 1,437 1,437 1,437 1,437 1,437 Joint Use Space 4,901 4,901 4,901 4,901 4,901

Total Rota Signatory Airline Leased Space 6,338 6,338 6,338 6,338 6,338

Tinian: Preferential Space 879 879 879 879 879 Joint Use Space 3,354 3,354 3,354 3,354 3,354

Total Tinian Signatory Airline Leased Space 4,233 4,233 4,233 4,233 4,233

Signatory Airline Revenues by Leased Space at the Airport System:

Saipan Main: Preferential Space Revenue $1,269,677 $1,320,383 $1,374,896 $1,429,797 $1,487,863 Joint Use Space Revenue 3,161,982 3,288,259 3,424,018 3,560,743 3,705,349

Total Saipan Main Airline Rental Revenue $4,431,659 $4,608,642 $4,798,914 $4,990,540 $5,193,212

Saipan Commuter: Preferential Space Revenue $19,837 $20,630 $21,481 $22,339 $23,246 Joint Use Space Revenue 113,629 118,167 123,045 127,959 133,155

Total Saipan Commuter Airline Rental Revenue $133,466 $138,796 $144,527 $150,298 $156,402

Rota: Preferential Space Revenue $31,897 $33,170 $34,540 $35,919 $37,378 Joint Use Space Revenue 108,811 113,157 117,828 122,533 127,510

Total Rota Airline Rental Revenue $140,708 $146,327 $152,368 $158,452 $164,887

Tinian: Preferential Space Revenue $19,515 $20,295 $21,133 $21,976 $22,869 Joint Use Space Revenue 74,465 77,439 80,636 83,856 87,261

Total Tinian Airline Rental Revenue $93,980 $97,733 $101,768 $105,832 $110,130

Airport System Airline Rental Revenue:

Saipan Main Airline Terminal Rental Revenues $4,431,659 $4,608,642 $4,798,914 $4,990,540 $5,193,212 Saipan Commuter Airline Terminal Rental Revenues 133,466 138,796 144,527 150,298 156,402 Rota Airline Terminal Rental Revenues 140,708 146,327 152,368 158,452 164,887 Tinian Airline Terminal Rental Revenues 93,980 97,733 101,768 105,832 110,130

Total Terminal Airline Rental Revenue $4,799,813 $4,991,498 $5,197,577 $5,405,122 $5,624,631

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 22 of 28 PREPARED ON 11/04/2015 Tabel 9B Saipan Main Terminal Joint Use Space (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Calculation of Joint Use Space:

Enplanements by Airline:

Total Enplanements 529,955 535,255 540,607 546,013 551,473

Percent of Total Enplanements:

CO/AM Airlines 1% 1% 1% 1% 1% Dynamic Airlines 0% 0% 0% 0% 0% Delta Air Lines 17% 17% 17% 17% 17% Asiana Airlines 34% 34% 34% 34% 34% Pacific Orient, Inc. 0% 0% 0% 0% 0% Pacific Airport 0% 0% 0% 0% 0% China Eastern Airlines 11% 11% 11% 11% 11% Oren Air 0% 0% 0% 0% 0% Sichuan Airlines 16% 16% 16% 16% 16% Vladivostok Airlines 0% 0% 0% 0% 0% Jeju Airlines 15% 15% 15% 15% 15% Miscellaneous Airlines 0% 0% 0% 0% 0% Cape Air 7% 7% 7% 7% 7% Freedom Air 0% 0% 0% 0% 0%

Total 100% 100% 100% 100% 100%

Joint Use Space Allocated by Enplanement Market Share

CO/AM Airlines 605 605 605 605 605 Dynamic Airlines 00000 Delta Air Lines 11,842 11,842 11,842 11,842 11,842 Asiana Airlines 23,949 23,949 23,949 23,949 23,949 Pacific Orient, Inc. 90 90 90 90 90 Pacific Airport 00000 China Eastern Airlines 7,735 7,735 7,735 7,735 7,735 Oren Air 00000 Sichuan Airlines 11,586 11,586 11,586 11,586 11,586 Vladivostok Airlines 00000 Jeju Airlines 10,601 10,601 10,601 10,601 10,601 Miscellaneous Airlines 35 35 35 35 35 Cape Air 4,767 4,767 4,767 4,767 4,767 Freedom Air 00000

