Regulatory Restrictions on Finances and Spending
Airport spending can be restricted by both federal law and grant assurances. Restrictions differ depending on the source of the money – whether FAA and state grants, local funds, or airport revenues. Regardless of the source, money collected by the airport and its sponsor through earned airport revenues, taxes and fees, and money distributed by the FAA and states through grants are seen as public funds, and airports must apply them only to authorized projects. Private investment on airports is not limited but, certain types of development and airfield access are not permitted by other grant assurances.
Use of airport revenue on non-airport spending is referred to by the FAA as “diversion” and is almost always prohibited. Diversion can occur when a sponsor uses airport-generated revenue to fund non-aviation related projects elsewhere in the City. AIP Grant Assurance 25, Airport Revenues requires sponsors to reinvest aviation-related proceeds into operating, maintaining, and upgrading aviation facilities. Anti-diversion grant assurances are intended to keep airport facilities in a serviceable condition, and to promote safe and efficient use of the airport. This policy is intended to protect airport tenant and government infrastructure investment.
The FAA restricts spending of AIP grants through review of project scope and fees for AIP-eligible projects. FAA project managers use What Projects can be Funded? which is Chapter 3 of FAA Order 5100.38D, AIP Handbook to determine project eligibility. In some instances, sponsors can pay for components that are not eligible for AIP funding with PFC funds and other funds. However, PFCs and state grants often have similar eligibility restrictions. Projects not eligible for funding from outside agencies must be funded by the sponsor.
Finally, no part of airport revenue may be claimed by the city/county/state in an amount that exceeds reasonable charges for in-kind municipal services rendered and provided to the airport such as accounting, legal, code enforcement, emergency services, etc.