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Chapter 6. What special AIP programs are available?
 

Section 1. Letters of Intent (LOI).

6-1. LOI Overview.

A Letter of Intent (LOI) is a formal document issued by the FAA that states an intention to provide future funding using appropriate entitlements or apportionments, discretionary or funds from the small airport fund. The LOI is limited to airport development projects, including project formulation costs, at primary and reliever airports. It is further limited to projects that enhance or preserve capacity. 49 USC § 47110(e) gives the FAA the authority to issue LOIs and describes the requirements and prescribes the limitations on the use of the LOI.

The LOI establishes a schedule for future AIP funding, subject to annual appropriations and availability of funds. A sponsor who has received an LOI may start the project without waiting for individual AIP grants. Allowable project costs are eligible for reimbursement, subject to the payment schedule set forth in the LOI.

The LOI process is rigorous and requires early coordination and a full understanding of the submission and evaluation criteria by all parties involved. This section of the Handbook discusses the regulatory requirements.

Historical LOI information is available on the FAA Office of Airports website (see Appendix B for link). However, this information is not a reliable guide for future award amounts and disbursement schedules.

6-2. LOI Funding Rules and Policy.

Table 6-1 contains the unique funding rules and policy that apply to LOIs.

Table 6-1 LOI Funding Rules and Policy

Unique LOI funding rules and policy include…
a. LOI Budget. Per 49 USC § 47110(e)(4), the FAA must reserve a reasonable amount of AIP funding for grants not covered by LOIs. APP-510 meets this requirement by annually establishing an LOI budget that it uses to establish future LOI payment schedules.
b. Scheduling LOI Payments beyond the Fiscal Year of the Current AIP Authorization. The Department of Transportation and Related Agencies Appropriations Act, 1989 (Section 334 of Public Law 100-457) allows the FAA to issue an LOI with payments scheduled beyond the statutory expiration of the current AIP authorization.
c. Use of Airport Entitlements. It is FAA policy for a sponsor to commit all of the airport entitlements over the life of the LOI to the project unless APP-500 and the ADO agree otherwise. If during any given year a sponsor’s entitlements vary from the amount approved in the LOI schedule for that year: (1) Fiscal Year Entitlements Less than LOI Schedule. The ADO cannot increase the discretionary funds to compensate for the shortfall. Instead, the sponsor is expected to make up the shortfall with entitlements from a future year or other funding source. (2) Fiscal Year Entitlements More than LOI Schedule. After consultation with the sponsor, the ADO has the discretion to apply the funds to other higher priority projects during that fiscal year, carry over the funds to the following fiscal year, or add them to that year’s annual payment (reducing the entitlements that need to be applied to the LOI in future years).
d. Use of Discretionary. It is FAA policy that the total of discretionary funds in all LOIs subject to future obligation is limited to approximately 50% of the forecast discretionary funds available for that purpose. Depending on the size of airport, the discretionary funding may be drawn from the Capacity/Safety/Security/Noise fund, the Small Airport Fund, or the Remaining Discretionary fund.
e. Use of Passenger Facility Charges. Per 49 USC § 47110(e)(5), the FAA is restricted from requiring a sponsor to impose a passenger facility charge for the project in order to obtain a letter of intent.
f. Reimbursing with Discretionary. The ability to reimburse with discretionary funds under an LOI is discussed in Paragraph 3-100.
g. Change to Nonprimary Airport Status. Per 49 USC § 47108(e)(1), if a primary airport changes to a nonprimary airport when a development project approved under an LOI is underway, the project remains eligible for discretionary funds.
h. Insufficient Project Progress. In cases where significant final design, land acquisition, permitting or other requirements must still be completed, the FAA has an option to establish a disbursement schedule that defers the first year’s disbursement until certain milestones have been achieved.
i. Interest Costs. Because interest from bonds or other forms of indebtedness is not an allowable cost, interest costs may not be included in project costs and will not be covered as part of an approved LOI.

6-3. LOI in the Context of an Airport’s Overall Capital Program.

The proposed action is the primary project or program in a sponsor’s LOI request. Typically, the proposed action is not the only capital project for the airport. The FAA’s financial analysis will focus principally on the projects for which the LOI is requested, but it is also beneficial to consider major funding requests in the context of the airport’s broader financial environment. Therefore, it is important to clearly define three overlapping sets of capital project data as shown in Table 6-2 and Figure 6-1.

