Bradley Agreement

3 Months Ended

Mar. 31, 2020

The Company entered into a 25-year agreement (the "Bradley Agreement") with the State of Connecticut (the “State”) that expires on April 6, 2025, under which it operates surface and garage parking spaces at Bradley International Airport (“Bradley”) located in the Hartford, Connecticut metropolitan area.

The parking garage was financed through the issuance of State of Connecticut special facility revenue bonds and provides that the Company deposits, with the trustee for the bondholders, all gross revenues collected from operations of the surface and garage parking. 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, and specific annual guaranteed minimum payments to the state. All of the cash flows 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, the Company is obligated to deliver the deficiency amount to the trustee, with such deficiency payments representing interest bearing advances to the trustee. The Company does not directly guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.

To the extent sufficient funds are available, the trustee is then directed to reimburse the Company for deficiency payments up to the amount of the calculated surplus, with the Company having the right to be repaid the principal amount of any and all deficiency payments, together with actual interest and premium, not to exceed 10% of the initial deficiency payment. The Company calculates and records interest and premium income along with deficiency principal repayments as a reduction of cost of services in the period the associated deficiency repayment is received from the trustee. The Company believes these advances to be fully recoverable

as the Bradley Agreement places no time restriction on the Company’s right to reimbursement. The reimbursement of principal, interest and premium will be recognized when received.

The total deficiency repayments (net of payments made) from the State as of March 31, 2020 (unaudited) were as follows:



(millions)	March 31, 2020
Balance as of December 31, 2019	$	0.1
Deficiency payments made	—
Deficiency repayments received	(0.1		)
Balance as of March 31, 2020	$	—

The total deficiency repayments (net of payments made), interest and premium received and recognized for the three months ended March 31, 2020 and 2019 were as follows:



	Three Months Ended
(millions) (unaudited)	March 31, 2020		March 31, 2019
Deficiency repayments	$	0.1	$	0.6
Interest	0.1		—
Premium	—		0.1

Deficiency payments made are recorded as an increase in Cost of services - management type contracts and deficiency repayments, interest and premium received are recorded as reductions to Cost of services - management type contracts. The reimbursement of principal, interest and premium is recognized when received.

There were no amounts of estimated deficiency payments accrued as of March 31, 2020 and December 31, 2019, as the Company concluded that the potential for future deficiency payments did not meet the criteria of both probable and estimable. However, the Company may be required to make deficiency payments if the impacts of COVID-19 continue. The Company has been managing this exposure by working with Bradley to manage costs and obtain necessary waivers of guaranteed payments, if applicable. The Company cannot predict if it will obtain future waivers and be able to continually manage costs effectively. Therefore, the Company will record any potential accrued deficiency payments when probable and estimable.

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 operating profit tiers. The annual management fee is further apportioned 60% to the Company and 40% to an unaffiliated entity, and the annual management fee is paid to the extent funds are available for the trustee to make distribution, and are paid after Guaranteed Payments (as defined in the Bradley Agreement), and after the repayment of all deficiency payments, including interest and premium. Cumulative management fees of approximately $19.9 million and $19.7 million had not been recognized as of March 31, 2020 and December 31, 2019, respectively, and no management fees were recognized as revenue for the three months ended March 31, 2020 and 2019.