BOARD of TRUSTEES PRESIDENT/CEO Andy Wirth, Chair Marily M

BOARD OF TRUSTEES PRESIDENT/CEO Andy Wirth, Chair Marily M. Mora, A.A.E. Rick Murdock, Vice Chair EXECUTIVE VICE-PRESIDENT/COO Nat Carasali, Secretary Dean E. Schultz, A.A.E. Jerry Hall, Treasurer GENERAL COUNSEL Bill Eck Ann Morgan, Fennemore Craig Lisa Gianoli CLERK OF THE BOARD Adam Mayberry Claire Johnson Jenifer Rose Jessica Sferrazza

RENO-TAHOE AIRPORT AUTHORITY MEETING OF THE BOARD OF TRUSTEES February 11, 2016 9:00 a.m. Board Room, Administrative Offices Second Floor, Main Terminal Building Reno-Tahoe International Airport Reno, Nevada

Items V, VI, VIII, IX and XII are action items for the Board to consider. The Board may discuss a matter when it is brought up, but no action may be taken on it unless it has been specifically included on an agenda as an action item.

Public comment at the Board meeting will be allowed on agenda items as well as non-agenda items. Persons are invited to submit comments in writing on agenda items and/or attend and make comment on that item at the Board meeting. Requests to speak on a particular item should be submitted to the Clerk of the Board before the item is called by the Chairman.

I. PLEDGE OF ALLEGIANCE

II. ROLL CALL

III. PRESENTATIONS AND AWARDS A. Employee, Tenant and Special Recognition B. Introduction of New, Promoted and Retired Employees C. Tenant Communication

IV. PUBLIC COMMENT, if any – Limited to three minutes per person

V. APPROVAL OF MINUTES – January 14, 2016 Board Meeting Minutes

VI. APPROVAL OF AGENDA

VII. COMMITTEE AND LIAISON REPORTS A. Finance and Business Development Committee B. Planning and Construction Committee C. Airport Noise Advisory Panel (ANAP) D. Community Outreach Committee (COC) E. Stead Liaison F. RSCVA Board Board Agenda February 11, 2016 Board Meeting Page 2 of 3

G. Air Service Liaison H. The Chamber Reno Sparks Northern Nevada I. Reno-Tahoe International Airport Users Committee J. Compensation Committee

VIII. CONSENT ITEMS FOR BOARD ACTION

A. #16(02)-03 Authorization for the President/CEO to Execute an Agreement with Boyd Group International, Inc. to Host the 21st Annual International Aviation Forecast Summit on September 18-21, 2016, in an Amount not to Exceed $275,000

IX. ITEMS FOR BOARD INFORMATION, DISCUSSION AND POSSIBLE ACTION

A. #16(02)-04 Authorization for the President/CEO to Execute a Memorandum Of Understanding with Dermody Properties and Hillwood Investment Properties to Serve as the Exclusive Master Real Estate Developer at the Reno-Stead Airport and Negotiate Final Terms, and Execute (1) an Exclusive Master Development Agreement, and (2) a 50-Year Phase 1 Ground Lease with Dermody Properties and Hillwood Investment Properties

X. ITEMS FOR BOARD INFORMATION AND DISCUSSION

A. Presentation 1. Fiscal Year 2015-16 Reno-Tahoe Airport Authority Mid-Year Financial Review 2. RTAA Website Redesign with Air Service Themed Improvements

B. Board Meeting Schedule 1. March 8, 2016 9:00 am Finance & Business Development Committee Meeting 2. March 8, 2016 10:00 am Planning & Construction Committee Meeting 3. March 10, 2016 9:00 am Board of Trustees Meeting 4. April 12, 2016 9:00 am Finance & Business Development Committee Meeting 5. April 12, 2016 10:00 am Planning & Construction Committee Meeting 6. April 14, 2016 9:00 am Board of Trustees Meeting 7. April 14, 2016 TBD * FY 2016-2017 Budget Workshop

∗ Immediately Following Board of Trustees Meeting

C. President/CEO’s Report

D. General Board comments, questions, and items for future Board meetings

XI. PUBLIC COMMENT, if any – Limited to three minutes per person

XII. ADJOURNMENT

Items will not necessarily be considered in the sequence listed. This meeting may be continued if all of the items are not covered in the time allowed. If the meeting is to be continued, the time and place will be announced at the end of the portion of the meeting to be continued. Board Agenda February 11, 2016 Board Meeting Page 3 of 3

SUPPORTING MATERIAL: The designated contact to obtain supporting material is Claire Johnson, Clerk of the Board, P.O. Box 12490, Reno, NV, 89510 or 775-328-6410. Supporting material is also available at the Reno-Tahoe Airport (Administrative Offices) and at the scheduled meeting.

Members of the public who are disabled and require special accommodations or assistance at the meeting are requested to notify the Clerk of the Board in writing at P.O. Box 12490, Reno, Nevada 89510 or by calling (775) 328-6410 prior to the meeting date.

THIS AGENDA HAS BEEN POSTED AT THE FOLLOWING LOCATIONS: 1. Airport Authority Administrative Offices – 2001 E. Plumb Lane, Reno 3. Reno City Hall – One East First Street, Reno 2. Washoe County Administrative Offices – 1001 E. 9th Street, Reno 4. Sparks City Hall – 431 Prater Way, Sparks

RENO-TAHOE AIRPORT AUTHORITY BRIEF OF MINUTES MEETING OF THE BOARD OF TRUSTEES January 14, 2016 9:00 a.m.

MEMBERS PRESENT ALSO PRESENT Andy Wirth, Chair Marily M. Mora, A.A.E. Rick Murdock, Vice Chair President/CEO Jerry Hall, Treasurer Dean Schultz, A.A.E. Bill Eck (via phone) Executive Vice President/COO Lisa Gianoli Ann Morgan Adam Mayberry General Counsel Jenifer Rose Claire Johnson Jessica Sferrazza Clerk of the Board

MEMBERS ABSENT/EXCUSED Nat Carasali, Secretary

The Board of Trustees met in the Board Room, Airport Authority Administrative Offices, Reno-Tahoe International Airport, Reno, Nevada. Chairman Andy Wirth called the meeting to order. The Pledge of Allegiance was recited.

III. PRESENTATIONS AND AWARDS A. Employee, Tenant and Special Recognitions Marily Mora, President/CEO, announced the recipient of the Quarterly Employee 1st Class Award for the 4th Quarter of 2015. Paula Jo Squier, Property Technician at the Mini Warehouse, was recognized for her commitment to the organization and embracing the RTAA values. Ms. Mora stated that Ms. Squier gives 100% to her job duties, and is committed to customer service and cultivating good relationships with Airport tenants. Ms. Mora congratulated Ms. Squier on this well-deserved award. Ms. Squier said she is privileged and honored to be a Reno-Tahoe Airport Authority (RTAA) employee, and expressed her gratitude for being the recipient of the award.

B. Introduction of New, Promoted and Retired Employees Dean Schultz, Executive Vice President/COO, recognized one employee on her recent promotion – Rose Martin was promoted to the position of Airport Communications Specialist effective December 21, 2015.

C. Tenant Communication None.

Meeting of the Board of Trustees January 14, 2016 Brief of Minutes Page 2 of 9

IV. PUBLIC COMMENT (limited to 3 minutes) None.

V. APPROVAL OF MINUTES On motion by Trustee Gianoli, seconded by Trustee Murdock, which motion duly carried by unanimous vote, the Board approved the minutes from the Board of Trustees meeting of December 10, 2015.

VI. APPROVAL OF AGENDA On motion by Trustee Rose, seconded by Trustee Mayberry, which motion duly carried by unanimous vote, the Board approved the January 14, 2016 Board of Trustees meeting agenda.

VII. COMMITTEE / LIAISON REPORTS Committee / Liaison reports were given by:

A. Finance and Business Development Committee – Trustee Jerry Hall B. Planning and Construction Committee – Trustee Adam Mayberry C. Airport Noise Advisory Panel – Trustee Jenifer Rose D. Community Outreach Committee (COC) – Trustee Jessica Sferrazza E. Stead Liaison – Dean Schultz F. RSCVA Board – Chair Andy Wirth (in Trustee Carasali’s absence) G. Air Service Liaison – Trustee Rick Murdock H. The Chamber Reno Sparks Northern NV – Marily Mora I. Reno-Tahoe International Airport Users Committee – Trustee Adam Mayberry J. Compensation Committee – Chair Andy Wirth

Chair Wirth acknowledged City of Reno Councilwoman and Alternate RTAA Liaison Naomi Duerr as being present in the audience.

VIII. CONSENT ITEMS FOR BOARD ACTION A. #16(01)-01 Authorization for the President/CEO to Execute a Professional Services Agreement for Design Work and Pavement Inspections for the 2016 Airfield and Landside Pavement Management System Program at Reno-Tahoe International Airport and Reno-Stead Airport, with Stantec, in the Amount of $240,800

On motion by Trustee Sferrazza, seconded by Trustee Hall, which motion was duly carried by unanimous vote, the Board approved Agenda Item #16(01)-01 as follows: Authorized the President/CEO to Execute a Professional Services Agreement for Design Work and Pavement Inspections for the 2016 Airfield and Landside Pavement Management System Program at Reno-Tahoe International Airport and Reno-Stead Airport, with Stantec, in the Amount of $240,800.

IX. ITEMS FOR BOARD INFORMATION, DISCUSSION AND POSSIBLE ACTION

A. #16(01)-02 Discussion and Possible Action on a Salary Adjustment for Fiscal Year 2014/2015 for President/CEO Marily Mora Meeting of the Board of Trustees January 14, 2016 Brief of Minutes Page 3 of 9

Chair Wirth referenced his notes for the January 5th Compensation Committee, and the 2013 ADK recruitment brochure from when current President/CEO Marily Mora was hired, both of which were provided as information to all Trustees. He stated that the ADK recruitment brochure validates the base compensation package and that the recent ADK salary comparison report further affirms that it was appropriate. Chair Wirth indicated that he sought and has not heard any deficiencies on the CEO’s performance of the stated objectives. He opened the floor for comments from Trustees.

Trustee Mayberry indicated that he feels the CEO’s ethics and professionalism is beyond reproach. He stated that after much reflection, he cannot support the recommendation. While fundamentally he is not opposed to an increase in salary, his trepidation was doing it in conjunction with the 20% bonus awarded, which he supported at the December 2015 Board meeting. Trustee Mayberry said that in going forward, he’d prefer that the Board find a more modest approach within the confines of the CEO’s employment contract, as opposed to awarding a 20% bonus and a salary increase. This coming December, his expectations are that the Board will once again be discussing a 20% bonus for the CEO for the third time, and a likely salary increase. It was Trustee Mayberry’s view that continuing to go down this path annually is excessive for a public agency CEO. He agreed wholeheartedly that the Airport CEO’s compensation should be compared to peers at other Airports, and not to City or County Managers, or local governing agencies, or to the Reno-Sparks Convention and Visitors Authority (RSCVA) CEO. He stated that if it is the RTAA CEO’s salary range that the Board wants to focus on and build on, he will be willing to support that, but that the bonus potential must be reduced. Modest change in the CEO’s overall compensation will still provide for the excellence that the Board seeks. His decision was not about the CEO’s excellent performance, but about finding a balance and a more modest approach with which the CEO can be compensated and rewarded for her performance. Trustee Mayberry indicated that if today a majority of Board members support future discussions on finding a more modest path to reward the CEO going forward, as well as a reduction in the proposed 5% salary increase, he could probably support such a recommendation.

Trustee Rose said that as she stated during the vote on the CEO bonus, Ms. Mora and her team do a fantastic job, and as a result we have a great Airport. With that said, she asserted that bonuses are performance based – if you perform at an exceptional level you should get an exceptional addition to your competitive salary. Trustee Rose also stated that you have to have a competitive salary, bonus and benefits package to retain a great CEO. She said the challenge she is having is that the analysis provided did not compare packages, it only compared salaries, and therefore is not a true comparison of all the information. If the CEO of another airport has a salary of $15,000 more than our CEO, but their maximum bonus potential is $15,000 or $20,000, our CEO will still have the ability to earn more money annually, making the potential bonus and other benefits an important part of that competitive comparison. Trustee Rose expressed concern that the analysis did not take geographical location into consideration. She said she understands that Ms. Mora and her team has done a fantastic job and that 100% of the goals were accomplished, however compensation for that was done in awarding the maximum bonus, which Trustee Rose fully supported. When taking salary, bonus, PERS, car allowance, and geographical location into consideration, she was not convinced that a 5% raise is necessary to remain competitive. Trustee Rose said that as a result, she will not support a full 5% raise.

Meeting of the Board of Trustees January 14, 2016 Brief of Minutes Page 4 of 9

Chair Wirth said that Trustee Rose’s comments were reflected on and discussed at the Compensation Committee and that it is important to note they were taken into account. He suggested that the discussion point relates more to the Boards that preceded the current Board, and that is why the ADK recruitment brochure was provided for the current Trustees’ reference. Those items of base compensation could have and should have been reviewed and confirmed contractually three years ago. Chair Wirth stated he recognizes and appreciates what Trustee Rose is saying, but felt those elements are more appropriately discussed upon renewal of an employment agreement. It will be incumbent on this Board to discuss that as a future item when it comes time to renew the agreement. With regard to those other elements, it would take a great deal of time and at a significant cost for an agency to provide a thorough objective analysis.

Trustee Eck indicated he is in favor of the 5% increase. A list of goals was given to the CEO and she completed them all. When Ms. Mora was hired, she hit the ground running and deserves the increase that is being discussed.

Trustee Sferrazza said she agrees with a lot of what Trustee Mayberry and Rose have said, in the sense that it is important to compare all the information, to take into consideration geographical location, and to consider the fact that PERS is paid at this level. With that being said, Trustee Sferrazza stated the CEO has done a great job and therefore she will support the 5% raise. Trustee Sferrazza said that her issue was with the bonus, and that it was excessive. She said she believes that the employees and the CEO are what make an organization great. In looking at what other high performing RTAA employees got, they got 5%. In comparison to other airports, no one in the community will disagree that this Airport is top-notch; it is clean, the staff are friendly from the custodial staff all the way up the CEO, and the staff is incredible. Trustee Sferrazza said her concern is with what Trustee Mayberry pointed out, and that a 20% bonus on top of a 5% salary increase is too high. Moving forward, adjustments need to be made to the bonus structure so that the increases do not compound one another, resulting in moving outside the salary range for the CEO of the Authority.

