As reported in our “3 Minutes on Monday” special report this week, the recently approved CARES Act includes $10 billion in grants for airports.
Gary Mitchell reviewed the language and provides this overview:
We reported the grants would likely be used to service airport debt and to maintain operations. We initially stated that it was likely little, if any, of the grants would be used for construction projects. We have since done more research into the CARES Act and the following should help better explain what is in the bill. We encourage you to review this information carefully, and to refer to the FAA’s website, which includes additional information and answers to frequently-asked questions. Please see the links, which at the end of this article.
As it turns out, there is some funding in the bill to be used for airport construction. The $10 billion in funding is divided into four pots of money. At least $500 million is available to increase the Federal funding share to 100% for grants awarded under the fiscal year 2020 appropriations cycle for 2020 Airport Improvement Program (AIP) and 2020 Supplemental Discretionary grants. That means an airport sponsor should have incentive to proceed with construction projects as well as speed up some construction to take advantage of 100% funding instead of having to come up with funds in this tough fiscal environment.
Another $100 million of this $10 billion dollars is available for general aviation airports and could be used for any purpose for which airport revenues may be lawfully used.
CARES grant funding can be used for airport development on an airport. This could mean a general aviation airport would not have to come up with the local matching funds since a CARES grant is a 100% federal share. Coming up with the local share is often an issue for a small airport. The funds are allocated based on the categories published in the most current Nation Plan of Integrated Airport System (NPIAS), reflecting the percentage of the total published eligible development costs for each category, and then dividing the allocated funds evenly among the eligible airport in each category. So the money must be spread around and may not be a large amount, depending on all the request.
At least $7.4 billion of the funds are available to Commercial Service Airports for any lawful purpose and another $2 billion is available for large, medium and small hub airports and non-hub airports for any lawful purpose.
So while most of the money is dedicated to airports that would likely use the funds to service debt and maintain operations, up to $600 million is set aside that could be used to promote construction projects. To be eligible for a grant under the CARES Act, an airport must be part of the NPIAS.
We view this news as positive since the $500 million will likely be used to amend the 2020 AIP and discretionary grants to eliminate local matching shares, which will be an incentive to keep airport construction moving forward.
Additionally, this may present smaller airports with the opportunity to implement concrete overlay projects they originally thought were too expensive, because they would not have to provide matching funds and since traffic may be lower than normal. Any development projects would still need to go through the local FAA Airport District Office (ADO) and Region to assure it meets all FAA requirements.