Official Statement Airport Commission City and County of San ...

Risk Management and Insurance
Under the 1991 Master Resolution, the Commission is required to procure or provide and maintain
insurance, or to self-insure, against such risks as are usually insured by other major airports in amounts adequate for
the risk insured against, as determined by the Commission, and to file with the Trustee each year a written summary
of all insurance coverage then in effect. The Commission is not required to nor does it carry insurance or self-insure
against any risks due to land movement or seismic activity.
The Airport has an ongoing loss prevention program, a safety officer, property loss control and ongoing
employee training programs. The Airport carries general liability insurance coverage of $1 billion, subject to a
deductible of $10,000 per single occurrence. The Airport also carries commercial property insurance coverage for
full replacement value on all facilities at the Airport owned by the Commission, subject to a deductible of
$500,000 per single occurrence. Additionally, tenants and contractors on all contracts are required to carry
commercial general liability insurance in various amounts, naming the Airport as additional insured. The Airport is
self-insured as part of the City’s workers’ compensation program. From current revenues, the Commission pays
losses from workers’ compensation claims of Airport employees, the deductible portion of insured losses, and losses
from other uninsured risks. The Airport carries public official liability and employers liability coverage of
$5 million, subject to a deductible of $100,000 per single occurrence for each wrongful act other than employment
practices violations and of $250,000 per each occurrence for each employment practices violation. The Airport also
carries insurance for public employee dishonesty, fine arts, electric data processing equipment and watercraft
liability for Airport fire and rescue vessels.
Prior to September 11, 2001, the Airport had liability insurance coverage in the amount of $750 million per
occurrence for war, terrorism and hijacking. Immediately following the events of September 11, 2001, insurers
cancelled their coverages for war, terrorism and hijacking for all airports, including the Airport, and for all airlines
around the country. A number of insurers now provide this coverage through the Federal Government Terrorism
Risk Insurance Act (TRIA). However, the scope of the coverage is limited and the premiums are high. Due to these
factors, the Commission, in consultation with the City’s Risk Manager, has elected not to secure such coverage.
Investment of Airport Funds
Under the Charter and the 1991 Master Resolution, the Revenue Fund and the accounts therein, including
the Contingency Account, are held by the Treasurer. Amounts in the Revenue Fund are accounted for separately
from all other funds of the City. The 1991 Master Resolution further provides that moneys in all funds and accounts
(including Revenues) established under the 1991 Master Resolution which are held by the Treasurer shall be
invested in Permitted Investments in accordance with the policies and procedures of the Treasurer in effect from
time to time. For definitions of “Revenues” and “Permitted Investments” under the 1991 Master Resolution, see
APPENDIX C–“SUMMARY OF CERTAIN PROVISIONS OF THE 1991 MASTER RESOLUTION–Certain Definitions.”
Airport Pooled Investment Fund
Under the Treasurer’s current investment procedures, amounts in the Airport’s Revenue Fund and
Contingency Account are commingled for investment purposes with the Airport’s Construction Fund as part of a
pooled investment fund (the “Airport Pool”). Amounts in the Airport Pool are invested in Permitted Investments as
defined in the 1991 Master Resolution. The objectives of the Treasurer’s current investment policy, in order of
priority, are preservation of capital, maintenance of liquidity and yield. Investments generally are made so that
securities can be held to maturity. The Treasurer calculated the current weighted average maturity of these
investments as of December 31, 2009 to be approximately 669 days.
Payments due from the Revenue Fund and the Construction Fund actually are made from the City’s larger
pooled investment fund (the “City Pool”). Among other purposes, the City Pool serves in effect as a disbursement
account for expenditures from the City’s various segregated and pooled funds (including the Airport Pool). The
Treasurer periodically transfers from the Revenue Fund and the Construction Fund to the City Pool the proceeds of
investments in the Airport Pool which have matured or been sold and which are necessary to cover Airport
disbursements. These transfers may be made either before or after the disbursements are made from the City Pool.
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