Chair Wirth indicated that addressing these points and further vetting them will be a future action item for the Compensation Committee.

Trustee Hall added his concerns about the bonus and salary increase amounts, and the missing elements of the salary comparisons. Of the 28 comparables included in the matrix reported by ADK, Trustee Hall said about 7 or 8 of them are closest in number to RNO enplanements, and are the ones he would like to have additional information provided. He reiterated the importance of looking at the other variables included in a salary package because they affect how the salary range is set. Of particular importance is the PERS benefit. In regard to the recent ADK report, Trustee Hall looked at the competitive market salary range, and the median in that range is $264,000. With a 5% increase, it will bring the CEO’s salary to $240,000, which is below the median provided in the report. In looking back to the advertised starting salary range, it was $210K to $235K. There was general agreement among the Board at that time, that at some point there would need to be adjustments made. Trustee Hall stated he is in support of the salary increase as presented, but he wanted to remind the Board that the language in the employment contract is very clear. The bonus is at the sole discretion of the Board, and even with the fact that weights have been set per goal, it remains at the discretion of the Board. Meeting of the Board of Trustees January 14, 2016 Brief of Minutes Page 5 of 9

Trustee Sferrazza asked General Counsel to confirm whether or not it is at the discretion of the Board. Ann Morgan, General Counsel, stated that the bonus amount is at the discretion of the Board and the Board has exercised that discretion by setting weights to the goals.

Chair Wirth stated that in 2014, there was a great deal of in depth discussion about those weights. The goal was to put forth objectivity that was tied to the strategic plan and mission of the organization, so that the Board’s discretion could be exercised in a professional and objective fashion.

Trustee Hall said the reason he raised that point was to remind the Trustees that the percentage and the way it is weighted can be changed by the Board, perhaps not in this fiscal year, but going forward. Trustee Hall stated there are other dimensions, beyond the goals and objectives that have been set, that need to be considered, i.e. responsiveness, satisfaction of staff, and the general satisfaction with the performance of the CEO beyond those objectives. In Trustee Hall’s view, those other dimensions are critical to evaluating the overall performance of the CEO of this organization. If focus is placed solely on the objectives that have been set and approved by the Board, then the Trustees need to task themselves with a more stringent review and approach. If there is a lack of satisfaction with other things that are going on in the organization, there needs to be a way to express that.

Trustee Gianoli related to the concerns and thoughts shared by the other Trustees. She said what brought her to her decision was the additional data received, the ADK report, the discussion of the original recruitment, and Ms. Mora’s outstanding performance. She stated the discussion about what adjustments might be made in the future will make for a better process.

Trustee Murdock stated he appreciates everyone’s perspective. When he considered the CEO’s performance and the Airport’s performance as a team, he looked at how big of an impact and how important it is in terms of what the Airport does for this region. It is not just flights and seats on airplanes; it is job creation and economic impact well beyond tourism. It is important to recognize that the Airport is different than any business or quasi municipal agency in the State, and Trustee Murdock said that to play in this arena, you’ve got to have big thinkers and big doers, and the Airport team has done that. He said that he is in favor of the 5% increase, but going through the discussion process has been well worth it.

Chair Wirth indicated he will be voting in favor of this item. He said he cannot express anymore sincerely or with more genuine thought the concept of diversity of perspectives; it is what makes a healthier and stronger organization. He also acknowledged that the discussion has been difficult, public, and challenging. Since his involvement on the Compensation Committee, he has heard no deficiencies in performance or any areas that need improvement. He asserted the Board should recognize that there is an achieved objective, and that is to have hired a high performing CEO. From working with CEO’s of several other airports, Chair Wirth said in his perspective, Ms. Mora’s performance is among the highest. It will be his intent in the Compensation Committee, to move into an objective, transparent, and professional review of the variables that have come into question, as well as the process. He also stated that in the end, the Committee may find that when looking at total compensation packages of other airports, our CEO may be underpaid. Meeting of the Board of Trustees January 14, 2016 Brief of Minutes Page 6 of 9

On motion by Trustee Gianoli, seconded by Trustee Murdock, which motion was duly carried by 6 ayes and 2 opposed votes, the Board approved Agenda Item #16(01)-02 as follows:

Approved a salary increase of 5% in the amount of $11,440.00 for President/CEO Marily Mora for Fiscal Year 2014/2015.

Ms. Mora thanked the Board and said that this is about the performance of the organization, and it is about the team. Fiscal year 2014-2015 was a break out year, including everything from the financial results, the operational results and FAA inspection, the addition of two new airlines, and the reestablishment of international air service. She acknowledged the phenomenal job of the team. After this vote today, Ms. Mora stated she plans on going back individually to each Trustee, because there is always room for improvement, and she wants to seek the Trustee’s ideas to maintain a high performing organization.

X. ITEMS FOR BOARD INFORMATION AND DISCUSSION

A. Presentations 1. Ms. Mora introduced Mark Cameron, Manager of Landside Operations, to give an update on the status of Transportation Network Companies (TNC) at the Airport. Mr. Cameron stated he would be providing a brief presentation about the Airport’s efforts to get the TNCs up and fully operational.

He began by orienting the Trustees to where the Ground Transportation (GT) pick-up area is located at the north end of the terminal. Inside the fenced area is where all permitted GT operators pick up customers and the fence line establishes a TSA 300’ perimeter. Inside this gated and secured area, GT operators are not allowed to leave their vehicles unattended. He explained where each type of GT operator queues up to wait for fares. Each permit holder utilizes a transponder attached to the windshield of every fleet vehicle and has an individualized number and electronic symbol that is read at entry and exit. This tracks operators so that the Airport can charge the appropriate pick up fees. Mr. Cameron pointed out the new Area D assigned to the TNCs and where drivers for Uber and Lyft will pick up their customers.

The Airport began discussions with the TNCs in September 2015 and the goal was twofold. The first was to get the TNCs operating at the Airport as quickly as possible by integrating them into the existing GT operation. Second, was to satisfy the Airport’s obligations under grant assurances to treat the TNCs equitably with regard to how existing GT operators are allowed to operate. To that end, a number of meetings with the TNCs were held and the Airport offered them the existing GT permit which includes the use of the transponders. State of Nevada permits were granted to Uber and Lyft on September 14th. At that time, while the permit process to pick up fares was not finalized, Uber and Lyft were allowed to drop customers off at no cost, which is the same for all GT operators.

The Airport encouraged the TNCs to utilize the transponders to begin customer pickups immediately. The TNCs were reluctant to utilize the transponders as it does not fit into their business model. As a result, staff began discussing possible alternatives on how to facilitate some other process for the TNCs without the use of transponders. Staff proposed an Meeting of the Board of Trustees January 14, 2016 Brief of Minutes Page 7 of 9

alternative plan using a pick up location outside the secure area. The proposed plan was to implement a tracking and audit option using geofencing technology as an add on to the current taxi dispatch system provider, Gatekeeper Systems. Geofencing is a practice of tracking drivers within a specific geographic boundary using global positioning systems (GPS) technology, and by creating a virtual boundary around the entire Airport property using a GPS application on the drivers’ phones. Both Uber and Lyft agreed to the geofencing alternative with the use the Gatekeeper system and the outer pickup location.

Mr. Cameron said the next steps to get Uber and Lyft operating at the Airport are finalizing the TNC specific GT permit, modifying the existing dispatch system, establishing the geofencing perimeter for operation tracking and auditing, setting up wayfinding signage for drivers and passengers, briefing Security and Landside Operations staff on the new processes, and kicking off the operation. In closing, Mr. Cameron stated that the Airport is looking forward to Uber and Lyft being fully operational by the 2nd weekend in February, if not sooner.

Ms. Mora stated the Airport is excited to be offering this as a customer amenity.

Chair Wirth referenced Uber’s market capitalization as one expression of their success, which is in excess of $65B. He mentioned the ride share program called Uber Pool which is a cost and time effective method of transit, and hopes that Uber Pool will eventually be deployed in this area. It has been in beta testing in the Bay area for the better part of a year and has been successful. It will benefit the catchment area should Uber decide to deploy Pool, and he asked Mr. Cameron for his opinion on that possibility. Mr. Cameron indicated there has been no mention of Pool being used in Reno at this time.

Trustee Mayberry asked if the airports in Sacramento and Los Angeles are utilizing TNCs. Mr. Cameron responded yes and that Las Vegas is utilizing the same technology that RNO will be using. Trustee Mayberry said that one of the most frequently asked questions has been when Uber and Lyft would be coming, and therefore it may be advantageous to do a public relations kick off. Trustee Sferrazza concurred with Trustee Mayberry that a roll out will be important. Ms. Mora stated there will be a kickoff event.

B. Board Meeting Schedule Chair Wirth referred to the schedule of upcoming meetings. He mentioned the Boyd Aviation Forecast Summit and suggested that Trustees place that on their calendars.

1. February 9, 2016 9:00 am Finance & Business Development Committee Meeting 2. February 9, 2016 10:00 am Planning & Construction Committee Meeting 3. February 11, 2016 9:00 am Board of Trustees Meeting 4. March 8, 2016 9:00 am Finance & Business Development Committee Meeting 5. March 8, 2016 10:00 am Planning & Construction Committee Meeting 6. March 10, 2016 9:00 am Board of Trustees Meeting

C. President/CEO’s Report Ms. Mora referred the Trustees to the written President/CEO Report included in their Board binders. Meeting of the Board of Trustees January 14, 2016 Brief of Minutes Page 8 of 9

She highlighted the dates of the Boyd Aviation Forecast Summit that is scheduled to start on September 18th at Squaw Valley, which is the last day of the National Championship Air Races. The site visit occurred on January 4th and 5th at Squaw Valley. It will be a wonderful opportunity to showcase everything that is going on economically in this community and region to numerous airlines CEOs and their leadership teams. There will also be a stellar opportunity to hold a host dinner on the evening of September 18th up at High Camp at Squaw Valley. All Trustees will be invited to the dinner and have the opportunity to meet these CEOs and tell them about what’s going on in our community.

Ms. Mora shared how upbeat staff is about the future at Reno-Stead Airport with UAS and the NUANCE lab that is under fast-paced construction and should be finished by the end of February. There will be a grand opening event when the NASA logo goes up on the Stead terminal building. It has taken awhile to realize the potential for UAS at Stead but this initiative is really bringing it home.

Chair Wirth added that a request has been made to Mike Boyd to be a presenter for “Air Service 301” series of presentations. Mr. Boyd is outspoken and one of the most quoted individuals in global commercial air service on virtually every aspect of manufacturing, commercial air service, and what’s going on with their market cap, etc. It will be very important to showcase the region, toward supplemental air service and the relationships that will start at this conference. Ms. Mora added that Mr. Boyd was very taken with the Paws 4 Passengers during the welcome that was conducted when Mike and Marion Boyd arrived at the Airport.

D. General Board Comments, Questions, and Items for Future Board Meetings Chair Wirth asked each Trustee for any comments, questions, or items for future Board meetings that they may have.

Trustee Sferrazza asked that an update be provided to the Trustees regarding the investigation of Customs and Board Protection (CBP), either by adding it to the Board agenda for the next meeting, or in a closed session.

Several Trustees expressed their appreciation of Ms. Mora and the Airport team, and thanked Chair Wirth for facilitating the CEO’s performance evaluation process. Trustee Eck congratulated the entire team on landing the Boyd Conference.

There were no further comments.

XI. PUBLIC COMMENT Naomi Duerr, City of Reno Councilwoman and Alternate Liaison to the RTAA, gave comment on several items related to traveling through this and other airports, including the availability and convenience of TSA Pre-check at RNO, the absence of female TSA Agents to do pat downs at RNO, her experience at Lambert-St. Louis International Airport regarding availability of curbside check-in and passenger ability to leave their vehicles at curbside to check-in, and the availability, or lack thereof, of activities for passengers to engage in when weather delays increase the time spent waiting at the Airport.

Meeting of the Board of Trustees January 14, 2016 Brief of Minutes Page 9 of 9

Ms. Duerr mentioned the City of Reno’s sustainability initiatives and their newly hired Manager of Sustainability Programs, Lynn Barker. She suggested that a partnership be formed between the City and the Airport. Ms. Mora responded that Ms. Barker has reached out to the RTAA and a meeting is set.

Chair Wirth asked if curbside check in is a decision made by each air carrier. Ms. Mora stated yes it is the airlines’ decision whether to provide these services or not.

XII. ADJOURNMENT There being no further business, the meeting was adjourned at 10:47 am.

______Chair Andy Wirth

ATTEST:

______Secretary Nat Carasali

Board Memorandum Reno-Tahoe Airport Authority

Date: February 3, 2016 Memo: # 16(02)-03 To: Chairman & Board Members For: February 11, 2016 Board Meeting From: Marily M. Mora, A.A.E., President/CEO Subject: AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE AN AGREEMENT WITH BOYD GROUP INTERNATIONAL, INC. TO HOST THE 21ST ANNUAL INTERNATIONAL AVIATION FORECAST SUMMIT ON SEPTEMBER 18-21, 2016, IN AN AMOUNT NOT TO EXCEED $275,000

STAFF RECOMMENDATION Staff recommends that the Board authorize the President/CEO to execute an agreement with Boyd Group International, Inc. to host the 21st Annual International Aviation Forecast Summit on September 18-21, 2016, in an amount not to exceed $275,000.

PURPOSE This action requests authorization for the President/CEO to execute an agreement to host the 21st Annual International Aviation Forecast Summit (the Summit). This action is in support of the Reno-Tahoe Airport Authority (RTAA) Strategic Priority #1 – Increase Air Service, as adopted in the RTAA Fiscal Year (FY) 2014-2018 Comprehensive Strategic Plan. The Airport Authority strategic plan also incorporates long-term goals to “maintain scheduled airline service and strengthen relationships with existing air carriers,” as well as to “pursue new or expanded air service opportunities resulting in a net gain in air service.” The Summit offers the opportunity for both.

BACKGROUND Over the last two decades, the Boyd Group International Aviation Forecast Summit has evolved into the industry’s most prestigious and insightful air service event. Boyd Group International brings together the world’s most influential and respected airline and airport professionals, and provides attendees with an invaluable amount of knowledge and perspective on the airline industry. For the airport and host cities, the Summit, with approximately 450-500 attendees, delivers unparalleled exposure to airline decision-makers from around the globe, as well as major players in the industry, from financial institutions, to manufacturers and suppliers. Typically, there are between 80-100 airline representatives from over 30 airlines worldwide. In addition, aviation professionals from over 20 nations attend the Summit.

