Reno-Tahoe International Airport

P.O. Box 12490

Reno, NV 89510-2490

Re: Transmittal of Final Financial Compliance Report

Dear Mr. Griffin:

Thank for your January 24, 2024, response to the Federal Aviation Administration’s (FAA) draft

The draft report recommendation, RNO’s response and the FAA’s final response are as follows:

FAA Recommendation: We found that RTAA’s practice of reimbursing Spirit directly for

marketing expenditures is contrary to FAA Policy which states there can be no direct air carrier

subsidies. Although Spirit has a practice of conducting its marketing in-house and not using

third-party vendors, this is not a justification for making direct payments to Spirit. We

recommend that RTAA find other means which do not involve direct payments to the airline to

agency after receiving supporting receipts. A recently executed incentive agreement with Delta

Airlines is included with this response.

It specifically prohibits the direct payment to airlines for marketing expenditures. On page 4 of

the agreement, it states: "Marketing Incentives shall be provided by the RTAA by way of

reimbursement directly to the advertising agency carrying out the marketing campaign or

qualified portions thereof and no reimbursement will be made directly to Airline."

resolved/corrected.

FAA Recommendation: "Typically, 911 services are already paid for through state and local

funding. The City of Reno and RTAA need to justify the cost. Specifically, is it a City of Reno

requirement that City entities pay for 911 and are there other City entities paying for 911

services? If the charge is justified, the County may not disproportionately charge RTAA for the

services. The payment should be tied to a cost allocation methodology that does not

disproportionately charge the airport, such as by the number of dispatch calls from RNO or

will depend on the pace of negotiations and the City's willingness to engage. RTAA will provide

the FAA with status updates every ninety (90) days and will advise the FAA when a final

methodology has been agreed upon between the parties.

FAA’S Conclusion: The FAA has reviewed your response transmitted 4/4/2024 and consider

the matter closed at this time. However, the FAA expects RTAA to provide the necessary

updates as promised as well as a copy of the executed renegotiated agreement with the City of

Reno.

FAA’s Recommendation: "ACO Recommends CATS Forms 5100-126 & 127 be reconciled

and updated to the appropriate financial reports in their Fiscal Year Ending (FYE) June 30, 2020

and 2021 ACFR's."

years ending 6/30/2020 and 6/30/2021 removing RTS from the ACFR to agree with the CATS

Form 5100-127.

FAA Conclusion: After reviewing your updated CATS Form 5100-127, the FAA considers this

matter as closed.

We appreciate your prompt responses in addressing these recommendations. As a result, all

matters are now considered closed. The final audit report will be published on the financial

compliance website. Thank you for your cooperation, and our appreciation extends to you, your

Michael Helvey

Director, Office of Airport Compliance

April 24, 2023 – April 27, 2023

Draft Financial Compliance Review

The Federal Aviation Administration (FAA) Office of Airport Compliance and Management

Analysis (ACO) conducted a financial compliance review at the Reno -Tahoe International

Airport (RNO or Airport) to evaluate compliance with Federal statutes and FAA requirements.

Federal grant funds or Federal property transfers for airport purposes. The FAA enforces these

obligations through its Airport Compliance Program. The ACO conducts a financial compliance

review of selected airports each fiscal year.

Unlawful revenue diversion, as defined in section II, C of the Policy Concerning the Use of

Airport Revenue (Revenue Use Policy) 64 Fed. Reg. 7697 (Feb 16, 1999), as “the use of airport

revenue for purposes other than the capital or operating costs of the airport, the local airport

system, or other local facilities owned or operated by the airport owner or operator and directly

and substantially related to air transportation or property.” The ACO is responsible for ensuring

that airports adhere to AIP Grant Assurances and the FAA’s Revenue Use Policy.

To assess compliance of RTAA’s expenditures with FAA's Revenue Use Policy, we interviewed

finance department staff to understand their accounting practices. We judgmentally selected 65

accounting transactions to determine if these expenditures were allowable, allocable, and

reasonable under the Revenue Use Policy.

RTAA paid $50,000 for Annual Membership dues to EDAWN. According to EDAWN’s

website, it is a private/public partnership established in 1983, committed to adding quality jobs to

the region by recruiting new companies, supporting the success of existing companies, and

assisting newly forming companies to diversify the economy and have a positive impact on the

quality of life in Greater Reno-Sparks.

As outlined in Section 112 of the FAA Authorization Act of 1994, 49 U.S.C.§ 47107(l)(2)

(A-D), Congress explicitly prohibited the diversion of airport revenues. This includes usage of

RTAA was able to provide examples and quantify the monetary benefits it received through its

participation in EDAWN. One such example occurred in September 2020 when Deluxe Public

Charter, LLC d/b/a JSX (JSX) initiated flights from Reno -Tahoe International Airport (RNO).

