Page 69 - BAA CAFR 2017

BIRMINGHAM AIRPORT AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS

NOTE 12 DEFERRED COMPENSATION PLAN

The Authority offers certain executive employee(s) a deferred compensation plan
created in accordance with Internal Revenue Code Section 457. The plan, available
to executive employee(s), 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 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 employee or beneficiary)
solely the property and rights of the Authority (without being restricted to the
provisions of benefits under the plan), subject only to the claims of the Authority's
general creditors. Participants' rights under the plan are equal to those of general
creditors of the Authority in an amount equal to the fair value of the deferred
account for each participant.

It is the opinion of the Authority's legal counsel that the Authority 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. The Authority believes that it is unlikely that it will
use the assets to satisfy the claims of general creditors in the future.

NOTE 13 MAJOR CUSTOMERS

From January 1, 2006 until March 1, 2009, the airlines operated without an
agreement in place, but were charged rental rates and landing fees based on the
methodology contained in the expired agreement. On March 1, 2009, the Authority
changed its rate setting methodology to an approach of crediting the Airport’s
terminal cost center with 25% of all terminal building non-airline revenues, and
calculating landing fees based on a full compensatory methodology.

From July 1, 2011 until August 14, 2016, the Authority entered into a new
agreement with each of the six major airlines serving Birmingham. Under the terms
of the agreement, the airlines will be charged full compensatory landing fee rates
for the airfield, and will be charged commercial compensatory rates for the terminal
building reduced by a 35% non-airline terminal building revenue credit.

Effective August 15, 2016, the Authority entered into a new five-year agreement
with each of the four major airlines serving Birmingham. Under the terms of the
agreement, the airlines will be charged full compensatory landing fee rates for the
airfield, and will be charged commercial compensatory rates for the terminal
building reduced by a 35%-50% non-airline terminal building revenue credit
depending on Capital Improvement Fund balance. The new agreement contains an
end of term option that allows for a renewal of an additional five years.

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