DISCUSSION As previously mentioned, hosting the Summit is in direct support of the Airport Authority’s Strategic Plan. Unlike most aviation conferences, this particular conference is specifically focused on air service planning and will provide staff and regional partners an invaluable opportunity to not only interact with but also influence airline decision-makers, while simultaneously showcasing the spectacular Reno-Tahoe region.

Face-to-face opportunities for staff to talk directly with high-ranking executives from incumbent and potential new airlines are extremely difficult and nearly impossible to obtain. Many of these airline executives have never visited the Reno-Tahoe region and have misperceptions about what we have to offer. Now is the ideal time to showcase our vibrant and diverse region, and our Boyd Group Agreement – 2016 21st International Aviation Forecast Summit # 16(02)-03 February 11, 2016 Board Meeting Page 2 of 3

exciting economic growth. The RTAA will have the opportunity to change impressions and potentially influence future air service decisions that could have great financial impact on our local community. Coupled with current air service initiatives, hosting the Summit provides the Airport Authority and the Reno-Tahoe region an opportunity to maintain our recent air service wins and garner new ones that will set the stage for continued regional growth.

The conference host will have a variety of opportunities to host social networking events, including a private VIP dinner for airline CEOs and other key airline decision-makers. This one- on-one interaction with airline CEOs provides a rare opportunity for the Airport Authority and our community partners to showcase and tout what the region has to offer in terms of tourism, business, and regional partnerships.

For the past two consecutive years, the Summit has been held in Las Vegas. The RTAA was pleased to be a finalist alongside the Las Vegas Convention & Visitors Authority (LVCVA) and the Sacramento County Department of Airports. The ultimate decision to bring the Summit to the Reno-Tahoe area was the fact that we could offer a unique experience.

Boyd Group International was particularly interested in holding this conference in the mountains and specifically at Lake Tahoe. Strategically, the Airport Authority recognized that their Lake Tahoe preference required us to compete primarily with Sacramento. Because of this, the Airport Authority teamed up with Squaw Valley Ski Holdings and the Resort at Squaw Creek to offer attendees a “gold medal experience.” Both properties will share venue responsibilities and offer the wonderful hospitality for which our region is known.

In order to ensure that our local community has the opportunity to showcase itself, the Airport Authority has committed to coordinating a pre-conference package to include the National Championship Air Races. Between the pre-conference packages and the post-conference need to have blocks of rooms available for those departing Reno on early morning flights, the Reno- Sparks hotel properties will be involved in hosting CEOs and providing accommodations for some of the conference attendees.

COMPANY BACKGROUND Boyd Group International, Inc. is based out of Evergreen, Colorado. Since being founded in 1984, Boyd Group International (BGI) has been at the forefront of aviation thought-leadership. Their insight and perspectives on aviation issues draw clients from a broad spectrum of the aviation world. BGI’s clients have included airlines, aircraft manufacturers, airports, and financial institutions. Their goal is to assist entities throughout the aviation industry in providing excellence and innovation in consulting, research, forecasting, and strategic futuristic planning. Their annual International Aviation Forecast Summit is considered the only event of its kind.

FISCAL IMPACT If approved, the agreement includes an honorarium in the amount of $100,000. This non- negotiable fee, to host the conference, is paid directly to BGI. With the Board’s review of the mid-year budget, $75,000 of the total $100,000 will be paid for from the current fiscal year 2015-2016 Air Service Development Operating and Maintenance budget, utilizing funds realized from personnel savings. An additional $25,000 would be paid from this same funding source and used to cover site visits and other expenses incurred in the current fiscal year.

Boyd Group Agreement – 2016 21st International Aviation Forecast Summit # 16(02)-03 February 11, 2016 Board Meeting Page 3 of 3

The remaining $175,000 would be budgeted and realized in fiscal year 2016-2017, and would be utilized for the final conference fee and additional costs associated with hosting the conference, such as event production, transportation, protocol gifts, conference promotion, signage, and more. Staff will work with regional partners to secure sponsorships and in-kind services to offset some of these costs.

If sponsorships are not secured, the maximum financial risk to the Airport Authority would be $275,000.

COMMITTEE COORDINATION This item is scheduled to be presented at the February 9, 2016 Finance & Business Development Committee meeting.

RECOMMENDATION It is hereby recommended that the Board adopt the following motion:

“It is hereby moved that the Board authorizes the President/CEO to execute an agreement with Boyd Group International, Inc., to host the 21st Annual International Aviation Forecast Summit on September 18-21, 2016, in an amount not to exceed $275,000, and authorizes the President/CEO or her designee to sign.”

MMM/tt/cj

Board Memorandum Reno-Tahoe Airport Authority

Date: February 3, 2016 Memo: # 16(02)-04 To: Chairman & Board Members For: February 11, 2016 Board Meeting From: Marily Mora, A.A.E., President/CEO Subject: AUTHORIZATION FOR THE PRESIDENT/CEO TO EXECUTE A MEMORANDUM OF UNDERSTANDING WITH DERMODY PROPERTIES AND HILLWOOD INVESTMENT PROPERTIES TO SERVE AS THE EXCLUSIVE MASTER REAL ESTATE DEVELOPER AT THE RENO- STEAD AIRPORT AND NEGOTIATE FINAL TERMS, AND EXECUTE (1) AN EXCLUSIVE MASTER DEVELOPMENT AGREEMENT, AND (2) A 50- YEAR PHASE 1 GROUND LEASE WITH DERMODY PROPERTIES AND HILLWOOD INVESTMENT PROPERTIES

STAFF RECOMMENDATION Staff recommends that the Board of Trustees (Board) authorize the President/CEO to execute a Memorandum of Understanding (MOU) with Dermody Properties and Hillwood Investment Properties (DPHW) to serve as the exclusive master real estate developer at the Reno-Stead Airport (RTS) and negotiate final terms, and execute (1) an exclusive master development agreement, and (2) a 50-year Phase 1 ground lease with DPHW.

PURPOSE This action is in support of the Reno-Tahoe Airport Authority (RTAA) Strategic Priority # 2 - Optimize General Aviation Operations and Service and Priority # 4 – Facilitate Economic Development at Both Airports, and the Guiding Principle of Financial Integrity, as adopted in the RTAA Fiscal Year (FY) 2014-2018 Comprehensive Strategic Plan. This action supports the financial growth of the RTAA as a self-sustaining entity by maximizing non-airline revenue.

BACKGROUND In an effort to improve utilization of vacant land at RTS and attract aeronautical and non- aeronautical companies, staff issued a Request For Qualifications (RFQ) for a 3,500 acre development partner in March 2014. The RFQ process is in support of Resolution No. 504 setting forth policy adopted by the Board in May 2011. As a matter of policy, the RTAA recognizes the economic value of development at RTS. The RTAA will continue to support the National Championship Air Races as long as it is compatible with operational and economic goals of the RTAA.

The March 2014 RFQ solicitation was published on the RTAA’s website and the legal advertisement was published in the Reno Gazette-Journal. Additionally, the RFQ was advertised on National Site Selector websites, and through the Economic Development Authority of Western Nevada (EDAWN), local Broker networks, and development firms.

On March 18, 2014, the RTAA hosted a mandatory pre-submittal meeting at the Reno-Stead Freedom Flight Terminal Community Room. Staff presented an overview of the RFQ and Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 2 of 11

prospective respondents were encouraged to ask questions, which would be answered through an Addendum to all attendees. Approximately 20 different companies attended the meeting, including several engineering/planning firms representing undisclosed developers or general contractors that could partner into a development team. An Addendum was provided to all attendees and published on the RTAA’s website on March 25, 2014.

On April 17, 2014, the RTAA received three responses to the RTS Development Opportunity RFQ: 1) American Airports Corporation (AAC) 2) Dermody Properties (DP) 3) Unique Infrastructure Group/Lewis Group of Companies (UIG)

Prior to receipt of the Qualifications, a Selection Committee comprised of the CEO’s Land Development Working Group FY 2013-14 (LDWG/SC), which members included Trustees Carasali, Mayberry, Arger, and Larkin, and President/CEO Marily Mora and RTAA staff was established. Copies of the submitted responses and evaluation criteria worksheets were provided to each member of the LDWG/SC. The LDWG/SC reviewed the responses, and a meeting was held on May 2, 2014 to discuss the Qualification packages and identify preferred Responders to be invited to participate in Phase 2, a 120-day due diligence period.

Based on submitted responses and criteria scoring, two Respondents, (1) Dermody Properties and (2) UIG/Lewis Group of Companies, were short-listed by the LDWG/SC. Staff conducted shortlist interviews of the two Respondents on May 9, 2014. The purpose of the interview was to discuss the Respondent’s vision for development of RTS.

Based on research and experience in the Reno-Sparks region, as well as national experience, Dermody Properties explained that they believe the RTS will become one of the premier economic development opportunities in northern Nevada. They envisioned the property developing as a high-tech business park with a mix of aeronautical and non-aeronautical tenants that coexist with Airport operations. As a national developer with Reno headquarters and local expertise, the Dermody Properties team emphasized the importance of working with existing tenants such as Reno Air Race Association (RARA), Aviation Classics, Nevada Army National Guard, and the Bureau of Land Management, as well as the 100+ existing GA tenants based at RTS.

Following the May 9, 2014 interviews, the LDWG/SC conducted additional financial and reference checks on both Responders. Each Responder was notified in writing of the process and asked to provide additional information to assist with the reference checks. Following a complete investigation of each Responder’s financial condition and capabilities, the LDWG/SC selected Dermody Properties to participate in Phase 2, Due Diligence.

On July 23, 2014 a mandatory 30-day due diligence meeting was held with Dermody Properties representatives and the LDWG/SC, which was reorganized in FY 2014-15 with Trustee Wirth replacing Trustee Mayberry. The intent of the meeting was for Dermody Properties to provide a status update on the due diligence scope and schedule. Dermody Properties clearly demonstrated a strong due diligence program that would initially focus primarily on land constraints. At this meeting, Dermody Properties was advised by staff to not represent themselves to perspective Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 3 of 11

tenants as the RTAA’s development partner until recognition by the full Board of Trustees. Staff believed that although this approach modified the due diligence scope outlined in the RFQ, it would ensure control of existing relationships with perspective tenants. Additionally, this approach provided security if Dermody Properties determined the project was not viable, by limiting interaction with perspective tenants that could be persuaded to develop at other Dermody Properties’ projects.

Dermody Properties was advised that at the end of the land due diligence period, if they were still interested in the opportunity, in accordance with the RFQ, Dermody Properties would be invited to present findings to the LDWG/SC, which would possibly be followed by a recommendation to the CEO to authorize them to represent the RTAA. This authorization would allow Dermody Properties to complete RFQ Phase 2 - Marketing and Financial Due Diligence and RFQ Phase 3 - Development Proposal. Following completion of the RFQ Phase 2 and Phase 3, the LDWG/SC would again review the findings and proposed business terms with a possible subsequent recommendation to the CEO, who could then make a recommendation to the full Board of Trustees at a future Board meeting. Dermody Properties understood the modified process and agreed to proceed with due diligence focused on the land constraints.

Dermody Properties completed the 120-day due diligence period in October 2014 and submitted a Due Diligence Report outlining land development constraints and opportunities. On January 8, 2015, the LDWG/SC convened to provide Dermody Properties an opportunity to present land due diligence findings to date, answer questions, and review proposed efforts and requirements to complete the RFQ process.

After the LDWG/SC meeting on January 8, 2015, there was discussion with the CEO that this item should be brought to the full Board of Trustees to authorize Dermody Properties to represent the RTAA in order to complete Phase 2 and Phase 3 of the Reno-Stead Airport RFQ.

At the February 2015 Board meeting, the Board authorized Dermody Properties to represent the RTAA, allowing them to complete Phase 2 Due Diligence and Phase 3 Development Plan focused on approximately 1,700 acres not impacted by the current Reno Air Race safety corridors (refer to Exhibit A – Current Concept Plan). This authorization would allow Dermody Property to (1) actively market the property through brochures, site tours, prospective tenant meetings, and national recognition through conference attendance; (2) identify and pursue additional financial resources including debt and equity, such as investment partner Hillwood Investment Properties, for all or various parts of the development; (3) refine the project concept plans based on interest expressed by potential tenants/businesses and/or through internal and/or third party market research; and (4) obtain proposals for preliminary engineering and surveying related to development of the property.

Following the February 2015 Board meeting, Dermody Properties confirmed selection of Hillwood Investment Properties as their equity development partner. In addition to financial capacity, Hillwood Investment Properties brings a wealth of experience in Class “A” airport business park development.

On June 5, 2015, the RTAA sent Dermody Properties and Hillwood Properties, (DPHW) a letter confirming, pursuant to the RFQ, the February 23, 2015 RTAA authorization for DPHW to Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 4 of 11

represent the RTAA and actively market the property, refine project concept plans, obtain a proposal for preliminary engineering, and identify and pursue investment partners for the development. The June 5th letter also advised that the RTAA was awaiting deliverables as outlined in the RFQ. DPHW was advised that the outstanding items were to be received within 90 days and until the deliverables were received and approved by the Board, no steps should be taken with respect to easements, railroad crossings, or permits.

On August 17, 2015, DPHW discussed and delivered a conceptual plan to the RTAA, including a draft development proposal. DPHW was advised that the draft development proposal was deficient of items #6 – Preliminary financial analysis and revenue forecasts, and #7 – Proposed long term and short term agreement structure and business terms, requested in the June 5th letter. DPHW acknowledged the deficiency and promised to deliver items #6 and #7 on or before September 4, 2015.

On August 18, 2015, the RTAA, DPHW, and other DPHW consultants met to identify action items to complete the RFQ submittal requirements and DPHW delivered to the RTAA a comprehensive draft "Report and Business Terms for Reno-Stead Airport" dated July 24, 2015.

• As proposed by DPHW, RTS would be developed in five (5) phases, Phase I-V, ranging from approximately 1,700 - 3,000 acres (refer to attached Exhibit A and B).

• DPHW will also seek public and private financing for the construction of all backbone infrastructure necessary for each phase in order to develop and lease properties to users. If DPHW does not make application within six (6) months and/or receive funding for all infrastructure necessary for facility development within two (2) years of execution, the Master Development Agreement and Phase I Ground Lease shall terminate. During the two year period, DPHW may use private equity to expedite the development process while waiting for funding.

