CHARLESTON COUNTY AVIATION AUTHORITY

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1 CHARLESTON COUNTY AVIATION AUTHORITY CHARLESTON lnt RNATIONAL AIRPORT 5500 INTERNATIONAL BLVD. =101 CHARLESTON, SC 29' TELE: (8'13) FAX: (8'13) W\W 1.CHS AIRPORT.COM CHARLESTON COUNTY AVIATION AUTHORITY CHARLESTON INTERNATIONAL AIRPORT TUESDAY, JULY 23, 2013!O:OOA.M. SPECIAL BOARD MEETING MINUTES Members present were Chairman Savage, Messrs. Factor, Hagood (proxy for Campsen), Hartnett, S. Pryor, T. Pryor, Richter, Riley, Stavrinakis, Swails, Thomas (proxy for Limehouse) and Waters. Staff present were Mses. Stevens, Alexander, Beaman, Eagerton, Gunnells, McGhee, Mclendon, Murphy, Olmstead and Messrs. Brammer, Britnell, Carew, Connell, Goodstein, Heider, New, and Tracey. Others present were Robert Spann (CCAA Maintenance}; Tom Skinner, Carson Knizevski, Kent Thames and Troy Zbranek (Austin-Hitt); Tom Theobald and Greg Billingham (Fentress Architects}; Len Dillinger, Ken Burger, George Perinis and Michael Grandelski, (Baker); Eugene Bell and Jennifer Charzewski (Watson Tate Savory Liollio}; Greg Jones (ADC); Alex Haynes (Alex Haynes Consultants); Tom McNeish (Elliott Davis, LLC); Maurice Washington (Trust Management}; Sam Howell (Howell, Linkous & Nettles); Nancy Clawson (Bank of America); Geoff Wheeler (Ricondo & Associates); Ken Fullerton (PFM); Jennifer Mills (Raymond James); Peter Wertimer (Chernoff Newman); Nancy Bloodgood (Foster Law Firm) and Warren Wise (Post and Courier). CALL TO ORDER Chairman Savage called the meeting to order at approximately 10:15 a.m. PLEDGE OF ALLEGIANCE Robert Spann, Maintenance Superintendent, led the Pledge of Allegiance.

2 Minutes Page 2 of 11 ANNOUNCEMENTS Recognition: Salute to the Military- Peter Wertimer Peter Wertimer Chairman of the Military Policy Council for the Charleston Metro Chamber of Commerce thanked CCAA for Sean Tracey, Director of Special Projects, and highlighted all of Sean's good work with Joint Base Charleston and the Charleston Air Force Base. I. MINUTES A. June 20, 2013 Board Meeting L. Richter moved, seconded by P. Waters that the Authority defer the Minutes presented hereinabove. The motion was adopted. Chairman Savage stated that he wanted to do a better job at civility and that the Board should be cautious regarding statements Board Members make concerning fellow Board Members or Staff. He has been studying Roberts Rules of Order and the Board should try its best to be respectful and keep things positive. II. OPERATIONS COMMITIEE A. Report from Committee Chairman: S. Pryor The Operations Committee did not meet this month. Committee Chairman S. Pryor met with Director Stevens regarding the items listed below which are considered routine items and turned the meeting over to Director Stevens. B. Charleston International Airport (CHS) 1. Equipment Purchase: Compact Track Loader with Forestry Cutter P. Waters moved, seconded by S. Pryor that the Authority approve purchase of a T870 Bobcat Compact Track Loader with Forestry Cutter from Bobcat of Charleston in the amount of $93, The motion was adopted.

3 Minutes Page 3 of Equipment Purchase: Spare Cameras (2) for Ground Transportation License Plate Recognition (LPR) Software P. Waters moved, seconded by S. Pryor that the Authority approve the purchase of two spare cameras from CTR for a total of $26,900. The motion was adopted. M. Factor noted that the Authority should have a policy, which states how long the LPR information is kept in the system. Chairman Savage asked Committee Chairman S. Pryor to have the Operations Committee develop with staff a policy regarding the LPR information and report back to the Board. S. Pryor stated that the LPR information is automatically dumped when the automobile exits, but that he would verify with the vendor how the system operates. L. Richter asked Director Stevens "for the sake of the record, can you verify to us Madam Director that we have never disseminated or sold this information for any other use than has previously been described here?" Director Stevens answered, "I believe so, I cannot think of a situation where we would ever do that. This is used for internal purposes only." B. Hagood stated, because there is a law enforcement component we should consider that when looking into the policy. B. Hagood asked if there are some exceptions that would be appropriate or not? Director Stevens replied, there are exceptions we have found stolen rental cars in our parking lot that have been abandoned. It is not unusual when the military had a greater presence overseas we would have people abandon their cars in our parking lot. There are maintenance issues we have to deal with that might be exceptions to that policy. We will take a look at it. 3. Construction Contract for Surface Lot Seal Coat and Marking: First Construction Management, LLC S. Pryor moved, seconded by P. Waters that the Authority award contract to First Construction Management, LLC in the amount of $123, for the Surface Lot Seal Coat and Marking project. The motion was adopted.