Table 6-2 Three Overlapping Sets of Capital Data in the LOI Review

The three overlapping sets of capital data are…
a. Overall Capital Program. The sponsor must provide a complete financial picture of the airport in its LOI request. This includes both eligible and ineligible airport development needs. The FAA will assess whether any of these needs may impact the sponsor’s ability to support the LOI, including other higher priority projects that may require use of entitlement funds. However, the FAA’s evaluation will focus primarily on the proposed action.
b. LOI Proposed Action. The proposed action includes all work necessary to achieve the overall LOI objective whether or not the work is AIP eligible. It is important to include all of this work to capture the benefits and/or costs that will be calculated in the Benefit Cost Analysis (BCA) as further discussed in Paragraph 3-14. For example, if the proposed action involves a runway extension, then the proposed action may include multiple related projects such as associated facility relocations. The full cost of the proposed action must be reflected in the BCA and the associated funding plan.
c. LOI Projects. The LOI projects are the individual project elements that the ADO will place under grant if the LOI is approved. These projects must have clearly established AIP eligibility, and must be scheduled for implementation in advance of the requested LOI disbursement schedule.

 

6-4. LOI Project Criteria by Airport Type.

 

49 USC § 47110(e) gives the FAA the authority to issue the LOI’s for projects that enhance or preserve capacity at primary and reliever airports. By FAA policy, LOI projects must meet the criteria listed in Table 6-3. All of the other project funding requirements in Chapter 3 apply, including the restriction on using AIP funds for interest payments.

A project under an LOI must also satisfy all statutory and administrative requirements for an AIP project. Sponsors must proceed as though they had applied for and been awarded AIP funds and must fulfill all environmental, civil rights, bidding, procurement, and contracting requirements associated with an AIP grant, even though portions of the work may proceed in advance of receiving AIP funds.

Table 6-3 LOI Project Criteria by Airport Type

For the following type airport…	The following criteria apply…
a. Large and Medium Hub	Capacity Enhancing Projects: (1) Airfield Capacity Enhancement. The proposed project must enhance airfield capacity by increasing aircraft movements, increasing aircraft seating or cargo capacity (including a different aircraft design group), or reducing airfield delays. (2) Supporting Infrastructure. LOI projects must only include other AIP-eligible infrastructure that is logically necessary to complete the LOI project. In many cases this will be something that is physically required, such as acquiring land to complete a runway extension. However, in some cases, project components may not be physically required but logically necessary. For example, when extending a runway, it may also be necessary that the parallel taxiway be extended to ensure the full operational benefits of the runway extension are successfully realized. While the taxiway extension is not physically required, it is logically necessary because it links to the operational efficiency of the LOI project. (3) Non-Supporting Infrastructure. The LOI project must not include project components that, while completed concurrently because of convenience, are not logically necessary for the completion of the LOI project or for realizing the benefits of the LOI project. (4) Aprons. To qualify for LOI consideration, new apron areas must increase airfield capacity. However, aprons compete less favorably for LOIs than runway or taxiway projects. In addition, apron projects caused by terminal reconfiguration or relocations do not typically add capacity and are rarely eligible under an LOI. (5) System Capacity. Per 49 USC § 47110(e)(2)(C), APP-510 must determine that the project will significantly enhance system-wide airport capacity. (6) Ineligible Rehabilitation or Reconstruction Projects. Rehabilitation or reconstruction projects undertaken solely to extend the life of existing pavement does not satisfy the system capacity statutory requirement. (7) Eligible Reconstruction Projects. Reconstruction of an existing runway or taxiway must strengthen or relocate/shift the pavement and result in a capacity enhancement by: (a) Increasing aircraft movements, increased aircraft seating or cargo capacity (including accommodating a different aircraft design group), or reduced airfield delays. (b) Creating an added arrival stream or reducing dependency between arrival streams. (c) Eliminating intersecting runways. (d) Improving departure, approach, or missed approach procedures.
b. Small Hub, Non Hub, Reliever	Airfield Capacity Enhancing Projects: (1) Airfield Capacity Enhancement. The proposed project must enhance airfield capacity by increasing aircraft movements, increasing aircraft seating or cargo capacity (including a different aircraft design group), or reducing airfield delays. (2) Supporting Infrastructure. LOI projects must only include other AIP-eligible infrastructure that is logically necessary to complete the LOI project. In many cases this will be something that is physically required, such as acquiring land to complete a runway extension. However, in some cases, project components may not be physically required but logically necessary. For example, when extending a runway, it may also be necessary that the parallel taxiway be extended to ensure the full operational benefits of the runway extension are successfully realized. While the taxiway extension is not physically required, it is logically necessary because it links to the operational efficiency of the LOI project. (3) Non-Supporting Infrastructure. The LOI project must not include project components that, while completed concurrently because of convenience, are not logically necessary for the completion of the LOI project or for realizing the benefits of the LOI project. (4) Aprons. To qualify for LOI consideration, new apron areas must increase airfield capacity. However, aprons compete less favorably for LOIs than runway or taxiway projects. In addition, apron projects caused by terminal reconfiguration or relocations do not typically add capacity and are rarely eligible under an LOI. Airfield Capacity Preservation Projects (1) Eligible Rehabilitation or Reconstruction Projects. Rehabilitation or reconstruction projects must either enhance or preserve capacity. However, rehabilitation and reconstruction projects to preserve capacity have historically competed less favorably for LOIs than those that will enhance capacity.
c. New or Replacement Airports	(1) Additional Capacity Considerations. In addition to the above criteria, new and replacement airports must provide a net capacity gain that would fulfill an unmet civil aeronautical need, with due consideration of the proposed facility’s functional and operational position relative to other existing or proposed airport facilities.

