Ratemaking Overview

Settlement & True-Up

Not available

Extraordinary Coverage Protection (ECP)

No ECP mechanism is present. Exhibit D.02.F includes a year-end settlement provision: 'the difference between the actual Scheduled Air Carrier Rental Requirement and Scheduled Air Carrier space rentals billed shall be applied as an adjustment to the Terminal Rental Rate per square foot for all Scheduled Air Carriers serving the Airport in the Fiscal Year following the Fiscal Year in which the calculation has been finalized.' This is a standard residual settlement, not an ECP allowing the airport to charge airlines to meet bond requirements. The ordinance does not grant the Authority power to impose extraordinary coverage charges during shortfalls. Airlines agreed to a residual terminal rate, but there is no safety net provision requiring airlines to cover airport-wide shortfalls outside defined cost centers.

Landing Fee Methodology

Landing fees are charged per 1,000 lbs. MCGTW per Revenue Departure at a fixed rate ($0.20 per 1,000 lbs. as of Exhibit E). This is a compensatory rate set by ordinance and does not appear to be residually calculated to cover all airfield costs.

Terminal Rental Rate

Terminal rental rates are residually calculated. Total Terminal Building Area Cost (including O&M, debt service, capital amortization, equipment fund deposits) minus non-airline revenues (concessions, leases, interest) equals net cost, which is divided by total assigned area to determine average rate per square foot. Airlines collectively absorb the net cost.

Common Use & Gate Allocation

Additional Bonds Test

Two-part test: (a) Historical test: Net Revenues for the last audited FY (or any 12 consecutive months out of the most recent 18 months), plus Rolling Coverage Account balance (not exceeding 25% of Aggregate Annual Debt Service) ≥ 125% of Aggregate Annual Debt Service for all Outstanding Bonds and proposed Series; OR (b) Two-part test: (i) Historical Net Revenues plus Rolling Coverage Account (not exceeding 25% of Aggregate Annual Debt Service) ≥ 125% of Aggregate Annual Debt Service for existing Outstanding Bonds only, AND (ii) Consultant certificate showing estimated Net Revenues for each of three consecutive Fiscal Years (beginning with first FY in which Annual Debt Service is due on proposed Bonds, excluding amounts funded from bond proceeds/capitalized interest) ≥ 125% of Aggregate Annual Debt Service for all Outstanding Bonds and proposed Series. Rolling Coverage Account amounts used cannot exceed 25% of Aggregate Annual Debt Service in any year. Consultant may estimate Revenues from Projects reasonably expected to become available and Rolling Coverage Account deposits.

Rate Covenant

Net Revenues (Revenues minus Operation and Maintenance Expenses), together with amounts deposited in the Rolling Coverage Account as of the end of the immediately preceding Fiscal Year (not to exceed 25% of Aggregate Annual Debt Service), must be at least 125% of Annual Debt Service on Outstanding Bonds in each Fiscal Year. PFCs Irrevocably Committed to pay Annual Debt Service are excluded from the debt service calculation (deducted from denominator).

Flow of Funds

Monthly deposits from Gross Revenue Fund in the following priority order: (1) Operating and Maintenance Fund – sufficient to pay all O&M Expenses due in next month; (2) Debt Service Fund – for principal and interest on Outstanding Bonds (parity basis except as to timing); (3) Common Reserve Account and Series Debt Service Reserve Accounts – to maintain required levels; (4) Subordinate Obligation Debt Service Fund – for debt service on Subordinate Obligations (only to extent Net Revenues specifically pledged); (5) Operating and Maintenance Reserve Fund – 1/12th of amount needed to reach 1/6th of budgeted annual operating expenses; (6) Rebate Fund – amounts required for arbitrage rebate; (7) Airport Capital Fund – all remaining Revenues, which are allocated among Equipment and Capital Outlay Account, Capital Projects Account, Rolling Coverage Account, and General Capital Account. If general obligation bonds are outstanding at fiscal year-end, after all required deposits, remaining Gross Revenue Fund amounts are transferred to Charleston County Treasurer for general obligation bond payment (if not already sufficient).