4 Minutes Page 4 of Change Order No. 4 to McCarthy Improvement Company: Terminal Apron Expansion P. Waters moved, seconded by M. Factor that the Authority approve Change Order No. 4 to McCarthy Improvement Company in the amount of $392, contingent on FAA approval for the Terminal Apron Expansion project. The motion was adopted PLANNING COMMITTEE A. Report from Committee Chairman: l. Richter Committee Chairman Richter gave an update of the Planning Committee Meeting that was held at 9:00 a.m. this morning. Kent Vanden Oever of Air Projects, Inc. gave a presentation to the Committee concerning Food Service and Retail Concession RFP Overview. B. RFP: Solicitation for Food & Beverage and News & Gifts Concession I CHS Authority Staff with assistance from Air Projects, Inc., sub-consultant to Fentress Architects, developed a draft set of Request for Proposal (RFP} documents as it pertains to the concessions solicitation for Food & Beverage and News & Gifts at the Charleston International Airport. Implementation of the new concession program will require close coordination with the TRIP construction activities. No action was taken at this time. IV. FINANCE COMMITTEE A. Report from Committee Chairman: B. Swails Committee Chairman Swails reported that the Finance Committee did not meet this month. The Monthly Financial Report was presented as information only. B. Review FY Financial Statements & Management Letters Each Report includes a clean audit opinion as indicated in the letter from the auditor as well as detailed financial information. These financial reports are

Minutes Page 5 of 11 prepared by an independent auditor and presented to the full Board by the Auditor at a Board Meeting (usually in October of each year). C.

5 Minutes Page 5 of 11 prepared by an independent auditor and presented to the full Board by the Auditor at a Board Meeting (usually in October of each year). C. FY 2013 Statements on Auditing Standards {SAS) Forms 114 and 115: The Auditor's Communication with Those Charged with Governance and Communicating Internal Control Related Matters Identified in an Audit Chairman Savage directed the Board's attention to Items B. and C. above and stated he asked Director Stevens to include these two items because there have been some questions about the outside auditors and comments have been made. These are public documents and have always been public documents and there will never be any incentive to keep that information from Board Members or the public. They are on our website for anyone to look at, it is something that I am very proud of the fiduciary duty our staff has to the public- they have done an excellent job and that is confirmed by the outstanding audit reports. If there is any question about this Director Stevens is prepared to answer any questions that anybody might have regarding the outside auditor's comments, findings or anything and we will do this every year. They will be displayed, fully vetted and nothing kept from the Board or the public. Director Stevens stated that this process has been followed every year in the fall. A Special Board Meeting is held just for this purpose. Tom McNeish who is our current outside auditor or his predecessor came and presented the audit reports to the full Board. There has never been to my knowledge in my twenty-six years of any kind of attempt to withhold information. I think we have very good financial reports and work well with our auditors every year and I think it is important to note that as Chairman Savage said the audit reports are on the website. Mr. McNeish is here to answer any questions you may have. J. Riley moved, seconded by B. Swails that the Authority accept the Finance Committee report. The motion was adopted. Tom McNeish of Elliott Davis, LLC related that the audit firm works at the discretion of the Board. Direct communication between Elliott Davis and the Authority to share concerns as we go into the audit process is very valuable. Now that the Finance Committee has been established at the Board's convenience and discretion Elliott Davis should get on the agenda with the Finance Committee prior to the beginning of the audit process and anytime in between to get the Board's governance level, concerns and thoughts that Elliott Davis will incorporate into the audit process. As a matter of best practice Elliott Davis would certainly welcome input from the Committee and the Board. The