Total Joint Use Space 71,210 71,210 71,210 71,210 71,210

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 23 of 28 PREPARED ON 11/04/2015 Tabel 9C Saipan Commuter Terminal Joint Use Space (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Calculation of Joint Use Space:

Enplanements by Airline:

Star Marianas 35,372 35,726 36,083 36,444 36,808 Arctic Circle 638 645 651 658 664 Total Enplanements 36,011 36,371 36,734 37,102 37,473

Percent of Total Enplanements: Star Marianas 98% 98% 98% 98% 98% Arctic Circle 2% 2% 2% 2% 2%

Total 100% 100% 100% 100% 100%

Joint Use Space Allocated by Enplanement Market Share

Star Marianas 5,027 5,027 5,027 5,027 5,027 Arctic Circle 91 91 91 91 91

Total Joint Use Space 5,118 5,118 5,118 5,118 5,118

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 24 of 28 PREPARED ON 11/04/2015 Tabel 9D Rota Terminal Joint Use Space (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Calculation of Joint Use Space:

Enplanements by Airline: Arctic Circle 619 625 632 638 644 Star Marianas 4,790 4,838 4,887 4,936 4,985 CO/AM Airlines 1,313 1,326 1,339 1,353 1,366 Cape Air 2,579 2,604 2,630 2,657 2,683

Total Enplanements 9,301 9,394 9,488 9,583 9,679

Percent of Total Enplanements: Arctic Circle 7% 7% 7% 7% 7% Star Marianas 52% 52% 52% 52% 52% CO/AM Airlines 14% 14% 14% 14% 14% Cape Air 28% 28% 28% 28% 28%

Total 100% 100% 100% 100% 100%

Joint Use Space Allocated by Enplanement Market Share Arctic Circle 326 326 326 326 326 Star Marianas 2,524 2,524 2,524 2,524 2,524 CO/AM Airlines 692 692 692 692 692 Cape Air 1,359 1,359 1,359 1,359 1,359

Total Joint Use Space 4,901 4,901 4,901 4,901 4,901

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 25 of 28 PREPARED ON 11/04/2015 Tabel 9D Tinian Terminal Joint Use Space (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Calculation of Joint Use Space:

Enplanements by Airline: Freedom Air 00000 Star Marianas 30,170 30,471 30,776 31,084 31,395 Miami Air International 00000 Miscellaneous Airlines 328 332 335 338 342

Total Enplanements 30,498 30,803 31,111 31,422 31,736

Percent of Total Enplanements: Freedom Air 0%0%0%0%0% Star Marianas 99% 99% 99% 99% 99% Miami Air International 0%0%0%0%0% Miscellaneous Airlines 1% 1% 1% 1% 1%

Total 100% 100% 100% 100% 100%

Joint Use Space Allocated by Enplanement Market Share Freedom Air 00000 Star Marianas 3,318 3,318 3,318 3,318 3,318 Miami Air International 00000 Miscellaneous Airlines 36 36 36 36 36 Total Joint Use Space 3,354 3,354 3,354 3,354 3,354

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 26 of 28 PREPARED ON 11/04/2015 Table 10 Calculation of Per Use Fees - Saipan Main Terminal (Fiscal Year Ending September 30)

Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Calculation of Per Use Fees:

Per Use Fee - Ticket Counters and Queuing Ground Floor - Total Ticket Counter Space (square feet) 2,799 2,799 2,799 2,799 2,799 Ground Floor - Total Airline Queuing Space (square feet) 18,107 18,107 18,107 18,107 18,107

Total Leased Airline Ticket Counter and Queuing Space (square feet) 20,906 20,906 20,906 20,906 20,906

Divided by Total Number of Ticket Counters 12 12 12 12 12 Average Leased Ticket Counter Space (square feet) 1,742 1,742 1,742 1,742 1,742

Average Terminal Rental Rate - Saipan Main $44.40 $46.18 $48.08 $50.00 $52.03

Cost of Average Ticket Counters and Queuing Space $77,359 $80,448 $83,769 $87,114 $90,652 Divided by 365 365 365 365 365 365 Divided by Average Turns Per Day 44444

Per Use Fee - Ticket Counters and Queuing $52.99 $55.10 $57.38 $59.67 $62.09

Total Per Use Operations 11 11 11 11 12

Per Use Fees - Ticket Counters and Queuing $589 $618 $650 $683 $718

Per Use Fee - Holdrooms/Gates Second Floor - Average Holdroom B Gate Size (square feet) 6,109 6,109 6,109 6,109 6,109