6-5. LOI Approval/Disapproval Process.

The FAA’s process for evaluating LOI requests is principally a financial planning process rather than grant administration. Formal grant applications will still be required for each year once an LOI is awarded, based on the LOI payment schedule and subject to the availability of funds. The current process, as of the publication date of this Handbook, is contained in Table 6-4. APP-510 also maintains a timeline diagram for the LOI process that is available upon request.

Table 6-4 LOI Approval/Disapproval Process

The steps in the LOI process include…
a. Early FAA/Sponsor Coordination. Any sponsor interested in pursuing an LOI must contact their ADO as early as possible, generally at least five to six months before the LOI request deadline of March 1. The ADO must then brief the sponsor on all aspects of LOIs, including the LOI request process, evaluation criteria and submission requirements. The ADO is the primary contact for the sponsor regarding an LOI.
b. Joint Meeting. The ADO has the option to hold a joint meeting so that the ADO, the regional office, APP-510, the sponsor, and the sponsor’s consultant understand the purpose and scope of the project, FAA authority and policy, and sponsor financial needs, schedules, and responsibilities. This joint meeting will normally include a discussion of the evaluation criteria including the relationship between the FAA’s Terminal Area Forecast (TAF) and the sponsor’s forecast assumptions and level of effort to be used in their financial planning and Benefit-Cost Analysis.
c. Benefit-Cost Analysis. The FAA recommends that sponsors submit the Benefit-Cost Analysis (BCA) for the proposed action to the ADO as far in advance of the LOI request as possible, but no later than March 1. This is because the review of the BCA may take more than six months and could delay the LOI decision. The BCA process for capacity projects is contained in Paragraph 3-14.
d. ADO Notification to APP-510. Per FAA policy, APP-510 requests a list of LOI candidates from the regional offices early in the fiscal year. Regional offices must coordinate with the ADOs and provide the list to APP-510 in the time frame requested by APP-510. In addition, the ADO must notify the regional office, and the regional office must notify APP-510 promptly when a sponsor that is not on this list expresses interest in obtaining an LOI. Preliminary information provided to APP-510 must include a general description of the project, the estimated cost, the proposed schedules for construction and reimbursement, and an indication of whether the project is a good candidate for an LOI.
e. Sponsor Submits LOI Request. It is FAA policy for sponsors to submit LOI requests to the ADO on or before March 1. The LOI review committee will normally review and either approve or disapprove the request by end of the same fiscal year. If a sponsor submits an LOI request after March 1, the LOI review committee will normally not review the request until the following fiscal year. The LOI review committee also has the option to review incomplete or partial requests on a case by case basis.
f. ADO Review. The ADO and regional office will prepare an overview, assessment and preliminary recommendation for Headquarters consideration, within 30 days of receiving an LOI request unless an extension is requested of and approved by APP-510 in advance. The ADO and regional office must contact APP-510 to request the preferred format for this recommendation.
