Bradley Agreement

12 Months Ended

Dec. 31, 2012

Bradley Agreement

Bradley Agreement

Note Q. Bradley Agreement

        We are entered into a 25-year agreement with the State of Connecticut ("State") that expires on April 6, 2025, under which we operate the surface parking and 3,500 garage parking spaces at Bradley International Airport ("Bradley") located in the Hartford, Connecticut metropolitan area. The Company manages the facility for which it is expected to receive a contingent management fee.

        The parking garage was financed on April 6, 2000 through the issuance of $53,800 of State of Connecticut special facility revenue bonds, representing $47,700 non-taxable Series A bonds and a separate taxable issuance of $6,100 Series B bonds. The Series B bonds were retired on July 1, 2006 according to the terms of the indenture. The Bradley Agreement provides that we deposit with a trustee for the bondholders all gross revenues collected from operations of the surface and garage parking, and from these gross revenues the trustee pays debt service on the special facility revenue bonds outstanding, operating and capital maintenance expense of the surface and garage parking facilities excluding our management fee discussed below, and specific annual guaranteed minimum payments to the state. Principal and interest on the Bradley special facility revenue bonds increase from approximately $3,600 in contract year 2002 to approximately $4,500 in contract year 2025. Annual guaranteed minimum payments to the State increase from approximately $8,300 in contract year 2002 to approximately $13,200 in contract year 2024. The annual minimum guaranteed payment to the State by the trustee for the twelve months ended December 31, 2012 and 2011 was $10,375 and $10,162, respectively.

        All of the cash flow from the parking facilities are pledged to the security of the special facility revenue bonds and are collected and deposited with the bond trustee. Each month the bond trustee makes certain required monthly distributions, which are characterized as "Guaranteed Payments." To the extent the monthly gross receipts generated by the parking facilities are not sufficient for the trustee to make the required Guaranteed Payments, we are obligated to deliver the deficiency amount to the trustee. Additionally, the Guaranteed Payments are required to be paid before we are reimbursed for deficiency payments or management fees.

        The following is the list of Guaranteed Payments:

• •

  Garage and surface operating expenses,

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  Principal and interest on the special facility revenue bonds,

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  Trustee expenses,

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  Major maintenance and capital improvement deposits; and

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  State minimum guarantee.

        However, to the extent there is a cash surplus in any month during the term of the Bradley Agreement, we have the right to be repaid the principal amount of any and all deficiency payments, together with actual interest expenses and a premium, not to exceed 10% of the initial deficiency payment. We calculate and record interest and premium income along with deficiency principal repayments as a reduction of cost of parking services in the period the associated deficiency repayment is received from the trustee.

• Deficiency Payments

        To the extent that monthly gross receipts are not sufficient for the trustee to make the required payments, we are obligated pursuant to our agreement, to deliver the deficiency amount to the trustee within three business days of being notified. We are responsible for these deficiency payments regardless of the amount of utilization for the Bradley parking facilities. The deficiency payments represent contingent interest bearing advances to the trustee to cover operating cash flow requirements. To the extent sufficient funds are available in the appropriate fund, the trustee is then directed by the State to reimburse us for deficiency payments up to the amount of the calculated surplus.

        The total deficiency payments we have made, net of reimbursements, as of December 31, 2012 and 2011 are as follows:

	December 31,
	2012			2011
Balance at beginning of year	$	13,407		$	12,070
Deficiency payments made		1,658			1,716
Deficiency repayment received		(467	)		(379	)
Balance at end of year	$	14,598		$	13,407

        In the year ended December 31, 2012, we made deficiency payments (net of repayments received) of $1,191 and received interest of $85. The net of these amounts were recorded as additional cost of parking services. In the year ended December 31, 2011, we made deficiency payments (net of repayments received) of $1,337. The net of these amounts were recorded as additional cost of parking services, offset in part by $54 for premium and $256 in interest.

        We believe these advances to be fully recoverable, as the Construction, Financing and Operating Special Facility Lease Agreement, which governs reimbursement of the Guarantor Payments, places no time restriction on the Company's right to reimbursement. The payment of principal, interest and premium will be recorded when received. The reimbursement will be recognized when realized. We do not directly guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.

• Compensation

        In addition to the recovery of certain general and administrative expenses incurred, the Bradley Agreement provides for an annual management fee payment which is based on three operating profit tiers calculated for each year during the term of the agreement. The management fee is further apportioned 60% to us and 40% to an un-affiliated entity. To the extent that funds are available for the trustee to make a distribution, the annual management fee is paid when sufficient cash is paid after the Guaranteed Payments (as defined in our agreement), and after the repayment of all deficiency payments, including accrued interest and premium. However, our right to the management fee accrues each year during the term of the agreement and is paid when sufficient cash is available for the trustee to make a distribution.

        The annual management fee is paid after the repayment of all deficiency payments, including accrued interest and premium. Cumulative management fees of approximately $9,000 have not been recognized as of December 31, 2012 and no management fees were recognized during 2012, 2011 or 2010.