On September 21, 2015, DPHW presented a draft financial model to the RTAA for its review.

On October 2, 2015, DPHW advised the RTAA that DPHW would not be prepared to present a revised financial model that reflected the RTAA’s and Hillwood’s comments or deliver proposed business terms at the scheduled October 5th meeting. Subsequently, the RTAA cancelled this meeting to allow DPHW additional time to revise the financial model based on previous feedback.

On October 29, 2015, DPHW resubmitted the "Report and Business Terms for Reno-Stead Airport" dated July 24, 2015 with refined financial business terms and a draft Memorandum of Understanding (MOU).

On November 18, 2015, the RTAA and DPHW reviewed the October 29th submittal and requested additional changes to the draft MOU.

On November 23, 2015, the RTAA received a revised MOU reflecting the changes discussed at the November 18th meeting. DPHW requested that the RTAA review and provide feedback with any changes or comments.

Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 5 of 11

Between December 2015 and January 2016, the RTAA and DPHW worked together to revise and finalize the terms and conditions of the MOU as presented (refer to attached Exhibit C).

DISCUSSION This long and arduous process has culminated in proposed business terms between the RTAA and DPHW as presented below and in Exhibit C - Memorandum of Understanding (attached). The MOU encompasses two business relationships, a Master Development Agreement and Ground Leases.

The RTAA and DPHW have master planned 1,700 acres into a business park (Project), which includes the on-going National Championship Air Races (Air Races) at RTS. However should the Air Races discontinue the annual event, DPHW intends to develop the remaining undeveloped RTS land, for an estimated total of 3,000 acres, into the master planned business park. Understanding this is a long-term project, DPHW intends to develop the Project in a reasonable and orderly fashion in order to create a world-class business airport park specializing in aeronautical, distribution, manufacturing, office and other commercial uses.

The terms and conditions of the MOU establish DPHW as the exclusive master developer for all phases of the Project. As written below and in Exhibit C, unless material changes occur specific to the MOU terms (i.e. – ground rent formula, term, takedown schedule, entitlements, or infrastructure) or a direct impact to the Air Races occurs, no subsequent additional Board approval(s) will be required. However, staff will provide semi-annual written performance reports to the Board.

DPHW and the RTAA propose to enter into two contracts: 1) a Master Development Agreement whereby DPHW is the exclusive master developer and 2) a Phase I Ground Lease for development of approximately 90 acres. Key business terms include:

1. Master Development Agreement (Agreement)

a. Term shall be ten (10) years from date of its execution with seven (7) successive five-year options (phased ground leases). Agreement extension options shall not require subsequent Board approval(s) unless material changes occur.

b. Infrastructure for all Phases I-V is estimated to cost approximately $200,000,000. DPHW intends to seek State and/or Federal funding for all, or a portion thereof, in phases, depending on the Project. The RTAA shall have no obligation to fund, in whole or in part, any costs of funding infrastructure associated with the Project. Whenever possible, backbone offsite and onsite infrastructure may be dedicated to the appropriate jurisdictions and utility companies.

c. If DPHW does not secure grant funding within two (2) years of execution for entry and improvements proposed in the Phase I Ground Lease (see page 7), this Agreement shall terminate. During the two year period, DPHW may provide private capital to expedite the process while waiting for funding. If DPHW elects to use private equity for the improvements, the grant funding requirement shall be satisfied and the Agreement may not be terminated. Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 6 of 11

d. The ground rent for each phase of development shall be based on appraisal to establish fair market rental value or cash flow participation, or a combination thereof. Initial annual ground rent (Base Rent) shall be eight percent (8%) of the fair market land value.

e. Base Rent shall commence no later than two (2) years after Phases II-V ground leases are executed or upon certificate of occupancy, whichever is earlier. Base Rent shall increase by Consumer Price Index-Urban (CPI) or two percent (2%) compounded annually, whichever is lower. Base Rent adjustments shall be applied every other year. Every ten (10) years of the ground lease, the base rent shall be adjusted based on the appraisal process established in the Agreement.

f. The appraisal(s) shall comply with the Uniform Standards of Professional Appraisal Practice and any applicable Law, and will be completed by an appraiser with MAI (Member, Appraisal Institute) credentials licensed in Nevada, with at least ten (10) years of experience in the valuation of similar commercial properties located in the Reno-Sparks metropolitan area.

g. In the event any building is sold by DPHW to a third party, the RTAA shall receive 33% of sale proceeds in excess of DPHW’s required Internal Rate of Return (IRR) of 20%, which is calculated as a Net Present Value (NPV) of cash flows in the Fiscal Impact.

To the extent that DPHW is able to obtain grants, public financing, Federal Aviation Administration (FAA), RTAA, or other governmental funding, any improvements and the associated costs are specifically excluded from inclusion in the IRR calculation.

The Parties shall develop a specific definition of the cash flows to be included in the Internal Rate of Return calculation to avoid any ambiguity regarding the calculation of this provision and this definition shall be incorporated into the Agreement.

h. In exchange for the RTAA’s agreement to continue to work exclusively with DPHW for the potential development and lease of the Property, during the term of this Agreement, DPHW shall make a payment of Seventy-Five Thousand Dollars ($75,000) to the RTAA. Initial Option payment for Phases II through V is due on July 1, 2018, and every twelve (12) months thereafter, until the Agreement is terminated (Option Payments).

i. Ground leases will be executed in phases every five (5) years from the execution of the Master Developer Agreement.

j. DPHW shall use its best efforts to secure the following items to optimize development opportunities and tenant mix: i. Union Pacific Railroad approval for a grade crossing to enable the extension of Moya Boulevard into the property; Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 7 of 11

ii. A comprehensive marketing plan in coordination with the RTAA to attract customers; iii. The design and permitting of roads and utilities and all necessary infrastructure. The RTAA will provide up to 50 acre-feet of Truckee Meadows Water Authority (TMWA) “surface” water rights for development of commercial and industrial sites at RTS; iv. The construction of roads including the Moya Boulevard Gateway for each Phase as required; v. The design, permitting, and construction of buildings including aeronautical, manufacturing, office, and industrial uses as the market demands; and vi. The design, permitting and construction of any necessary drainage improvements that may be required to obtain regulatory approvals.

2. Phase I Ground Lease

If approved by the Board, the following terms and conditions of the Phase I Ground Lease will also apply to all Phases I-V, with the exception of acreage and base ground rent. Base ground rent will be adjusted based on current market value, as determined by a new appraisal. As written below and in Exhibit C, no subsequent Board approval(s) will be required unless material changes occur.

a. Premises are approximately ninety (90) acres in the southwest area of the Reno- Stead Airport with proximity to an existing rail spur and Moya Boulevard.

b. Ground Lease Term will be fifty (50) years commencing on January 1, 2017.

c. Base Ground Rent will be $.13 per square foot per year of lease land per a January 2016 appraisal of “As-Is” land valuation.

d. Base Rent will increase by Consumer Price Index-Urban (CPI) or two percent (2%) compounded annually, whichever is lower. Base Rent adjustments shall commence on January 1, 2020 and shall be applied every other year of the Phase I Lease Term. Every ten (10) years, the base rent shall be adjusted based on the appraisal process established in the Agreement.

e. Base Rent lease payments will commence upon the earlier of three (3) years or date of beneficial occupancy after the lease commencement date on January 1, 2020.

f. Capital Investment will be approximately $7.5 million in off-site and on-site infrastructure (refer to Exhibit D) as follows:

i. $5 million to construct the Gateway Entrance off-site improvements, including Moya Boulevard, and $2.5 million to construct Phase I on-site improvements (refer to Exhibit E); Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 8 of 11

ii. Ownership and title of all infrastructure improvements will vest with DPHW through the term of the Ground Lease. Upon expiration or termination of the Ground Lease, title to all building improvements, infrastructure, and other improvements on RTAA land will vest with the RTAA;

iii. To fund the costs of this infrastructure, DPHW will seek funding from State and/or Federal sources; and

iv. The conditions under Phase I Ground Lease are contingent and conditional on DPHW securing infrastructure funding within two (2) years of executing a Master Developer Agreement as described above. DPHW affirms its commitment to make good faith efforts toward obtaining the infrastructure funding.

3. Ground Leases Phase II through V:

a. Phases II-V ground leases will occur every five-years (5) from the execution of the Master Developer Agreement. Subsequent ground leases shall not require Board approval(s) unless substantial deviation from the Agreement terms above or a direct impact to the Air Races occurs.

b. If, at any time during the term of the Agreement, DPHW fails to meet the minimum takedown schedule as described above, the RTAA may terminate the Agreement by providing written notice to DPHW. However, DPHW takedown obligation hereunder shall be suspended if the vacancy rate in the Reno industrial market is greater than fifteen percent (15%) for two consecutive quarters as defined by the quarterly report published by the Reno office of CBRE. The takedown schedule shall be reinstated when the CBRE report indicates that the industrial vacancy report has fallen below 15% for two consecutive quarters or five years.

c. Each subsequent phase ground leases will be based on appraisal to establish fair market rental value or cash flow participation, or a combination thereof.

d. Subsequent phase ground lease terms shall be agreed upon a minimum of six months prior to next land takedown.

COMPANY BACKGROUND Dermody Properties is a national developer of industrial and commercial properties, having been ranked among the 10 largest privately held industrial developers in the nation. Since 1960, the company has developed over 35 million square feet of industrial space including parks, speculative facilities, and build-to-suits for lease or purchase. Development is managed through each of Dermody’s regional offices located in Philadelphia, Chicago, Phoenix, Portland, and the corporate headquarters in Reno. The company has over 300 international, national and regional customers, many of whom are the country’s most respected companies. Dermody’s customers include Amazon.com, APL Logistics, Aramark, Bed Bath and Beyond, Borders Group, CDW Corporation, Dole Food Company, Federal Express, Kimberly-Clark, Kuehne + Nagel, Michelin, Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 9 of 11

Office Depot, OfficeMax, Ozburn-Hessey Logistics, Pepsi-Cola, Sherwin-Williams, United Stationers Supply Co., UPS, Volvo/Mack, Wal-Mart, Xerox and 1-800-Flowers.com.

In addition to these customers, Dermody Properties has relationships with financial entities including California Public Employees’ Retirement System (CalPERS), Lazard Freres & Co, and California State Teachers’ Retirement System (CalSTRS), through joint ventures and partnerships.

Hillwood Investment Properties, a Ross Perot Company, has nearly 30 years of expertise and experience in developing on airports across the country. At AllianceTexas, an 18,000 acre mixed use project north of Fort Worth, they are developing and operating a cargo airport, and related aviation and non-aviation uses. This project has over 400 clients and provides jobs to approximately 40,000 workers with companies such as Bell Helicopter, UPS, FedEx, Rolls- Royce, and Lockheed Martin.

In addition to AllianceTexas, Hillwood has public-private partnerships with the Ontario Airport, San Bernardino International Airport (AllianceCalifornia), Cecil Field in Florida, and Cincinnati/Northern Kentucky International Airport.

To ensure development of a Class “A” business park, Dermody Properties and Hillwood Investment Properties have partnered to develop an airport-centered business park capable of accommodating aviation and non-aviation uses.

FISCAL IMPACT DPHW intends to seek State and/or Federal funding for backbone off-site and on-site infrastructure in phases as ground leases are executed.

Regarding Phase I Ground Lease, DPHW estimates that $7.5 million in land improvements are required to move the land from an “as-is” basis to a tenant ready program in a master planned, best-of-class business park and job center that can compete on a regional basis. The current “as- is” land improvements do not meet the utility and road requirements of target businesses, such as an aircraft manufacturer or similar industrial uses in the vicinity. If DPHW is unable to secure grant funding within two years, the Master Development Agreement and the Phase I Ground Lease will terminate.

The RTAA shall have no obligation to fund, in whole or in part, any infrastructure costs associated with the entire development.

DPHW and the RTAA intend to dedicate backbone off-site and on-site infrastructure to the appropriate jurisdictions and utility companies whenever possible. Subject to FAA approval, private improvements, including entry monumentation, landscaping, and other such improvements, will be owned and maintained by DPHW, or through an improvement district, and/or through common area maintenance fees.

All assets currently owned by the RTAA, including existing roads, hangars, buildings and airfield improvements, and/or future improvements funded by the RTAA and not incorporated into the Master Developer Agreement, special improvement districts, or subsequent Ground Leases, shall be maintained by the RTAA. Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 10 of 11

DPHW shall be responsible for the assessment and collection of the infrastructure common area maintenance fee. DPHW will also be responsible for the daily, non-structural upkeep/maintenance of common areas and periodic rehabilitation/upgrade of infrastructure improvements, as mutually agreed by the Parties.

If DPHW obtains infrastructure funding within two years of the execution of the Master Development Agreement, the following table outlines the following: (1) the Option Payments during the term of the Master Development Agreement; (2) Phase I Ground Lease for approximately ninety (90) acres starting January 1, 2020, for the first 10 years of the term assuming a two percent (2%) CPI adjustment compounded annually ever two (2) years, and (3) Phase II Ground Lease for the minimum of forty (40) acres starting July 1, 2023.

Option Payments Phase I Ground Phase II Ground Total - Exclusive Lease – Base Rent Lease –Base Rent Estimated Development of $0.13 per sq. ft. of $0.14 per sq. Revenue Rights - $75,000 per year X ft. per year X per year 3,920,400 1,742,400 (40 Phase II - V (90 Acres) Acres) FY 2016-17 ------FY 2017-18 ------FY 2018-19 $75,000 -- -- $75,000 FY 2019-20 75,000 $265,834 -- 340,834 FY 2020-21 75,000 542,302 -- 617,302 FY 2021-22 75,000 552,935 -- 627,935 FY 2022-23 75,000 563,944 -- 638,944 FY 2023-24 75,000 575,053 $255,579 905,632 FY 2024-25 75,000 586,554 260,690 922,244 FY 2025-26 75,000 598,055 265,802 938,857 Total FY 2017 to $600,000 $3,684,677 $782,071 $5,066,748 2026

The Phase I and Phase II Ground Lease, as outlined above, over the fifty (50) year term of the leases are estimated to generate total revenue in the range of $55 to $60 million.

If DPHW does not take down the Phase II minimum ground, the Master Development Agreement will terminate, subject to the condition that the industrial vacancy rate in the Reno market does not exceed 15%.

In addition, the MOU outlines that in the event any building sold by DPHW to a third party, the RTAA shall receive 33% of sale proceeds in excess of DPHW’s required IRR, which is calculated as Net Present Value (NPV) of 20% below.