g. Committee Review. The FAA will establish a national-level committee each year to review LOI requests to ensure that all statutory requirements have been met, and to advise the FAA Associate Administrator for Airports (ARP-1) and the FAA Director of the Office of Airport Planning and Programming (APP-1) on the selection of LOI proposals. The committee will be composed of representatives of the FAA Office of Airports (ARP). The committee is chaired by APP-510 and may include ARP representatives from APP-510, APP-520, and an ARP regional division manager (or designee) with no LOI candidate in the current year. The committee may also include representation by the FAA Office of Aviation Policy and Plans (APO), the FAA Air Traffic Organization (ATO) and/or other FAA offices, as determined by the committee chair. The committee may recommend that APP-510 request additional information from the sponsor, and/or additional assessment from the ADO or regional office.
h. LOI Selection. After receiving the recommendations from the LOI Committee, ARP-1 makes the official selections.
i. LOI Programming. After ARP-1 selects the sponsors that will receive LOIs, APP-500 coordinates the LOI sign-off package within Headquarters including the FAA Office of Government and Industry Affairs (AGI). The LOI package contains a draft of the LOI documents, a memorandum from APP-500 to the regional division manager containing documentation of the FAA’s review and proposed LOI approval, and the unsigned congressional notification letters.
j. DOT Office of the Secretary (OST) Coordination. APP-500 forwards the LOI sign-off package electronically to OST including the unsigned congressional notification letter.
k. Congressional Notification. For new or amended LOIs that exceed $10,000,000, OST must send the signed congressional notification letter to the Committees on Appropriations of the Senate and the House of Representatives; the Committee on Commerce, Science, and Transportation of the Senate; and the Committee on Public Works and Transportation of the House of Representatives of the proposed LOI. This requirement is contained in a note in the Department of Transportation and Related Agencies Appropriations Act, 1993 (Public Law 102-388, title III § 320). The FAA interpretation of this requirement is that OST must notify these parties of the new or amended LOI and may proceed if no legislation is passed to prohibit the LOI within 30 days after notification. OST electronically notifies the FAA when this process is complete.
l. LOI Decision Memorandum. When the congressional notification process is complete, APP-510 will officially prepare a memorandum that establishes the LOI funding level and provides supporting information for the decision.
m. LOI Offer. The ADO will issue the LOI to the sponsor when APP-510 has provided the ADO with the LOI Decision Memorandum. The same official who normally signs a grant offer for the FAA will be the official who signs the LOI offer.
n. ADO Issues Initial LOI Grant. APP-520 normally schedules the initial LOI grant for the fiscal year following the year in which the application was received unless the approval of the LOI is delayed beyond the end of the fiscal year. However, as allowed by 49 USC § 47110(e)(6), APP-500 has the option to schedule the initial LOI grant during the same fiscal year that the LOI is approved.

6-6. Sponsor LOI Submission Requirements.

Per FAA policy, sponsors must submit one hard copy and one electronic copy of the documentation listed in Table 6-5 to the ADO.

