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

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City and County of Denver Municipal Airport System NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 Pension Plans’ Funding Policy and Annual Pension Cost For DERP, the City contributes 8.50% of covered payroll and employees make a pre-tax contribution of 2.50% in accordance with Section 18-407 of the Revised Municipal Code of the City. The City’s contributions to DERP for the years ended December 31, 2010, 2009 and 2008 were approximately $38,427,461, $41,006,000, and $41,313,000, respectively, which equaled the required contributions each year. The Airport’s share of the City’s contributions for the years ended December 31, 2010, 2009 and 2008 were approximately $5,509,853, $5,782,918 and $5,676,000, respectively. Postemployment Healthcare Benefits The health benefits’ account was established by City Ordinance in 1991 to provide, beginning January 1, 1992, postemployment healthcare benefits in the form of a premium supplement to retired members, their spouses and dependents, spouses and dependents of deceased active and retired members, and members of the Plan awaiting approval of retirement applications. During 2009, the monthly health insurance premium supplement was $12.50 per year of service for retired participants under the age of 65, and $6.25 per year of service for retirees aged 65 and older. The health insurance premium supplement can be applied to the payment of medical, dental, and/or vision insurance premiums. The benefit recipient pays any remaining portion of the premiums. Before consideration of the premium supplement or premiums paid by the employer, the premiums charged to retirees are the same as charged to active employees for the same coverage. This results in an implicit rate subsidy, which is considered another postretirement benefit (OPEB). Because the Plan is a cost-sharing multiple-employer plan, the actuarially determined obligation for the OPEB is not reflected as a liability in the financial statements of the participating employers. Expense related to the implicit rate subsidy OPEB represents contractually required contributions under the cost-sharing multi-employer plan. (16) Deferred Compensation Plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or an unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employees or other beneficiary) held in trust by the City for the exclusive benefit of the participants and their beneficiaries. It is the opinion of the City’s legal counsel that the City has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. 62
City and County of Denver Municipal Airport System NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 (17) Commitments and Contingencies (a) Commitments At December 31, 2010, the Airport System has the following contractual commitments for construction and professional services: Construction projects $ 43,026,378 Construction projects to be funded by bonded debt 75,998,367 Projects related to remediation – Stapleton 4,757,800 Total commitments $ 123,782,545 (b) Noise Litigation The City and Adams County entered into an intergovernmental agreement for Denver International dated April 21, 1988 (the Intergovernmental Agreement). The Intergovernmental Agreement establishes maximum levels of noise that should not be exceeded on an average annual basis at various grid points surrounding the Airport. Penalties must be paid to Adams County when these maximums are exceeded. As of December 31, 2010, the Airport System had accrued $.5 million in the accompanying financial statements for noise violations and penalties. There is no noise penalty paid in 2010. (c) (d) Claims and Litigation The Airport System is involved in several other claims and lawsuits and is the subject of certain other investigations. The Airport System and its legal counsel estimate that the ultimate resolution of these matters will not materially affect the accompanying financial statements of the Airport System. Denver International Assets under Operating Leases The Airport leases portions of its buildings and improvements to airline and concession tenants under noncancelable operating leases. Lease terms vary from 1 to 30 years. The operating leases with the concession tenants require rental payments equal to the greater of a fixed minimum amount per square foot or percentage of gross receipts. Rental income under operating leases for 2010 and 2009 was $70,216,520 and $67,895,546, respectively. Minimum future rentals due from concession tenants are as follows for the years ending December 31: 2011 $ 51,050,528 2012 48,176,958 2013 46,081,476 2014 14,384,784 2015 8,830,104 2016-2020 11,498,399 2021-2022 232,506 Total minimum future rentals $ 180,254,755 63
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City and County of Denver Municipal Airport System ANNUAL ...

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