Average Terminal Rental Rate - Saipan Main $44.40 $46.18 $48.08 $50.00 $52.03

Total Cost of Shared Holdrooms/Gates $271,262 $282,095 $293,741 $305,471 $317,876 Divided by 365 365 365 365 365 365 Divided by Average Turns Per Day 44444

Per Use Fee - Holdrooms/Gates $185.80 $193.22 $201.19 $209.23 $217.72

Total Per Use Operations 11 11 11 11 12

Per Use Fees - Holdrooms/Gates $2,064 $2,168 $2,280 $2,395 $2,517

Total Per Use Fees $2,653 $2,786 $2,930 $3,078 $3,235

Source: Commonwealth Ports Authority and Ricondo & Associates, Inc. Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 27 of 28 PREPARED ON 11/04/2015 Table 11 Cash Flow, Coverage Calculation, Cost Per Enplanement (Fiscal Year Ending September 30) Budget PROJECTED FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Aviation Revenues:

Landing Fees $2,106,703 $2,194,167 $2,288,175 $2,383,116 $2,483,574 Terminal Rental Revenues - Main Terminal 4,431,659 4,608,642 4,798,914 4,990,540 5,193,212 Terminal Rental Revenues - Commuter Terminal 133,466 138,796 144,527 150,298 156,402 Terminal Rental Revenues - Rota 140,708 146,327 152,368 158,452 164,887 Terminal Rental Revenues - Tinian 93,980 97,733 101,768 105,832 110,130 Per Use Fees 2,653 2,786 2,930 3,078 3,235 Parking 10,200 10,506 10,821 11,146 11,480 Incinerator 526,000 541,780 558,033 574,774 592,018 Triturator 6,600 6,798 7,002 7,212 7,428 Fuel Flowage 172,326 177,496 182,821 188,306 193,955

Total Aviation Revenues $7,624,295 $7,925,032 $8,247,361 $8,572,754 $8,916,321

Airport Non-Aviation Revenue 5,837,805 5,931,929 6,109,047 6,292,989 6,484,110

Total Aviation and Non-Aviation Revenues $13,462,100 $13,856,962 $14,356,407 $14,865,743 $15,400,431

Interest Income $17,001 $17,001 $17,001 $17,001 $17,001 PFC Revenues Available for Debt Service & Coverage 523,309 521,009 525,197 520,773 519,180

Total Revenues $14,002,411 $14,394,972 $14,898,605 $15,403,517 $15,936,613 Less: Operating Expenses $11,340,180 $11,850,488 $12,383,760 $12,941,029 $13,523,376 Debt Service 1,386,250 1,380,156 1,391,250 1,379,531 1,375,313

Net Remaining Revenues $1,275,981 $1,164,327 $1,123,595 $1,082,956 $1,037,924

Total Revenues $14,002,411 $14,394,972 $14,898,605 $15,403,517 $15,936,613 Operating Expenses 11,340,180 11,850,488 12,383,760 12,941,029 13,523,376

Net Revenues $2,662,231 $2,544,484 $2,514,845 $2,462,488 $2,413,237

Debt Service $1,386,250 $1,380,156 $1,391,250 $1,379,531 $1,375,313

Debt Service Coverage 1.92 1.84 1.81 1.79 1.75

Cost Per Enplanement:

Total Landing Fees $2,106,703 $2,194,167 $2,288,175 $2,383,116 $2,483,574 Total Terminal Rental Revenues 4,799,813 4,991,498 5,197,577 5,405,122 5,624,631 Total Per Use Fees 2,653 2,786 2,930 3,078 3,235 Parking 10,200 10,506 10,821 11,146 11,480 Incinerator 526,000 541,780 558,033 574,774 592,018 Triturator 6,600 6,798 7,002 7,212 7,428 Fuel Flowage 172,326 177,496 182,821 188,306 193,955

Total Aviation Revenues $7,624,295 $7,925,032 $8,247,361 $8,572,754 $8,916,321

Total Enplanements 605,765 611,822 617,941 624,120 630,361

Cost Per Enplanement $12.59 $12.95 $13.35 $13.74 $14.14

Source: Commonwealth Ports Authority Prepared by: Ricondo & Associates, Inc.

PRELIMINARY DRAFT Page 28 of 28 PREPARED ON 11/04/2015