While there are too many variables to properly estimate the financial impact of this MOU provision, the following example outlines how this provision might factor into the future RTAA revenues.

Reno-Stead Airport Master Developer Agreement & Phase I Ground Lease # 16(02)-04 February 11, 2016 Board Meeting Page 11 of 11

Cash Outflows:

Building Construction $21,000,000 Less: Leasehold Mortgage ( 14,000,000) Permanent Financing – 20 Year Term ------Developer Initial Investment $ 7,000,000

Cash Inflows:

Net Building Rent – 5 Years $ 3,750,000 ($750,000 per year after Debt Service)

Sale of Building - Year 6 $26,250,000 Less: Loan Pay Off: (11,500,000) Outstanding Loan Less: Closing Costs ( 250,000) ------Net Sales Proceeds - Year 6 $14,500,000

Total Cash Inflows $18,250,000 Net Present Value 20% Required Developer IRR

In this example, the RTAA would receive 33% of any net sale proceeds that exceed the $14,500,000 as outlined in Net Sales Proceeds – Year 6 above.

Additional fiscal impact may occur if the RTAA elects to enter into a contract with a Construction Management company to oversee development. If this were decided, the Construction Management services would be procured separately and be presented to the Planning and Construction Committee and the Board for consideration.

In addition to the RTAA Chief Financial Officer (CFO) financial updates, staff will provide semi-annual written performance reports to the Board.

COMMITTEE COORDINATION This item is scheduled to be presented at the February 9, 2016 Finance and Business Development Committee meeting.

RECOMMENDED MOTION It is hereby recommended that the Board adopt the following motion:

It is hereby moved that the Board of Trustees authorizes the President/CEO to execute a Memorandum of Understanding with Dermody Properties and Hillwood Investment Properties to serve as the exclusive master real estate developer at the Reno-Stead Airport and negotiate final terms, and execute (1) an exclusive Master Development Agreement, and (2) a 50-year Phase 1 Ground Lease with Dermody Properties and Hillwood Investment Properties.

MMM/sh/cj EXHIBIT A CURRENT CONCEPT PLAN

Hangar Site K‐1 EXHIBIT B CONCEPTUAL MASTER PLAN MEMORANDUM OF UNDERSTANDING

This Memorandum of Understanding ("MOU") is entered into this ___day of ______, 2016 ("Effective Date") by and among the Reno Tahoe Airport Authority ("RTAA" or "Authority"), and Dermody Properties/Hillwood Investment Properties ("DPHW") as set forth below.

WHEREAS:

DPHW intends to develop approximately 3,000 acres known as the Reno-Stead Airport (Project). Understanding this is a long-term project, DPHW intends to develop the Project in a reasonable and orderly fashion in order to create a world-class business airport park specializing in aeronautical, distribution, manufacturing, office and other commercial uses. The Parties intend to enter into a Master Development Agreement (Agreement) with an initial term of ten (10) years, which will enable the completion and orderly phased development of the first two phases of the Project.

Each phase will require certain public and private infrastructure funding in order to prepare the property for development. Phase I will develop approximately 90 acres of land and accommodate 1,200,000 square feet of facilities including the creation of the Moya Boulevard Gateway Entrance. The Parties intend to enter into a fifty (50) year Ground Lease (“Ground Lease”) for Phase I of the Project.

In order to create the most successful project possible, Dermody Properties has aligned itself with Hillwood Investment Properties. Hillwood is a Perot Company and has had extensive experience in developing and financing airport projects.

NOW THEREFORE:

RECITALS

I. RTAA owns and operates the Reno-Stead Airport (RTS), consisting of approximately 5,000 acres, located variously in the City of Reno and Washoe County, Nevada, (Property) (Exhibit A) as a general aviation facility.

II. RTAA is a quasi-municipal corporation created under Chapter 474, Statutes of Nevada 1977, as amended, with its principal office at Reno-Tahoe International Airport, 2001 East Plumb Lane, Reno, Nevada 89502.

III. RTAA is authorized to enter into agreements for the use of the Airport premises and facilities.

IV. The execution of a Ground Lease and this Memorandum of Understanding (“MOU”) will not convey any ownership of the land to DPHW in accordance with Federal Aviation Administration (FAA) requirements.

V. RTAA shall retain design review and approval for purposes of FAA concurrence and compliance with approved Airport Layout Plan (ALP) prior to any construction on site.

VI. In March 2014, RTAA issued a Request for Qualification ("RFQ") for the Property, indicating RTAA's desire to lease the Property to a third party to develop unleased land available for development at RTS.

VII. In May 2014, DPHW submitted the initial Phase 1 proposal to RTAA in response to the RFQ.

VIII. In June 2014, DPHW was selected by RTAA to proceed with Phase 2 and 3 of the Due Diligence process pursuant to the RFQ.

IX. Pursuant to the RFQ, DPHW conducted numerous meetings in 2014 and 2015 with stakeholders to discuss potential approaches to repurpose and develop the Property.

X. On January 8, 2015, DPHW presented to the RTAA CEO’s Land Development Working Group an updated development plan for the Property.

XI. On February 23, 2015, the Board authorized Dermody Properties to represent RTAA, allowing them to complete Phase 2 Due Diligence and Phase 3 Development Plan focused on approximately 1,700 acres not impacted by the current Reno Air Race safety corridors. This authorization would allow Dermody Property to (1) actively market the property through brochures, site tours, prospective tenant meetings, and national recognition through conference attendance; (2) identify and pursue additional financial resources including debt and equity, such as investment partner Hillwood Investment Properties, for all or various parts of the development; (3) refine the project concept plans based on interest expressed by potential tenants/businesses and/or through internal and/or third party market research; and (4) obtain proposals for preliminary engineering and surveying related to development of the property.

XII. On June 5, 2015, the RTAA sent Dermody Properties a letter confirming, pursuant to the RFQ, the February 23, 2015 RTAA authorization for DPHW to represent the RTAA and actively market the property, refine project concept plans, obtain proposal for preliminary engineering and identify and pursue investment partners for the development. The June 5th letter also advised that the RTAA was awaiting deliverables as outlined in the RFQ. DPHW was advised that the outstanding items were to be received within 90 days and until the deliverables were received and approved by the Board, no steps should be taken with respect to easements, railroad crossings or permits.

XIII. On August 17, 2015, DPHW discussed and delivered a conceptual plan to the RTAA, including a draft development proposal. DP was advised that the draft development proposal was deficient items #6 – Preliminary financial analysis and revenue forecasts and #7 – Proposed long term and short term agreement structure and business terms requested in the June 5th letter. DP acknowledged the deficiency and promised to deliver items #6 and #7 on or before September 4, 2015.

XIV. On August 18, 2015, the RTAA, DPHW, and other DPHW consultants met to identify action items to complete the RFQ submittal requirements and DPHW delivered to RTAA a comprehensive draft "Report and Business Terms for Reno-Stead Airport" dated July 24, 2015.

a. As proposed by DPHW, the Project would be developed in five (5) phases, Phase I-V, for approximately 1,700 - 3,000 acres.

b. DPHW will also seek public and private financing for the construction of all backbone infrastructure necessary for each phase in order to develop and lease properties to users. If DPHW does not secure funding for the $5,000,000 Gateway Entry offsite improvements and/or the $2,500,000 for Phase I onsite improvements within two (2) years of execution, the Agreement and/or the Phase I Ground Lease shall terminate. During the two year period, DPHW may use private equity to expedite the development process while waiting for funding.

XV. On September 21, 2015, DPHW presented a draft financial model to the RTAA for its review.

XVI. On October 2, 2015 DPHW advised the RTAA that DPHW would not be prepared to present a revised financial model that reflects the RTAA’s and Hillwood’s comments or deliver proposed business terms at the scheduled October 5th meeting. Subsequently, RTAA cancelled this meeting to allow DPHW additional time to revise the financial model based on previous feedback.

XVII. On October 29, 2015 DPHW resubmitted the "Report and Business Terms for Reno- Stead Airport" dated July 24, 2015 with refined financial business terms and a draft Memorandum of Understanding (MOU).

XVIII. On November 18, 2015 RTAA and DPHW reviewed the October 29th submittal and requested additional changes to the draft MOU.

XIX. On November 23, 2015 the RTAA received a revised MOU reflecting the changes discussed at the November 18th meeting. DPHW requested RTAA review and provide feedback with any changes or comments.

XX. DPHW understands and agrees that all entitlements, jurisdictional reviews and approvals pertaining to said Property shall first be reviewed by RTAA.

NOW THEREFORE:

In consideration of the efforts of the parties, this Memorandum of Understanding will be submitted for approval to the RTAA Board of Trustees (Board). Upon execution of the MOU following receipt of such Board approval, the RTAA will create an Agreement as described herein which Agreement must be executed by the parties within one hundred and twenty (120) days of signing the MOU. Failure to execute an Agreement within one hundred and twenty (120) days of signing the MOU shall result in the termination of the MOU without further action on the part of the RTAA.

OPERATIVE PROVISIONS OF MASTER DEVELOPMENT AGREEMENT

I. Incorporation of Recitals.

a. All recitals are true and correct and incorporated by reference herein.

II. Identity of Parties.

a. Reno Tahoe Airport Authority (RTAA).

b. Dermody Properties – is a joint venture with Hillwood Investment Properties (DPHW).

III. Master Development Agreement.

a. DPHW and RTAA will enter into a Master Development Agreement (Agreement) whereby DPHW is the exclusive master developer of the Project for the initial phase and all subsequent phases, subject to compensation as outlined below and in compliance with the terms and conditions of the Agreement and Ground Lease.

i. The initial term of the Agreement shall be ten (10) years from date of its execution, with seven (7) successive five-year extension options subject to certain conditions below.

ii. If DPHW does not secure grant funding within two (2) years of execution for said entry and offsite improvements, the Agreement and Phase I Ground Lease shall terminate. During the two year period, DPHW may provide private capital to expedite the process while waiting for funding. If DPHW elects to use private equity for said entry and offsite improvements, the grant funding requirement shall be satisfied and the Agreement may not be terminated.

iii. In the event any building is sold by DPHW to a third party, RTAA shall receive 33% of sale proceeds in excess of DPHW’s required Internal Rate of Return (IRR) of 20%.

To the extent that DPHW is able to obtain grants, public financing, FAA, RTAA or other governmental funding, any improvements and the associated costs are specifically excluded from inclusion in the IRR calculation.

4 iv. Takedown Schedule.

1. DPHW shall enter into ground leases with the RTAA in phases.

2. Phase I (approximately 90 acres) shall be leased from RTAA to DPHW in accordance with the Ground Lease, within six (6) months of execution of the Master Development Agreement

3. Phases II-V will occur every five-years (5) from the execution of the Agreement.

4. If, at any time during the term of the Agreement, DPHW fails to meet the minimum takedown schedule as described above, the RTAA may terminate the Agreement by providing written notice to DPHW. However, DPHW’s takedown obligation hereunder shall be suspended if the vacancy rate in the Reno industrial market is greater than fifteen percent (15%) for two consecutive quarters as defined by the quarterly report published by the Reno office of CBRE. The takedown schedule shall be reinstated upon the earlier of when the CBRE report indicates that the industrial vacancy report has fallen below 15% for two consecutive quarters or 5 years.

5. Phase II through V:

a. In exchange for RTAA’s agreement to continue to work exclusively with DPHW for the potential development and lease of the Property, during the term of the Agreement, DPHW shall make a Subsequent Phase Option payment of Seventy-Five Thousand Dollars ($75,000) to the RTAA. Initial option payment for Phases II through V is due on July 1, 2018 and every twelve (12) months thereafter until the Agreement is terminated (Option payments). In exchange for these Option Payments, RTAA hereby grants to DPHW an exclusive option with respect to the leasing of the Property during the term of the Agreement.

b. Each subsequent phase ground lease will be based on one or more appraisals to establish fair market rental value or cash flow participation or a combination thereof.

c. Initial annual ground rent (Base Rent) shall be based on the fair market value of the land with an eight percent (8%) rate of return.

d. Base Rent shall increase by Consumer Price Index-Urban (CPI) or two percent (2%) compounded annually, whichever is lower. Base Rent adjustments shall be applied

every other year. Every ten (10) years of the ground lease, the Base Rent shall be adjusted based on the appraisal process established in the Agreement.

e. The appraisal(s) shall comply with the Uniform Standards of Professional Appraisal Practice and any applicable Law, and will be completed by an appraiser with MAI (Member, Appraisal Institute) credentials licensed in Nevada, with at least ten (10) years of experience in the valuation of similar commercial properties located in the Reno-Sparks metropolitan area.

f. Subsequent phase Ground Lease terms shall be agreed upon a minimum of six (6) months prior to next takedown.

iv. Entitlements for Development and Use.

1. DPHW shall use its commercially reasonable efforts to secure the following:

a. Union Pacific Railroad approval for a grade crossing to enable the extension of Moya Boulevard into property per Exhibit A-1.

b. A comprehensive marketing plan in coordination with RTAA to attract customers.

c. The design and permitting of roads and utilities and all necessary infrastructure. RTAA will provide up to 50 acre- feet of Truckee Meadows Water Authority (TMWA) “surface” water rights for development of Phase 1 commercial and industrial projects at Reno-Stead Airport.

d. The construction of roads including the Moya Boulevard Gateway for each Phase as required.

e. The design, permitting and construction of buildings including aeronautical, manufacturing, office, and industrial buildings as the market demands.

f. The design, permitting and construction of any necessary drainage improvements that may be required to obtain regulatory approvals.

IV. Total Infrastructure.

a. The 3,000 acres governed by this MOU require approximately $200,000,000 of infrastructure including all Phases I-V.

i. DPHW intends to seek State and/or Federal funding for all, or a portion thereof, in phases, depending on the Project. The RTAA shall have no obligation to fund, in whole or in part, any costs of funding infrastructure associated with the Project.

ii. DPHW and the RTAA intend to dedicate backbone offsite and onsite infrastructure to the appropriate jurisdictions and utility companies whenever possible. Subject to FAA approval, private improvements, including entry monumentation, landscaping and other such improvements will be owned and maintained by DPHW or through an improvement district and/or through common area maintenance fees.

iii. All assets currently owned by the RTAA, including existing roads, hangars, buildings and airfield improvements, and/or future improvements funded by the RTAA and not incorporated into the Master Developer Agreement, special improvement districts, or subsequent ground leases shall be maintained by the RTAA at its sole cost and expense.

iv. DPHW shall be responsible for the assessment and collection of the infrastructure common area maintenance fee.

v. DPHW will be responsible for the daily, non-structural upkeep/maintenance of common areas and periodic rehabilitation/upgrade of infrastructure improvements as mutually agreed by the Parties.