6 Minutes Page 6 of 11 mission of the auditors is to look at financials and give a level of reasonable assurance that the financial statements are presented fairly in accordance with generally accepted accounting principles. The main concern is that a significant misstatement in the financials has not occurred where users of the financials would be misled in making a credit decision. Any finding would be ancillary to that. It is important to know the limitations of the financial statement audit in that they are not engaging to necessarily find issues in internal controls they are really concerned about financial statements being properly stated. SAS #114 states that auditors should communicate clearly to those charged with governance the responsibilities of the auditor, and an overview of the scope and timing of the audit. The audit is scheduled to begin in August SAS #115 allows auditors to communicate to management and those charged with governance other matters related to an entity's internal control. An auditor may communicate matters that he/she believes are of potential benefit, or identification of deficiencies. V. HUMAN RESOURCES COMMITIEE A. Report from Committee Chairman: M. Stavrinakis Committee Chairman Stavrinakis reported that the Human Resources Committee did not meet last month. VI. BOND COMMITIEE A. Report from Committee Chairman: l. Richter Committee Chairman Richter informed the Board that we have the final draft version of the Bond documents. Judi Olmstead, Director of Finance and Administration, updated the Board as to where we are in regard to the financing schedule and the reason for recommending the Bank of New York Mellon as Trustee. Ken Fullerton, financial advisor provided a synopsis and a summarization of the bond process. Sam Howell, bond counsel, gave the specifics of the bond documents. B. Approval: Bond Financing Documents 1. Master Bond Resolution Relating to Airport Revenue Bonds

7 Minutes Page 7 of First Supplemental Bond Resolution Relating to Airport Revenue Bonds 3. Preliminary Official Statement 4. Purchase Agreement C. Approval of Trustee: Bank of New York Mellon Bank of New York Mellon is our current trustee for the outstanding 2004 Bond Series. Per direction of the 2013 Bond Committee, a proposal was obtained for the new 2013 bond issuance. Trustee fees are capped at $5,000 per year, and one-time initial counsel fees are also capped at $5,000. Services provided by Bank of New York Mellon to date have been efficient and without any problems. This proposal has been reviewed by bond counsel and the CCAA Financial Advisor. L. Richter moved, seconded by T. Pryor that the Authority approve the Bond Financing Documents items B.l., B.2., B.3., B.4. and Item C. listed above as set forth in the final version as recommended by counsel. The motion was adopted. VII. TERMINAL REDEVELOPMENT AND IMPROVEMENT PROGRAM (TRIP) COMMITTEE A. Report from Committee Chairman: H. Pena In Chairman Pena's absence, Len Dillinger, Program Manager for Michael Baker Jr., Inc. gave the report for the TRIP Committee, which met on July 16, B. Program Update: Report from Program Manager, Michael Baker Jr., Inc. C. Austin I Hitt Contract: Owner's Staff Designated Representative Director Stevens received a letter from Tom Skinner of Austin I HITT requesting a new Owner's Staff Designated Representative be identified due to the retirement of Jim Fann. Director Stevens proposed identifying herself as the Owner's Staff Designated Representative. The position of Program Manager was also updated to now identify Len Dillinger.

8 Minutes Page 8 of 11 The TRIP Committee recommended the Authority approve these administrative changes be made to the Austin I HITI Contract. D. Austin I Hitt Work Authorization No. 6: Central Energy Plant Balance CGMP Len Dillinger presented the Component Guaranteed Maximum Price (CGMP) proposal submitted by Austin I HITI for the remaining work required for the Central Energy Plant (CEP). The proposed CGMP was presented separate from the GMP in order to use currently available CCAA funds prior to the availability of bond funding in the August 2013 time frame. Committee members engaged the TRIP Team members with detailed questions related to the proposal. Baker has reviewed this CGMP proposal and recommends approval of the CGMP in the amount of $7,733, The TRIP Committee recommended the Authority approve CGMP in the amount of $7,733, E. Austin I Hitt Work Authorization No.7: Hazardous Material Remediation CGMP Len Dillinger presented the CGMP proposal submitted by Austin I HITI for the required Hazardous Material Remediation work. It was explained that the proposed CGMP was presented separate from the GMP in order to use currently available CCAA funds prior to the availability of bond funding in the August 2013 time frame. Committee members engaged the TRIP Team members with detailed questions related to the proposal. Baker has reviewed this CGMP proposal and recommends approval of the CGMP in the amount of $71, The TRIP Committee recommended the Authority approve the CGMP in the amount of $71, F. Austin I Hitt Work Authorization No. 3 Change Order No. 2: Addition of Rental Car Pavilion Kiosk Conduit Len Dillinger presented this proposed change order submitted by Austin I HITI and prepared by Fentress Architects for the installation of electric and data conduit at the Rental Car Pavilion (RCP). This infrastructure is being added to allow the Rental Car Companies to install kiosks in the Rental Car Ready Lot in the future if they choose to do so. Baker has reviewed this Change Order

