Funding airport projects is a challenging task these days. The cost of construction is rising with no increase in available grant dollars. In fact, for the next three years, the FAA has now prioritized its discretionary funding on runway rehab projects, leaving significantly less funding for other projects. With these changing funding priorities, the Sponsor needs to be inventive to find funding for its other needed airport projects. Projects such as hangar development areas and buildings, fuel facilities, snow removal equipment buildings, and apron expansions are some projects that will now take more financial planning to attain your airport goals and capital improvement needs schedule.
For general aviation airports, it will take future allocations of federal non-primary entitlements to fund larger projects. It is good to see Congress looking at a 6-year funding bill with actual increases in AIP funds. This helps set a base for future project planning. However, all non-primary entitlement funds have a 4-year shelf life. If they are not used in the fourth year, they are put on the expiration list and a sponsor could lose them forever.
One method to keep your non-primary entitlement funds from lapsing and make them available for use at a later date is to loan them to another airport. Conversely, a Sponsor can pool non-primary funds, borrowed from other airports, to fund its project. This creates a win-win situation for both airports. Exchange of non-primary entitlements from other airports is done with airports in the same state and usually includes a negotiated project schedule and funds payback year. The process is always coordinated with FAA during the grant pre-application phase and tracked by State officials. The two forms needed are Agreement for Transfer Entitlements and Federal Airport Funding Repayment Agreement. Accepting the funds is completed the year that you will use the funds and, as noted, almost always involves the use of expiring funds from other airports. Since the FAA tracks expiring funds, they can be a good source to help identify airports that are not using their expiring funds.
Bolton & Menk, Inc. works with sponsors to look at future projects to anticipate when additional federal funds will be needed. If the projects do not rank high on the discretionary list, we can then help you look at other funding strategies such as pooling non-primary entitlement funds.
If you would like to discuss funding options and methods for your upcoming CIP projects, please contact Ron Roetzel.
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