OPERATIVE PROVISIONS OF PHASE I GROUND LEASE

I. Phase I Ground Lease:

a. DPHW and RTAA will enter into a Phase I Ground Lease Agreement, covering approximately 90 acres, whereby DPHW is the exclusive master developer.

i. The ground lease term for Phase I development shall be fifty (50) years.

ii. Base Ground Rent for Phase I is based on the RTAA appraisal of land value of $1.60 per square foot per year multiplied by eight percent (8%) or $.13 per square foot per year of lease land.

iii. The Phase I Ground Lease Term shall commence on January 1, 2017.

iv. Base Rent shall increase by Consumer Price Index-Urban (CPI) or two percent (2%) compounded annually, whichever is lower. Base Rent adjustments shall commence on January 1, 2020 and shall be applied every other year of the Phase I Lease Term. Every ten (10) years, the base rent shall be adjusted based on the appraisal process established in the Agreement.

v. Non-economic business terms (subordination, assignment, etc.) that are consistent with the terms of a commercially reasonable, financeable ground lease.

vi. Base Rent lease payments will commence upon the earlier of three (3) years after the specific land lease commencement date and construction has commenced on a building or an occupancy permit is issued for the new building constructed on the specific site, whichever occurs first.

II. Phase I Infrastructure as follows:

a. The initial Phase I requires $7.5 million of offsite and onsite infrastructure as follows:

i. $5 million to construct the Gateway Entrance offsite improvements, including Moya Boulevard, and $2.5 million to construct Phase I onsite improvements of the project.

ii. Ownership and title of all infrastructure improvements shall vest with DPHW through the term of the Ground Lease. Upon expiration or termination of the Ground Lease, title to all building improvements, infrastructure, and other improvements on RTAA land shall vest with the RTAA.

iii. To fund the costs of this infrastructure, DPHW will seek funding from State and/or Federal sources.

iv. The Parties understand that the conditions under Phase I Ground Lease are contingent and conditional on DPHW securing infrastructure funding within two (2) years of executing a Master Developer Agreement as described above. DPHW hereby affirms its commitment to make good faith efforts toward obtaining the infrastructure financing.

GOVERNMENTAL AND GENERAL PROVISIONS

I. Indemnification and Hold Harmless. Developer is and shall remain responsible for its actions and omissions, and Authority shall in no way be responsible therefor. Except to the extent solely caused by the negligence or willful misconduct of the Authority, its officers, employees or agents, Developer shall keep, save, protect, defend at the option of Authority, indemnify and hold Authority harmless from any and all claims, fines, demands, suits, causes of action, liability and damages, including, but not limited to, costs of court and administrative proceedings and reasonable fees of attorneys and other professionals incurred by Authority, arising out of, in connection with, incidental to or in any way resulting from: (a) Developer’s operations conducted on the Property and/or Airport; (b) Developer’s development, improvement, use, occupancy, maintenance, management and operation of the Property and the condition of the Property and improvements thereto; or (c) defect in equipment, components, fixtures and other products owned, used, installed or stored on the Property or any other approved location; (d) any substance, material or waste now or hereafter defined or classified as hazardous or toxic under applicable federal, state or local law including petroleum products, which is brought on, deposited or stored on or removed from the Property during Developer’s tenancy; or (e) any contamination of the Property or neighboring property or any other Airport property resulting from any of the foregoing. This indemnification of Authority by Developer includes, without limitation, costs incurred in connection with any investigation of site conditions or any clean-up, remediation, removal, reclamation or restoration work required by any federal, state or local governmental agency or political subdivision because of the presence of hazardous material in the soil or ground water, upon or under the Property or neighboring property (if originating from the Property). Without limiting the foregoing, if the presence of any hazardous material results in contamination as aforesaid, Developer shall promptly take all actions at its sole expense as necessary to restore the Property and other affected Airport property to the condition existing prior to the introduction of any such hazardous material. Authority will not hold Developer responsible for contamination which, upon investigation by the governmental agency having authority in such matters, is found to conclusively be the result of operations of prior owners or tenants of the Property. Developer’s obligation to indemnify as provided herein shall survive the expiration or early termination of this MOU, the Agreement, or the Ground Lease.

II. Attorney Fees. If any legal action is instituted to enforce any terms, covenants or conditions of this MOU or an Agreement, or litigation concerning the rights and duties of the parties or to recover any amount due hereunder, the losing party shall pay the prevailing party, in addition to the costs and disbursements allowed by statute, such sum as the court or proceeding officer, might adjudge reasonable as attorney’s fees in such suit or action, in both trial court and appellate court subject to statutory restrictions.

III. Governing Law. This MOU, its interpretation and performance, the relationship between the parties and any disputes arising from or relating to any of the foregoing, shall be governed, construed, interpreted, and regulated under the laws of Nevada, without regard to principles of conflict of laws.

IV. Venue. The parties each hereby irrevocably agree that any legal action or other proceeding relating to this MOU which may be brought by one party against the other party in a court of law shall be commenced and prosecuted in the Second Judicial District in and of the County of Washoe in the State of Nevada, and each party further irrevocably consents to the jurisdiction of such courts, which shall be the exclusive and only proper forum for adjudicating such a claim.

V. No Third-Party Beneficiaries. The provisions of this MOU are for the benefit of DPHW and RTAA, and no other parties shall have any right or claim against DPHW or RTAA by reason of this MOU or be entitled to benefit therefrom or to enforce any of the provisions thereof.

VI. No Joint Venture. RTAA does not, in any way or for any purpose, become a partner of DPHW in the conduct of its business, or otherwise, or joint venture or a member of a joint enterprise with DPHW by reason of this MOU.

VII. Successors and Assigns. This MOU shall bind and inure to the benefit of the successors and assigns of Authority and DPHW, and their successors and assigns of the parties hereto.

VIII. National Emergency. This MOU and all the provisions hereof shall be subject to any and every right which the United States Government now has, or in the future might have, affecting the ownership, possession, control, operation and regulation of Airport or the exclusive or nonexclusive use of Airport by the United States Government during time of war or national emergency.

IX. Federal Review. This MOU is subject to any applicable review, by the FAA or any other federal agency having regulatory authority, to determine satisfactory compliance with federal law, and shall be in full force and effect pending such review and approval by the FAA or other federal agency; as applicable; provided, however, that upon such review, the parties hereto agree to modify any of the terms hereof which might be determined to be in violation of or contrary to existing laws, regulations or other legal requirements.

X. Right of Flight. Authority reserves unto itself, its successors in interest and assigns, for the use and benefit of the public, the right of flight for the passage of aircraft in the airspace above the Property. This right of flight shall include the right to cause in the airspace such noise, vibrations, fumes, dirt, dust, air movement and/or any other substance, material or phenomenon as might be inherent in or attendant to the operation of any aircraft now known or hereafter devised for navigation or flight through the airspace for landing at, taking off from or operating on Airport.

It is anticipated that changes will come from regulatory agencies having jurisdiction over the Airport or Authority in the form of regulatory changes. It is Developer’s responsibility to obtain all Notices of Proposed Rule Making directly from such agencies. Where possible, Authority may provide notice of proposed changes but nothing contained herein shall render this provision unenforceable by virtue of Developer not receiving notice of proposed changes.

XI. Construction and Interpretation. DPHW and RTAA have each participated in the drafting and negotiation of this MOU, and the language in all parts of this MOU shall be in all cases construed as a whole according to its fair meaning and not strictly for or against either DPHW or RTAA.

XII. Entire Agreement. This MOU supersedes any prior agreements, negotiations and communications, oral or written, including any letter of intent or memorandum of understanding previously executed by such parties, if any, and contains the entire agreement between DPHW and RTAA as to the subject matter hereof.

XIII. Signed in Counterparts. This MOU may be executed in one or more counterparts, each of which shall constitute an original and all of which shall be one and the same agreement.

SIGNATURE PAGE Reno Tahoe Airport Authority: Dermody Properties:

Marily M. Mora Michael C. Dermody Its: President & Chief Executive Officer Its: Chairman & Chief Executive Officer

Douglas A. Kiersey Its: President

Hillwood Investments

______Todd L. Platt Its: Chief Executive Officer

Exhibit A Reno-Stead Airport (RTS)

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EXHIBIT D OFF‐SITE & ON‐SITE INFRASTRUCTURE PAGE 1 OF 2 EXHIBIT D OFF‐SITE & ON‐SITE INFRASTRUCTURE PAGE 2 OF 2 EXHIBIT E OFF‐SITE & ON‐SITE INFRASTRUCTURE GATEWAY ENTRANCE & MOYA BOULEVARD President/CEO’s Report January 2016 Marily M. Mora, A.A.E., President/CEO______

Air Service • Reno-Tahoe International Airport (RNO) served 286,432 passengers in December 2015, which is up 8.6% versus December 2014. For the year 2015, RNO served 3,432,657 passengers, representing an increase of 3.9% when compared to year 2014. For the first time since 2005, RNO is reporting year- over-year annual passenger growth. The rise in passenger traffic can be attributed to the new flights and the increased seat capacity on certain routes. In addition, the growing regional economy played a role in attracting travelers to the region.

TOTAL PASSENGERS

Total Passengers December-15 Passengers Passengers % Diff. % Diff. 2013 2014 2015 JAN 264,265 241,181 -8.7% 246,571 2.2% FEB 259,299 228,035 -12.1% 234,763 3.0% MAR 306,139 278,172 -9.1% 277,477 -0.2% 1st Quarter 829,703 747,388 -9.9% 758,811 1.5% APR 279,418 266,800 -4.5% 256,823 -3.7% MAY 295,494 282,277 -4.5% 276,969 -1.9% JUN 328,755 316,720 -3.7% 319,309 0.8% 2nd Quarter 903,667 865,797 -4.2% 853,101 -1.5% JUL 333,321 332,242 -0.3% 350,823 5.6% AUG 322,083 318,965 -1.0% 336,948 5.6% SEP 283,800 284,931 0.4% 297,299 4.3% 3rd Quarter 939,204 936,138 -0.3% 985,070 5.2% OCT 262,473 266,701 1.6% 295,749 10.9% NOV 227,213 225,384 -0.8% 253,494 12.5% DEC 270,051 263,682 -2.4% 286,432 8.6% 4th Quarter 759,737 755,767 -0.5% 835,675 10.6% TOTAL 3,432,311 3,305,090 -3.7% YTD Total 3,305,090 3,432,657 3.9%

President/CEO’s Report – January 2016 February 11, 2016 Page 2 of 12

• In December 2015, RNO was served by eight airlines providing 57 peak daily departures to 17 non- stop destinations. Total departures at RNO were up 2.6% and the seat capacity increased 5.7% when compared to December 2014.

• Starting March 16, 2016, Alaska Airlines will begin non-stop daily flights between RNO and John Wayne Airport, Orange County (SNA). Horizon Air, Alaska’s sister carrier, will fly the route with a 76-seat Bombardier Q400 aircraft.

• Starting June 5, 2016, Southwest Airlines will begin non-stop flights between Reno and Oakland three times a day. The airline will utilize 143-seat Boeing 737-700 aircraft on this route.

• On November 5, 2015, Alaska Airlines began non-stop daily flights between RNO and Boise Airport (BOI) with a 76-seat Bombardier Q400 aircraft.

• Recent and Upcoming Schedule Changes  Alaska Airlines o Starting November 1, 2015, the new schedule for non-stop flights between Reno and San Jose is as follows: . San Jose to Reno: • AS2250 7:35AM-8:34AM • AS2500 6:25PM-7:24PM . Reno to San Jose: • AS2183 6:00AM-7:05AM • AS2253 4:15PM-5:19PM (this flight will be re-timed in March 2016 to a 5:50 PM departure)

o Reno – Orange County Flights: The flight will depart Reno at 10:15 a.m. and arrive in Orange County at 11:37 a.m. It will depart Orange County at 2:45 p.m. and arrive in Reno at 4:05 p.m.

o Alaska Airlines reduced the number of non-stop flights between Reno and Portland for the month of February 2016 to twice a day. This flight returns to a three times a day schedule on March 14, 2016.

 American Airlines o The non-stop flights between Reno and Chicago O’Hare will operate five times a week (Thursday – Monday) until February 8, 2016. The flight returns to a seven days a week schedule on February 11, 2016.

 JetBlue Airways o The non-stop flights between Reno and New York City will operate four times a week (Thursday, Friday, Sunday and Monday) until February 11, 2016. The flight returns to a seven days a week schedule on February 11, 2016.

 Delta Air Lines o The seasonal non-stop flight between Reno and Minneapolis will return in July 2016.

President/CEO’s Report – January 2016 February 11, 2016 Page 3 of 12

 United Airlines o The daily non-stop flight between Reno and Houston will return on February 13, 2016. This flight will operate on Saturdays and Sundays.

 Southwest Airlines o Reno - Oakland schedule is as follows:

RNO Departure Time OAK Arrival Time OAK Departure Time RNO Arrival Time 6:40 AM 7:45 AM 10:50 AM 11:40 AM 9:30 AM 10:35 AM 3:50 PM 4:40 PM 5:35 PM 6:40 PM 8:45 PM 9:35 PM

o The seasonal non-stop flights between Reno and Chicago Midway will resume service in March 2016.

 Volaris o Starting November 2, 2015, Volaris added a third weekly flight between Reno and Guadalajara. Beginning February 1, 2016, the flights began operating on Mondays, Wednesdays, and Fridays.

President/CEO’s Report – January 2016 February 11, 2016 Page 4 of 12

• In December 2015, RNO handled 17,907,699 pounds of cargo, an increase of 13.5% when compared to December 2014. With respect to year-over-year monthly increases, December 2015 is the tenth consecutive month of air cargo growth at RNO. The growth in industrial development areas such as the Tahoe-Reno Industrial Center continues to help spur cargo growth and economic diversity in Northern Nevada. During the year 2015, RNO handled 138,276,979 pounds of air cargo, an increase of 7.1% when compared to year 2014. Year 2015 was the best year recorded at RNO in terms of air cargo.

