Identify New Funding Sources for Future Projects

AIP funding for airports is classified by the types of airports that are included in the NPIAS. GA airports are included as non-primary airports and receive a fixed non-primary entitlement of $150,000 annually. Primary airports – those airports with scheduled commercial passenger service with 10,000 or greater annual enplanements receive at least a $1 million entitlement annually as long as AIP is funded at $3.2B or greater. The amount of the primary entitlement increases with additional enplanements.

Although FAA AIP funding is the most common source of federal capital improvement funding at airports in the NPIAS, for the smaller GA airports included in the program, the annual non-primary entitlement has its limitations. AIP entitlement funding for non-primary airports is generally not sufficient to pay for larger projects, even when accumulated over several years. To assist in funding larger programs, airports are allowed to carryover AIP entitlements for three years to use with their current year, so the most AIP entitlement money an airport that receives $150,000 a year can have is $600,000 (three years of carry-over funds plus the current year allocation).

AIP discretionary funding is a competitive, priority-driven system. Depending on what other capital projects are programmed throughout the NPIAS, airports may face difficulty securing funding. Non-NPIAS airports do not have access to FAA funding, and must rely on alternate funding sources for capital projects such as state departments of aviation and transportation, economic development grants, local funds, and special tax districts.

One alternative funding source for NPIAS airports is to share AIP entitlement grants with nearby airports. The way this works is one airport in a region is given AIP entitlement grants by other airports in the region to pay for a capital improvement project. This transfer comes with the understanding that the receiving airport will return the favor to the other airport or airports in the years to come. This practice requires FAA coordination, and is explained in FAA Order 5100.38D, Chapter 4. This practice helps sponsors without AIP-eligible projects use AIP funds before they expire and are returned to the FAA. A detailed explanation can be found in Section 4-11, Transfer of Entitlement Funds Between Airports of the FAA’s AIP Handbook.

State departments of transportation provide grant monies to qualifying airports to augment or replace FAA AIP grants. States maintain a CIP much like the FAA, which lists projects by airport, expected state contribution, and programming year. The process for inclusion and eligibility in state CIPs varies; however, airports generally need to submit their airport CIP to the state several years in advance in order to receive funding. For the most part, state grant funding can range from approximately 50% of total capital project cost to more substantial amounts sometimes exceeding 75%. Many times these grant funds are capped to limit the size of eligible projects and to help spread limited state dollars over a larger number of statewide projects.

Some states let sponsors share state grants, similar to the AIP entitlement sharing described above. As with the AIP entitlement sharing, this state grant sharing requires agreements and stakeholder coordination. This practice allows sponsors, particularly of non-NPIAS airports, to accumulate sufficient funds to implement necessary capital improvement projects sooner than they would otherwise be able to, and can be used to make use of funds before they expire.

Airports sponsored by entities with taxation authority can fund capital projects through taxes. This process can be controversial, and may require voter approval. Successful campaigns for tax-related funding provide clear project definition, demonstrated need for the project and consequences without the project, and an idea of what the return for the community will be. Sponsors that proceed with this route must be prepared to respond to opposition and criticism about the airport’s use of existing funds, adequacy and need for existing and planned facilities, and realistic benefit to the community. If the request for funding is the first conversation the airport has with the larger community, it can be especially challenging. An airport can prepare for this conversation by sharing information and building relationships before there is a specific need using ideas in the Media Toolkit.

Benefits of using local taxes to fund improvements is the wider range of eligible projects which is much greater than with FAA AIP and state grants, provided the tax-collection legislation supports the sponsor’s goals. Examples of taxes that can be implemented to support airport operations include TIFs which are a method by which future property taxes are used to cover the debt service of improvement in lieu of the taxes funneling to a taxing district’s general fund for a fixed period of time. They can also include sales tax increases, property tax increases, and tourist tax increases (e.g. on rental cars, hotels, etc.) The latter may be more palatable to the community since the tax does not directly apply to local residents. However, industries that rely on tourism may see the tax as a threat to business.