City and County of Denver Municipal Airport System ANNUAL ...

City and County of Denver
Municipal Airport System
NOTES TO FINANCIAL STATEMENTS
December 31, 2010 and 2009
construction. The bond reserve account and bond accounts represent $645,031,962 and are externally restricted
for debt service. The net assets restricted for capital projects represents $13,062,862.
The remaining net assets include unrestricted net assets of $235,597,016 which may be used to meet any of the
Airport System’s ongoing operations. Management of the Airport System has internally designated $67,267,320
of its unrestricted net assets amount, as allowed for in the 1984 Airport System General Bond Ordinance, as
supplemented and amended, to help meet debt covenant coverage requirements. In addition, ($291,114,739)
represents the Airport System’s investment in capital assets, less the related indebtedness outstanding used to
acquire those capital assets.
(l)
(m)
(n)
(o)
Restricted and Unrestricted Resources
Uses of restricted and unrestricted resources are made on a case-by-case basis by management depending on
overall requirements. Generally, management applies restricted resources and then unrestricted resources when
both restricted and unrestricted resources are available to pay an expense.
Operating Revenues and Expenses
The statement of revenues, expenses, and changes in net assets distinguishes operating revenues and expenses
from nonoperating activity and capital contributions. Operating revenues and expenses generally result from
providing services and producing and delivering goods in connection with Denver International’s principal
ongoing operations. The principal operating revenues of the Airport System are charges to airline tenants for
facility rentals, landing fees and parking. Operating expenses include the cost of providing services,
administrative costs, and depreciation on capital assets. All revenues and expenses not meeting this definition
are reported as nonoperating revenues and expenses or capital contributions. Such items include Passenger
Facility Charges (PFCs), interest expense, interest income, grants from the federal government and Stapleton
demolition and remediation expenses.
Governmental Grants
The Airport System periodically receives grant revenues from federal agencies which are either for capital
projects or operating purposes. Revenue is considered earned as the related approved capital outlays or expenses
are incurred by the Airport System. Revenues from capital grants are reported as capital contributions on the
statements of revenue, expenses and changes in net assets and revenues from operating grants are reported as
nonoperating revenues. The Airport System has also received a grant allocation through the American Recovery
and Reinvestment Act (ARRA) of 2009.
Rates and Charges
The Airport System establishes annually, as adjusted semi-annually, airline facility rentals, landing fees, and
other charges sufficient to recover the costs of operations (excluding certain debt service payments),
maintenance, and debt service related to the airfield and the space rented by the airlines. Any differences
between amounts collected from and actual costs allocated to the airlines’ leased space are credited or billed to
the airlines. As of December 31, 2010 and 2009, the Airport System had accrued a liability to the airlines,
included in current other liabilities, of $6,831,425, and ($5,891,209), respectively.
For the years ended December 31, 2000 through 2005, 75% of Net Revenues (as defined by the bond ordinance)
remaining at the end of each year were to be credited in the following year to the passenger airlines signatory
use and lease agreements; and thereafter it is 50%, capped at $40,000,000 for all years. The Net Revenues
credited to the airlines totaled $40,000,000 and $29,334,593 for 2010 and 2009, respectively. Liabilities for
these amounts were accrued as of December 31, 2010 and 2009, respectively, and are reported in the statement
of net assets as revenue credit payable.
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