TOTAL CARGO

Total Cargo December-15 2013 2014 2015 % Diff. % Diff. Cargo in Pounds Pounds Metric

JAN 10,269,546 10,303,380 0.3% 10,113,421 4,587 -1.8% FEB 8,635,807 9,486,697 9.9% 9,418,781 4,272 -0.7% MAR 9,457,376 9,758,391 3.2% 10,381,009 4,708 6.4% 1st Quarter 28,362,729 29,548,468 4.2% 29,913,211 13,566 1.2% APR 8,639,172 9,876,465 14.3% 10,416,248 4,724 5.5% MAY 9,398,212 10,269,963 9.3% 10,459,643 4,744 1.8% JUN 9,001,339 9,679,744 7.5% 10,595,645 4,805 9.5% 2nd Quarter 27,038,723 29,826,172 10.3% 31,471,536 14,273 5.5% JUL 10,149,807 10,863,843 7.0% 11,775,072 5,340 8.4% AUG 10,859,694 10,853,726 -0.1% 11,031,470 5,003 1.6% SEP 9,689,115 10,127,014 4.5% 12,360,393 5,606 22.1% 3rd Quarter 30,698,616 31,844,583 3.7% 35,166,935 15,949 10.4% OCT 10,834,930 11,429,538 5.5% 12,160,586 5,515 6.4% NOV 10,099,499 10,664,398 5.6% 11,657,012 5,287 9.3% DEC 13,998,438 15,776,073 12.7% 17,907,699 8,121 13.5% 4th Quarter 34,932,867 37,870,009 8.4% 41,725,297 18,923 10.2% TOTAL 121,032,935 129,089,232 6.7% YTD Total 129,089,232 138,276,979 62,711 7.1%

President/CEO’s Report – January 2016 February 11, 2016 Page 5 of 12

Parking Comparison

President/CEO’s Report – January 2016 February 11, 2016 Page 6 of 12

• 2015 Parking Revenue – Good News The RTAA had a banner year in parking revenue for 2015. Revenue was up $888,000 or 10.3% over parking revenues collected in 2014. The following chart provides an annual comparison between calendar years 2013, 2014, and 2015.

Business Development Reno-Stead Airport Economic Development (AED)

• UAS (Unmanned Aircraft Systems) Staff continues working with the University of Nevada Reno (UNR), the National Aeronautics and Space Administration (NASA), and other corporate partners regarding the technical requirements of Task Order 2 from NASA to establish connectivity between Nevada and the Live Virtual Constructive Distributed Environment (LVC-DE) at NASA Ames. To support this connectivity, UNR will lease 1,572 square feet of space located on the first floor of the Reno-Stead Airport terminal, where the Nevada Unmanned, Aerial, and NextGen Collaborative Environment (NUANCE) laboratory will be located.

President/CEO’s Report – January 2016 February 11, 2016 Page 7 of 12

As an incentive to locate the LVC-DE at the Reno-Stead Airport terminal, the Reno-Tahoe Airport Authority (RTAA) will fund and construct Phase 1 of the NUANCE lab. In order to meet NASA’s deadline requirements for the LVC-DE, the scope for Phase 1 has been scaled back. The refined Phase 1 scope now only includes construction of the NUANCE lab, which will meet NASA and UNR connectivity technical requirements and deadlines.

Staff is working with NASA, the Nevada Advanced Autonomous Systems Innovation Center (NAASIC), UNR, and the Governor’s Office of Economic Development (GOED) for a press event to celebrate the opening of the NUANCE lab. Additional information will be provided at a future date.

Reno-Tahoe International Airport (RNO) General Aviation

• CEO Advisory Group on GA Minimum Standards (GAMS) The CEO Advisory Group reconvened on January 21, 2016 to review public input received from general aviation stakeholders during the Public Workshop held in December 2015. The CEO Advisory Group incorporated workshop recommendations into the proposed GAMS document. Staff provided an update to the RTIA User Committee on February 8, 2016 on the GAMS process.

The final step in the CEO Advisory Group’s GAMS process is to recommend proposed GAMS revisions in the form of a final draft document to RTAA President/CEO for review and future Board consideration.

• Atlantic Fuel Storage Facility On January 12, 2016, the FAA Airport District Office (ADO) issued a categorical exclusion approval for Atlantic Aviation’s installation of the fuel storage facility that was approved by the Board on April 9, 2015. The fuel storage facility is exclusively for storage and will not be used for self-serve fueling. The construction and tank installation process is anticipated to be completed by the second quarter of 2016.

Outside Commercial Properties

• 1120 Telegraph Street

R&S Distribution, LLC dba R&S Cabinets A new 24-month commercial lease agreement was executed with R&S Distribution, LLC dba R&S Cabinets for the 8,400 square foot commercial warehouse building located at 1120 Telegraph Street. R&S is a local retailer and distributor of kitchen and bathroom cabinets as well as countertops and other accessories. R&S will utilize the building as their showroom, general office area, and for storage of materials. The total contract value is $90,720.

RNO Concessions

• Retail

Specialty retailer Forever Heather has completed its relocation from its pre-security Lobby location to the holdroom area across from gate B1. The pre-security Lobby space is being back-filled by Squaw Valley Ski Resort, LLC which has executed a new two-year space lease with the Authority. Squaw Valley is currently in the process of remodeling this space into a Mountain Concierge office, which President/CEO’s Report – January 2016 February 11, 2016 Page 8 of 12

will offer ski pass and ticket fulfillment, retail merchandise, virtual mountain tours, sports equipment demos, and a guest lounge. Squaw Valley’s Mountain Concierge is scheduled to open in early to mid- February.

Smarte Carte, Inc. has executed a new three-year license agreement with the RTAA to provide luggage carts, phone charging stations, and massage chair services. Smarte Carte will be replacing the current luggage cart inventory with its newest model luggage cart before the end of 2016.

• Food & Beverage The Timber Ridge Restaurant has been nominated for the USA Today’s 10 Best Readers' Choice travel award contest. The judging panel has selected Timber Ridge as a contender for “Best Airport Bar / Restaurant Atmosphere.” The other airports with restaurant contenders in this category include San Diego, Raleigh-Durham, Portland (OR), Sacramento, JFK, Dallas/Ft. Worth, Chicago O’Hare, Philadelphia, McCarran, Minneapolis, and Baltimore/Washington. The contest, which is being promoted by USA Today, gives people four weeks to vote for the restaurant candidate of their choice at http://www.10best.com/awards/travel/best-airport-bar-restaurant-atmosphere/. Voting ends at midnight on Wednesday, February 10, 2016 and the winners will be announced on Thursday, March 10, 2016.

• Advertising

La Galleria, a Truckee-based jewelry, art, home décor, and furnishings company, has installed a custom display inside the glass case in Baggage Claim. The display content will be updated three times each year. The advertising contract is for a five-year term and has a total value of $24,000.

The Grand Sierra Resort (GSR) virtual concierge installation began in the Lobby alcove on February 1st. Once completed, the display will provide GSR information and showcase various aspects of the property on four LED screens, as well as a kiosk offering the capability for guests to confirm reservations and check in to the hotel. In addition to the alcove, the GSR completed installation of their advertising on the Lobby soffit located near the ski statue.

Organizational Training & Development • “RTAA 101”, a quarterly series on what different departments do and how they operate, kicked off with a dynamic presentation titled “Air Service 101”. Participants received an overview of the changing airline industry, and then heard about how a new flight becomes a reality, as well as how the RTAA is working with the local community to compete for air service.

• Human Resources (HR) staff presented several computer classes which were open to all RTAA employees. “The PowerPoint Template” class provided instruction on how to create consistent and professional presentations using the RTAA PowerPoint template. “Forms” is a perennially popular class that shows participants how to create documents that can be filled out electronically.

• All custodians and select maintenance employees received OSHA required training on “Bloodborne Pathogens”, which was delivered by Airport Firefighters. This annual class goes over safety precautions and policies regarding safe practices in working around and/or handling these potentially hazardous materials.

President/CEO’s Report – January 2016 February 11, 2016 Page 9 of 12

• In support of the organization’s succession planning efforts, HR staff presented “Strength Training for Resume Writers”, one of the courses in RTAA’s Career Development series. This course gives participants a new perspective on this all important job search document, teaching them how to take their resume from good, to great, to excellent.

• The RTAA will again be participating in the Best Places to Work Competition. The Best Places to Work award was established in 2008 to recognize organizations that deliver an outstanding workplace experience. Best Places to Work winners are determined exclusively on confidential and anonymous survey responses to an Employee Engagement Survey conducted by an independent firm. The survey will be available to complete between February 15th and March 18th. In order to be considered as a finalist, at least 50% of our employees must complete the survey. Human Resources will be communicating with employees about the survey process and participation rates.

• RTAA Management representatives have been meeting to review the Teamster collective bargaining agreement in preparation to enter into successor agreement negotiations beginning in February 2016. Potential bargaining priorities have been identified.

• To kick off the New Year, a new 12 Week Weight Loss Challenge has begun. The challenge was designed based on employee feedback and we have 35 employees participating. In just the first week, the total combined weight loss was 62 pounds and there are still have 11 weeks to go. The challenge will also be highlighted with several Mini Focus Challenges that will get participants to concentrate on drinking water, eating fruits and veggies, tracking their food intake, reducing body fat, and many others. The challenge will continue through early April 2016.

Miscellaneous Information • The Airport’s social media strategy continues to be a success. Facebook followers are at 11,135 with a monthly post reach of 1.6 million people and Twitter is now at 4,926. This month we featured Fly Reno/Tahoe’s promotion for a free ski vacation to 11,135 followers Boise, RNO’s Timber Ridge Restaurant USA Today’s poll for best airport restaurant, and Squaw Valley’s poll for best ski resort nationwide. The Kindness Takes Flight monthly activity was featured on social media during National Popcorn Day. 4,926 followers Also featured was the Employee Photo Contest and new transportation options Uber and Lyft.

• Reno-Tahoe International Airport, in partnership with Squaw Valley Ski Holdings, LLC, has been selected to host the 21st Annual International Aviation Forecast Summit, which is put on by Boyd Group International, Inc. The annual conference will take place September 18 – 21, 2016 and will bring together 450 to 500 aviation professionals, including CEOs and top airline officials. It will coincide with the weekend of the National Championship Air Races, bringing in attendees early to enjoy the races and the Reno-Sparks area.

• Reno-Tahoe International Airport’s website has a fresh, new design to match the look and feel of Reno-Tahoe. As part of the Airport Authority’s Strategic Plan, the new website has a focus on air service and added customer service functionality to help ensure a positive experience for our passengers. The layout is easy to use, and features airline fare sale information, integrates social media, and better adjusts to the user’s device such as a desktop, tablet, smart phone, etc. President/CEO’s Report – January 2016 February 11, 2016 Page 10 of 12

RenoAirport.com was most recently updated in 2008, and the new site is a better reflection of the Airport and our region. A presentation and walk through of the updated website will be given to the Board on February 11th.

• Staff celebrated the American Heart Association’s National Go Red Day on February 5th, to show support for women’s heart health. Staff wore red and participated in a group photo in the Airport terminal, and promoted new routes at an RTAA booth at the Go Red for Women Luncheon held at the Atlantis Resort Casino.

• As in previous years, staff welcomed a unique sporting event this month. The annual Pole Vault Summit brought 1,000 athletes and their equipment through the terminal, which required substantial coordination between the airlines and TSA.

• Airport staff continues to support the three international Volaris flight arrivals each week in the U.S. Customs and Border Protection (CBP) facility, providing customer service with assistance in using the Automated Passport Control (APC) kiosk, information, water, and snacks. In addition, this month RNO welcomed the arrival of two international golf charters from Puerto Vallarta, MX, and Airport staff was there to assist with queuing and APC kiosk use.

• RNO announced the start of two Transportation Network Companies (TNC) this month. On January 20th, Uber rideshare service began, and was celebrated with a press conference that included Airport and Uber officials, and University of Nevada Reno (UNR) mascots Alfie and Wolfie. The event garnered attention from all the local news media outlets and the new service is getting a lot of play on social media. Then, on January 29th, Lyft finalized their operating agreement and began offering pickups at RNO. Rideshare companies are good news for our community and customers, providing increased transportation options, and added convenience.

• Staff conducted an interview with USA Today regarding air cargo for a possible future feature article. The year 2015 was the best year recorded at RNO in terms of air cargo with a 7.1% increase over 2014.

• The New Approach to Sustainability Planning staff met with Lynne Barker, Sustainability Manager for the City of Reno, in January to discuss the Airport Authority’s sustainability initiatives, and the City’s interest in creating a sustainability and climate action plan for Reno through a broad, stakeholder engagement process with other community leaders.

• On February 3, 2016, staff received a briefing from the Truckee River Flood Management Authority (TRFMA) staff on the current improvements plan and options they are considering for funding of the project. A series of improvements are proposed along the Truckee River that run from the Reno downtown area, through the valley and developed areas downstream. In scale, these improvements are much more modest than previously proposed, and as a result the total estimated cost is down to about $445 million, but when all elements are completed will provide flood protection for developed parts of the valley, including the Airport, from a 100-year flood event. The challenge that the TRFMA now faces is that there is no revenue sources in place to fund these improvements and they do not anticipate federal assistance due to competition for grants from other major projects around the country. Among the many funding options being considered, a leading candidate being put forward by TRFMA staff, is the creation of a special assessment district fee applied to the area directly President/CEO’s Report – January 2016 February 11, 2016 Page 11 of 12

benefitting from flood protection, which includes the Airport, supplemented by a request at a future legislative session for an increase in property or sales taxes. Based on information shared at this briefing, staff is analyzing the cost implications to the Airport associated with the estimated special assessment district fee. Staff was informed that the TRFMA Board would be discussing these issues at their February 12, 2016 meeting, but the Airport was assured that no decisions were expected and several more opportunities for input will be made available.

• Federal Aviation Administration (FAA) Airport Capital Improvement Program (ACIP) Planning and Engineering staff submitted the required annual update to the Federal Aviation Administration’s (FAA) Airport Capital Improvement Plan (ACIP) for Reno-Tahoe International Airport on January 29, 2016, and for Reno-Stead Airport on January 31, 2016. Information submitted is incorporated by the FAA Regional Airports Office into its Regional ACIP. The Regional ACIPs are then incorporated into the National ACIP. The National ACIP is the primary planning tool used by the FAA to identify and prioritize nationwide airport capital improvement needs and to plan for the distribution of Airport Improvement Program (AIP) funds over the next 3 to 5 years. On an annual basis, both the Reno-Tahoe International and Reno-Stead Airports are eligible for entitlement and discretionary AIP funding. For Reno-Tahoe International Airport, annual entitlement levels are based on passenger volumes. Entitlement levels are fixed for Reno-Stead Airport at $150,000 per year. Discretionary levels fluctuate greatly based on the total amount of funding made available for airport projects and on how high the Reno-Tahoe and Reno-Stead projects rank nationally compared to other airport projects.