As Subject Matter Experts (SMEs), EDAWN presented RTAA with specific information on the

local demographics, disposable income, and economic diversity that JSX considers when

selecting a region to operate in. According to RTAA, the landing fees collected from JSX since

its first flight until April 2023 amounted to a total of over $165,000.

In addition, RTAA uses EDAWN's website to maximize exposure by posting Requests for

new 30,000 square foot hangars, over 10,000 square feet of office space, and a 5,000 square foot

executive terminal. During the property tour, you were given a glimpse of the area under

development. RTAA reports that during the first phase of development, Stellar is paying annual

land rents of $235,224.

Finally, RTAA has stated that they will actively prepare an annual report to highlight the tangible

financial benefits accrued from their active engagement with EDAWN.

Conclusion: Since RTAA was able to quantify the monetary benefits it received and will prepare

an annual summary that demonstrates the monetary benefits obtained due to its participation in

EDAWN. No further action is needed.

RTAA is one of twenty-two partner and sponsored agencies participating in the system. RTAA

has pledged a total contribution of $837,472.51 over a 15-year period to support the funding of

the system’s construction and infrastructure.

Before they joined the P25 System, the management of RTAA reported that they had difficulties

communicating with the State police during public safety incidents, leading to various incidents.

The FAA Revenue Use Policy restricts the use of airport revenue for non-airport activities and

prohibits direct or indirect payments that exceed the fair and reasonable value of services and

facilities provided to the airport. To ensure RTAA is contributing its fair share to the system and

adhering to the FAA Revenue Use policy, we have requested RTAA to provide the following

2) The breakdown of the cost allocation for the Washoe County P25 Radio System, specifying

the distribution of costs to each Partner and Sponsored Agency.

After our visit, RTAA supplied a copy of an Excel file and a written statement containing the

information we requested. For the fiscal year ending June 30, 2021, RTAA had 268 radios in

operation, accounting for 4.20% of the 6,380 radios actively used by all agencies within the

Washoe County P25 System. Furthermore, RTAA contributes to the system's debt payments,

with their contribution standing at 7.18% (or $837,472.51)—a figure that corresponds to the

number of Radio IDs issued.

Section 111 of the Federal Aviation Administration Authorization (FAA) Act of 1994, Public

Law 103-305 (August 23, 1994) established the requirement for commercial service airports to

file financial reports with the FAA. These reports are the Financial Government Payment Report,

ACO attempted to reconcile the information reported on both forms with the sponsor’s FY 2021

and 2020 Annual Comprehensive Financial Reports (ACFR). ACO found the information

presented in the sponsor’s Form 5100-127 did not reconcile to the ACFR. The sponsor had not

updated the FAA financial reporting database (CATS) financial information to reflect the audited

financial reports resulting with material variances between the CATS reporting and the ACFRs.

For example, variances between amounts entered into CATS and the ACFR for FY 2021 were:

CATS ACFR Variance %

Total Operating Revenue $42,588,202 $43,662,916 $-1,074,714 -2.52

information, but the FAA prefers audited data. CATS allows sponsors to update financial data at

any time. ACO felt the reported variance warranted the necessity of updating unaudited amounts

to those reported in the ACFR to prevent misleading the public.

Conclusion: ACO recommends CATS Forms 5100-126 & 127 be reconciled and updated to the

appropriate financial reports in their Fiscal Year Ending (FYE) June 30, 2020 and 2021 ACFRs.

Fee and Rental Structure and Grant Assurance 25, Airport Revenues to have an airport fee and

rental structure that will make the airport as self-sustaining as possible and minimize the airport’s

reliance on Federal funds and local tax revenues. The FAA has generally interpreted the self-

sustaining assurances to require airport sponsors to charge fair market value commercial rates for

nonaeronautical uses of airport property.

The FAA received and reviewed 52 commercial leases and agreements pertaining to the property

and concessions at RNO to determine if the airport sponsor followed acceptable practices for the

All leases reviewed contained provisions for annual increases with an escalation, and the Airport

or Real Estate Division approves all sub-leases, depending on the duration. The FAA found the

lease program to exceed leasing practices and fairly administered. There was no indication of

outside influences or political favoritism for the soliciting and awarding of leased property.

ARFF at RTAA is staffed with 15 line staff and 3 battalion chiefs, who handle paramedic,

structural, training, and inspections at RNO. The majority of calls at RNO involve Emergency

Medical Services. The ARFF staff do not perform off-airport runs however, RNO engages in

Dispatcher and some indirect costs. The primary function the City of Reno provides to the

RTAA includes, receiving, processing and dispatching “911 emergency” calls for service to

RTAA. Typically, an airport 911 call is for a passenger with a possible heart problem. During

our review, we were unable to determine how many calls 911 dispatchers received for service

requests at RNO.

Conclusion: Typically, 911 services are already paid for through state and local funding. The

City of Reno and RTAA need to justify the cost. Specifically, is it a City of Reno requirement

that City entities pay for 911 and are there other City entities paying for 911 services? If the

charge is justified, the County may not disproportionately charge RTAA for the services. The