9 Minutes Page 9 of 11 proposal and recommends approval of the Change Order in the amount of $4, The TRIP Committee recommended the Authority approve Change Order in the amount of $4, G. Austin I Hitt: Guaranteed Maximum Price {GMP) Conditional Approval Tom Skinner explained that Austin I HITI is seeking conditional approval of the GMP to give subcontractors confidence that the Program is moving forward and to lock the subcontractors into their bid amounts since the 90 day expiration date of bids is approaching. Director Stevens noted that conditional approval is also good for CCAA because it will give the bond ratings agencies increased confidence. Tom Skinner stated Austin I HITI has continued to refine their pricing and that any reductions are returned to the Owner's Contingency keeping the total budget to $158,929, as previously approved by the Board. Ron Mitchum asked what the impact Value Engineering {VE) has had on the quality of the project. Greg Billingham responded that changes due to VE have had minimal impacts on the project; most of the changes will not even be seen by the traveling public. The TRIP Committee recommended the Authority approve the GMP conditionally on the basis that bond funding is received and that the TRIP Team work with Staff and Legal Counsel to refine the contractual language. J. Riley moved, seconded by T. Pryor that the Authority approve the GMP conditionally on the basis that bond funding is received and that the TRIP Team work with Staff and Legal Counsel to refine the contractual language to 100% of the first 1.5% followed by 50% of the remaining 1.5%. The motion was adopted 7-5. The vote was as follows: Aye: Nay: T. Pryor, J. Riley, B. Swails, B. Hagood, S. Pryor, P. Waters and A. Savage L. Richter, T. Hartnett, M. Factor, E. Thomas and M. Stavrinakis

10 Minutes Page 10 of 11 H. Fentress Architects Construction Update: Construction Administration Report Greg Billingham presented an overview of the work that has been completed to date on both the RCP and the CEP. He also discussed the upcoming work that will be starting in the Baggage Claim Hall. I. Austin I Hitt Update: Schedule and Program Phasing Presentation Tom Skinner presented the proposed construction-phasing plan and how it changes as the project moves towards completion. VUI LAND SALE COMMITIEE A. Report from Committee Chairman: T. Hartnett Committee Chairman Hartnett stated that the Boeing land sale has been under review by the FAA. Upon review of the appraisals submitted to the FAA only one of the appraisals was approved as meeting the FAA's guidelines and being well supported in the data. The FAA concluded after reviewing the appraisals the price should be in the value submitted by CCAA' s appraiser. Additional information has been provided to the FAA by our appraiser and Boeing's appraiser to substantiate their conclusions and this information is now being review by the FAA. A. Goodstein reported that he, Director Stevens and Sean Tracey were in Washington, DC at the invitation of the FAA yesterday. They met with the Associate Administrator. The FAA is asking lots of questions, this was the second trip and we expect to go back. Boeing was there with Mark Fava, Neil Robinson, Marc Poulin and Amy Smith. Chairman Savage related that he attended a couple of the meetings and he wants everyone to know that Arnold Goodstein, Sue Stevens and Sean Tracey were hugely supportive of Boeing that there were several meetings with Boeing to plan the first trip to Washington. It was a very assertive, aggressive position ofthis Authority to comply with the Board's instructions for the land sale. Director Stevens stated that there are concerns by the FAA that are more about getting the sale to fit into the FAA's structure and making it something that they can work with the process.

11 Minutes Page 11 of 11 A. Goodstein added that CCAA has Grant Assurances and that everything has to fit within those Grant Assurances. X. EXECUTIVE SESSION DISCLAIMER Authority Board meetings are open to the public; however, exceptions to the open meeting policy may occur from time to time when a member of the Authority Board makes a motion to enter into Executive Session regarding an item listed on the published meeting agenda. In compliance with existing provisions under State law, the motion for Executive Session must be approved by the Authority's Legal Counsel and voted on by all present Board members, the presiding officer must state the specific purpose of the Executive Session. The Board did not convene into Executive Session. X. GENERAL DISCUSSION Chairman Savage noted that he wants the Operations Committee chaired by S. Pryor to do an evaluation of our parking. A serious issue has risen with one of our rental car companies. It is a good issue because they do not have enough parking. Chairman Savage stated that this could also be a Planning Committee item. Chairman Savage reported that he will get back with the Board next month. He has met with Michael Baker Jr., Inc. counsel regarding the issues, which arose in February. He is pleased to say that the end result of that investigation is positive, there is no hint of any impropriety that he is aware of based on their comprehensive investigation of all the players involved. The Chairman will provide details through the Governance Committee chaired by Keith Summey. Committee Chairman Summey was directed to put Chairman Savage on the Governance Committee's agenda he will be glad to report and basically give all the details. There is no hint of any misfeasance or malfeasance. XI. ADJOURNMENT Chairman Savage declared the meeting adjourned at 12:50 p.m.

CHARLESTON COUNTY AVIATION AUTHORITY

CHARLESTON COUNTY AVIATION AUTHORITY CHARLESTON lnternationt\l AIR C'oRT 5500 INTERNATIONAl BLVD. "'101 CHARLESTON, SC 29418-6911 TELE: (843) 767-7000 FAX: (543) 760 3020 W\VW.C.'HS AIRI'ORT.COM CHARLESTON