Page 40 - BAA CAFR 2017

BIRMINGHAM AIRPORT AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

W. Components of Net Position
The Authority’s net position classifications are as follows:

Net investment in capital assets – This component of net position consists
of capital assets, net of accumulated depreciation and reduced by the
outstanding balances of any bonds or other borrowings that are attributable
to the acquisition, construction, or improvement of those assets. If there are
significant unspent related debt proceeds at year-end, the portion of the debt
attributable to the unspent proceeds is not included in the calculation of net
investment in capital assets. Rather, that portion of the debt is included in
the same net position component as the unspent proceeds.

Restricted net position – This component of net position represents
restrictions imposed by creditors, grantors, contributors, or laws or
regulations of other governments and restrictions imposed by law or
through constitutional provisions or enabling legislation.

Unrestricted net position – This component of net position consists of net
position that does not meet the definition of “restricted” or “net investment
in capital assets.”

NOTE 3 CASH AND CASH EQUIVALENTS AND INVESTMENTS

It is the Authority's policy to invest only in obligations of the U.S. Treasury, U.S.
Government Agencies, State of Alabama obligations, and short-term bank
certificates of deposit.

The Authority's cash and cash equivalents and investments are subject to several
types of risk, which are examined in more detail below:

Custodial Credit Risk of Bank Deposits
Custodial credit risk is the risk that, in the event of a bank failure, the Authority's
deposits (in excess of FDIC insurance) may not be returned to it. The carrying
amount of the Authority's deposits, certificates of deposits and cash on hand was
$34,430,543 and $28,488,429 and the related bank balance was $33,329,844 and
$31,036,488 at June 30, 2017 and 2016, respectively. The Authority also had
restricted cash deposited with a trustee, with a carrying amount of $46,821,811 and
$45,949,237 and related bank balances were $46,607,519 and $44,994,774 at June
30, 2017 and 2016, respectively.

The Authority's deposit policy for custodial credit risk limits deposits to financial
institutions that are members of the Alabama State Treasury's Security for Alabama
Funds Enhancement ("SAFE") Program. Under the SAFE program, the Authority's
funds are protected through a collateral pool administered by the Alabama State
Treasury. Banks doing business within the State of Alabama and holding deposits
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