• Aircraft Rescue and Firefighting Facility (ARFF) Solar System The 135-kilowatt solar system installed at the Reno-Tahoe Airport Authority’s Aircraft Rescue and Firefighting Facility (ARFF) has been fully operational since March 2011. Solar power generation results are provided below. Banked credits have been used during those months when not enough power is generated to cover the monthly use. As indicated in the table below, approximately $20,232 in electrical costs were saved as a result of the solar system during the current 2015-2016 fiscal year period.

December Power Generation FY 2015-2016 2015 Energy Offset from Monthly Bill $3,792 $19,801 Energy Credits Banked $0 $431 Banked Credits Applied ($1,926) ($2,096) Total Earned $1,866 $20,232 Banked Credits Remaining NA $8,967

• Recycling at Reno-Tahoe International Airport Beginning July 2015, Airport Authority staff have successfully collected approximately 36.98 tons of recyclable material during the FY 2015-2016 period. These recyclables equate to a 9.26 percent diversion rate of the Airport’s total waste volume. An annual recycling objective remains set at 10 percent.

As a result of hauling cost-reduction measures, collected recyclables are no longer transported monthly to local recycling centers. Airport Authority staff accumulate recyclables for longer periods of time before transportation, thereby decreasing the number of annual trips. As a result, during some months there are no reportable quantities for certain materials, as illustrated in the table below. President/CEO’s Report – January 2016 February 11, 2016 Page 12 of 12

Material January 2016 FY15-16 (Tons) (Total Tons) Cardboard 2.23 17.03 Mixed Paper 0 6.18 Glass 0 0 Batteries 0.025 0.20 Beverage Containers 6.44 13.57 Total 8.69 36.98

Quarterly Strategic Plan Update • Attached to this report is the Strategic Plan Dashboard Report for period ending the 2nd Quarter of Fiscal Year 2015-2016.

Legislative/Government Affairs Update • In support of the RTAA, the McDonald·Carano·Wilson (MCW) Government Affairs Group engaged in the following meetings and activities in January 2016:

 Community Meetings MCW attended the Las Vegas Metro Chamber of Commerce "Preview" event. During the tourism panel presentation by the Las Vegas Convention and Visitors Authority (LVCVA) Head Rossi Ralenkotter, RTAA received praise for having "stress dogs" available to relieve travelers' stress.

 Leadership Meetings CEO Marily Mora and Tina Iftiger, Vice President Airport Economic Development, attended a luncheon hosted by MCW for Assemblywoman Irene Bustamante Adams. At the event, the Assemblywoman and Caucus Leader singled out the RTAA’s efforts to pass the aviation tax abatement as an example of policy change that had an immediate and positive economic impact in the State. Ms. Iftiger was invited by the Assemblywoman to describe the legislation and its impact to the 25+ attendees at the event.

 Initiatives MCW will collaborate with the RTAA Administration to develop an employee training course on the legislative process. This is a dual effort to prepare senior administrators to assist with technical expertise leading up to and during the next session, as well as to broadly educate other employees about the people and processes that affect their work and private lives.

 Candidates MCW continues to meet with declared candidates and incumbents. Once the official filing period closes on March 18th, MCW will arrange strategic briefings with the RTAA administrative team.

Presentations • The CEO gave an informative presentation to the RSCVA Board on January 28th, with an update on air service and economic development.

• Staff spoke to the Sparks Sertoma Club, providing an overview of new air service. Reno Tahoe Airport Authority

FY 14-18 Comprehensive Strategic Plan Dashboard

FY16

As of 02/04/2016

Goa1.l1 CLuirrsentt Air Service: Maintain 1.2 New Air Service: Pursue new 1.3 Low Cost Ops: Maintain the 1.4 Community Collaboration: scheduled airline service and or expanded air service low cost airport environment Increase awareness and strengthen relationships with opportunities resulting in a net within the lowest 25% medium opportunities for enhanced air existing air carriers. gain in air service. hub airports. service. Goal List 51.5% 53.5% 67% 83% % of supporting goals % of supporting goals % of supporting goals % of supporting goals accomplished accomplished accomplished accomplished

Marily Mora Marily Mora Marily Mora Marily Mora

2.1 GA Community: Support a 2.2 Reno-Tahoe General Aviation 2.3 Reno-Stead General Aviation 3.1 Current Service: Maintain vibrant GA community through Service Providers: Encourage GA Service Providers: Encourage GA existing cargo support service to optimizing the GA customer support through a variety of support through a variety of retain current cargo volume. service experience. service vendors. service vendors. 100% 67.5% 30% 57% % Achieved - Target 85% % of supporting goals % of supporting goals % of supporting goals Occupancy of T-Hangars accomplished accomplished accomplished or better Marily Mora Marily Mora Marily Mora Marily Mora

3.2 New Service: Position RNO as 3.3 Facilities: Continue to 4.1 RNO Airport Land and 4.2 RTS Airport Land and a West Coast distribution point by optimize infrastructure to address Building Utilization: Optimize and Building Utilization: Optimize and actively growing cargo market demand in a cost-effective diversify revenue portfolio. diversify the revenue portfolio. development. manner. 73% 55% $2.8m $314k % of supporting goals % of development initiated RNO annual gross land/ RTS annual gross land/ accomplished in Southwest quadrant facilities revenue to budget facilities revenue to budget

Marily Mora Marily Mora Marily Mora Marily Mora

4.3 Non-Airline Revenue: 5.1 Customer Experience: 5.2 Training and Innovation: 5.3 Governance: Foster trust and Maximize all non-airline revenue Continually improve customer Continually improve the a collaborative environment at both airports (parking, convenience, supporting professional development, skills between staff and the Board of concessions, rental cars, etc.). hospitality and service. and abilities of the RTAA staff. Trustees. $16.4 66% 71% 100% Non-Airline Revenue per % of supporting goals % of supporting goals Board/Staff Retreat- % EPAX to budget accomplished accomplished Completed

Marily Mora Marily Mora Marily Mora Marily Mora

5.4 Org/Staff Environment: 6.1 GP: Air Service Development - 7.1 GP: Safety and Security - The 7.2 GP: Safety and Security - The Maintain and enhance the positive Maintain the facility to ensure safety and security of every user RTAA will strive to maintain and RTAA environment and attractiveness and functionality. of our airports is our primary enhance operational efficiency. organizational values. concern. 51% 57% 49% 84% % of supporting goals See #1 Strategic Priority - % of Support Goals % of supporting goals accomplished Increase Air Service Accomplished accomplished

Marily Mora Marily Mora Marily Mora Marily Mora

8.1 GP: Customer Service - 9.1 GP: Financial Integrity - 10.1 GP: Professionalism & 11.1 GP: Environmental Continually improve customer Financial stability through Ethics - Value and respect the Responsibility -Pursue satisfaction and ensure the very honesty and transparency in all individual and support each other sustainable practices to minimize best service. transactions. through teamwork. the impact on the environment. 0 76% 25% 75% Customer Service % of supporting goals % of supporting goals % of supporting goals Satisfaction Score of 6.12 accomplished accomplished accomplished or better Marily Mora Marily Mora Marily Mora Marily Mora

Interoffice Memo

Reno-Tahoe Airport Authority

Date: February 11, 2016 To: Chairman & Board Members From: Marily Mora, A.A.E., President/CEO Subject: MCW’s Legislative Update Supplement

As a supplement to the McDonald·Carano·Wilson (MCW) Legislative/Government Affairs update included in the January 2016 President/CEO’s Report, attached for your reference is a matrix showing declared candidates as of January 29, 2016. This matrix is subject to change at any time until the official filing period closes on March 18th.

MMM/cj

Candidate Matrix TERMED OUT Not Running Mid-Term

Primary Winner General Winner Congress Incumbent Challenger June 14, 2016 November 8, 2016

Congressional District 1 Dina Titus (D)

Congressional District 2 Mark Amodei (R) Chip Evans (D) Michael Roberson (R) Michelle Fiore (R) Sami Kahl (R) Kerry Bowers (R) Dr. Annette Teijeiro (R) Congressional District 3 Joe Heck (R) Andy Mathews (R) Jesse Sbaih (D) Barry Michaels (D) Heather Murren (D) Jacky Rosen (D) Danny Tarkanian (R) Ruben Kihuen (D) Susie Lee (D) Congressional District 4 Cresent Hardy (R) Lucy Flores (D) John Oceguera (D) Primary Winner General Winner Senate Incumbent Challenger June 14, 2016 November 8, 2016 Joe Heck (R) Harry Reid (D) William Tarbell (R) Catherine Cortez Masto (D) Primary Winner General Winner State Assembly Incumbent Challenger June 14, 2016 November 8, 2016 District 1 Marilyn Kirkpatrick (D) Daniella Monroe Moreno (D) District 2 John Hambrick (R) District 3 Nelson Araujo (D) District 4 Michele Fiore (R) District 5 Erv Nelson (R) Tony Baca (R) District 6 Harvey Munford (D) District 7 Dina Neal (D) District 8 John Moore (R) Steve Yearger (D) District 9 David Gardner (R) Diana Orrock (R) District 10 Shelly Shelton (R) Chris Brooks (D) District 11 Olivia Diaz (D) District 12 James Ohrenschall (D) District 13 Paul Anderson (R) District 14 Maggie Carlton (D) District 15 Elliot Anderson (D) Stan Vaughn (R) District 16 Heidi Swank (D) District 17 Tyrone Thompson (D) District 18 Richard Carrillo (D) District 19 Chris Edwards (R) Connie Foust (R) District 20 Ellen Spiegel (D) Vinny Spotleson (D) District 21 Derek Armstrong (R) Ozzie Fumo (D) Richard Bunce (R) District 22 Lynn Stewart (R) Keith Pickard (R) District 23 Melissa Woodbury (R) District 24 Amber Joiner (D) Sam Kumar (R) District 25 Pat Hickey (R) Till Tolles (R) Jennifer Terhune (R) Lisa Krasner (R) District 26 Randy Kirner (R) Jason Guinasso (R) District 27 Teresa Benitez-Thompson (D) District 28 Edgard Flores (D) District 29 Stephen Silberkraus (R) Amy Groves (R) District 30 Michael Sprinkle (D) District 31 Jill Dickman (R) District 32 Ira Hansen (R) District 33 John Ellison (R) Manny Garcia (D) District 34 Victoria Seaman (R) Shannon Bilbray-Axelrod (D) Zach Conine (D) Garlyn Norris (D) District 35 Brent Jones (R) Justin Watkins (D) Tiffany Jones (R) Scott Mattox (R) District 36 James Oscarson (R) Rusty Stanberry (R) Districy 37 Glen Trowbridge ( R) Jim Marchant (R) District 38 Robin Titus (R) District 39 Jim Wheeler (R) District 40 PK O'Neill (R) Kiran Hill (R) District 41 Vicki Dooling (R) Sandra Jauregui (D) District 42 Irene Bustamante Adams (D) Primary Winner General Winner State Senate Incumbent Challenger June 14, 2016 November 8, 2016 District 1 Pat Spearman (D) District 2 Mo Denis (D) District 3 Tick Segerblom (D) District 4 Kelvin Atkinson (D) District 5 Joyce Woodhouse (D) Dr. Carrie Buck (R) Nicole Cannizzaro (D) District 6 Mark Lipparelli (R) Erv Nelson (R) Victoria Seaman (R) District 7 David Parks (D) District 8 Patricia Farley (R) District 9 Becky Harris (R) District 10 Ruben Kihuen (D) District 11 Aaron Ford (D) District 12 Joe Hardy (R) District 13 Debbie Smith (D) District 14 Don Gustavson (R) Eugene Hoover (R) Denis Hoff (I) District 15 Greg Brower (R) Devon Reese (D) Heidi Gansert (R) District 16 Ben Kieckhefer (R) District 17 James Settelmeyer (R) District 18 Scott Hammond (R) District 19 Pete Goicoechea (R) Michael Roberson (R) District 20 -running in CD3 District 21 Mark Manendo (D) Primary Winner General Winner Reno City Council Incumbent Challenger June 14, 2016 November 8, 2016 Mayor Hillary Schieve Ward 1 Jenny Brekhus Victor Salcido Ward 2 Naomi Duerr Ward 3 Oscar Delgado Ward 4 Paul McKenzie Ward 5 Neoma Jardon At-Large David Bobzien Washoe County Primary Winner General Winner Incumbent Challenger Commission June 14, 2016 November 8, 2016 District 1 Marsha Berkbigler (R) District 2 Bob Lucey (R) District 3 Kitty Jung (D) District 4 Vaughn Hartung (R) Maurice Washington (R) District 5 Jeanne Herman (R) Primary Winner General Winner Sparks City Council Incumbent Challenger June 14, 2016 November 8, 2016 Mayor Geno Martini Ward 1 Julia Ratti Ward 2 Ed Lawson Ward 3 Ron Smtih Ward 4 Charlene Bybee Ward 5 Ron Schmitt Kristopher Dahir (R) Primary Winner General Winner Clark County Commission Incumbent Challenger June 14, 2016 November 8, 2016 District A Steve Sisolak (D) District B Marilyn Kirkpatrick (D) Steve Ross District C Larry Brown (D) District D Lawrence Weekly (D) District E Chris Giunchigliani (D) District F Susan Brager (D) Distrit G Mary Beth Scow (D) Next Election Las Vegas Incumbent Challenger Spring of 2017 Mayor Carolyn Goodman (up in 2019) Ward 1 Lois Tarkanian Ward 2 Bob Beers Ward 3 Bob Coffin Ward 4 Stavros Anthony Ward 5 Ricki Barlow Ward 6 Steve Ross Next Election North Las Vegas Incumbent Challenger Spring of 2017 Mayor John Lee Ward 1 Isaac Barron Ward 2 Pamela Goynes-Brown Ward 3 Anita Wood Ward 4 Richard Cherchio Next Election City of Henderson Incumbent Challenger Spring of 2017 Mayor Andy Hafen Ward 1 Gerri Schroder Ward 2 Debra March Ward 3 John Marz Ward 4 Same Bateman