Table 6-5 Sponsor LOI Submission Requirements

The sponsor must provide…
a. Executive Summary. This summary must include an overview of the existing airport’s facilities and operating environment, along with an overview of the proposed capital project or program to be supported by the requested LOI.
b. Description of the Existing Problem. This description must focus on the capacity constraints of the existing facilities relative to existing or projected demand.
c. Description of System-Wide Airport Capacity Enhancement (required for Large and Medium hub airports). This description must include how the proposed action will meet the requirement for a significant system-wide capacity enhancement. Sponsors must not construe this to refer solely to throughput capacity for major airline hubs. Sponsors may rely upon any one or more of several factors that the FAA may then consider in making this determination. Examples include, but are not limited to, physical airport improvements that result in or support one or more of the following. Reduction of required minimums will not generally be considered sufficient evidence, on its own, to represent a significant system-wide airport capacity enhancement. (1) Capacity increase in annual operations, either in Visual Flight Rules (VFR) or Instrument Flight Rules (IFR) conditions or both. (2) Increase in airport service volume by the addition of a new runway, elimination of runway intersections or other airfield operational constraints. For large hub airports, sponsors will need to demonstrate that the capacity benefits are real, measurable and significant. (3) Increase in hourly call rates (i.e., local tower acceptance rates in terms of hourly arrivals and departures). (4) Delay reduction relative to existing or forecast levels, either at the individual airport or among multiple airports serving the same geographic area. (5) Projected delay savings as a percentage of existing delays at the airport, or as a percentage of all national delays. (6) Delay reduction that can be shown to enhance airline schedule reliability, even if the project does not lead to substantial increases in operations. (7) Creation of an additional arrival stream or reduced dependency between arrival streams. (8) Regional distribution of demand from one or more capacity-constrained or significantly delayed airports. (9) Elimination of a demonstrable capacity constraint for an airport serving a region or metropolitan area where population or economic growth has exceeded growth in available departing seats or cargo capacity. (10) Increase in the maximum stage-length that can be served from the airport.
d. Description of the Sponsor’s Forecast. This description must include both summary and detailed information on enplanements and operations. If applicable, the description must also include details of the fleet mix, the peak hour airfield mix by class, and the airline load factors. The sponsor must provide a clear discussion of how the forecasts were derived and their key assumptions.
e. Description of the Proposed Action. This description must focus on how the proposed action will provide additional capacity. For large and medium hub airports, this description must also explain how the proposed action will enhance system-wide airport capacity.
f. Description of the Capital Cost Estimates. This description must delineate the level of planning or design data on which the estimates are based, the source of quantities and unit costs, and the levels of contingency assigned. The ADO has the option to request that the sponsor secure the services of an independent consultant to conduct a formal cost estimate review, including unbiased quantity calculations, estimates of unit costs and determination of appropriate contingency levels based on the level of design information available.
g. Status of and Schedule for the ALP Approval. If the sponsor has not submitted an ALP depicting the proposed action by March 1, the sponsor must provide a schedule to the ADO that clearly demonstrate that the FAA will be able to approve the ALP by September 30. This schedule must include sufficient time for full aeronautical study and determination and all required coordination.
h. Status of Environmental Decision and Required Federal/State Permits. Both approval of the proposed action on the airport layout plan and issuance of the LOI are considered Federal actions subject to the requirements of the National Environmental Policy Act (NEPA). If the FAA has not completed the environmental decision or the sponsor has not obtained the required federal/state permits, the sponsor must provide a status/schedule of when this will be accomplished. The schedule must demonstrate the FAA has sufficient time to issue an environmental decision by August 1. If the schedule suggests a date later than August 1, the sponsor must consider deferring the LOI request to the following year.
i. LOI Application Financial Template and Supporting Documentation. The sponsor must include the requested LOI amounts (payment schedule) and all other proposed sources and amounts for the proposed action in the FAA Form 5100-139, LOI Application Financial Template (see the AIP Forms link in Appendix B). If additional approvals or other actions are required for any funding type (such as for Passenger Facility Charges or General Airport Revenue Bonds) the sponsor must include the status. Using the LOI Application Financial Template, the sponsor must clearly outline all sources and amounts of financing for the proposed project as well as for all other anticipated capital projects during the life of the LOI request. The Finance Template also provides an opportunity for sponsors to discuss alternative LOI disbursement schedules and how those alternatives might impact the overall financial plan.
j. Description of the Financial Plan for Other Capital Needs. The sponsor must discuss other significant capital costs identified in the LOI Application Financial Template beyond the proposed action to enable the FAA to identify whether the funding plan for the proposed action is viable. The FAA does not normally review the impact on rates and charges, landing fees, cost per enplanement, or the ability to attract or retain airline service, which is driven by many factors including underlying market strength, the competitive environment, revenue potential, and other operating expenses beyond airport rates and charges. The FAA will also not generally consider current or projected Cost Per Enplanement (CPE) or landing fee projections as a means of comparing one airport to another. CPE is highly dependent upon a number of factors, including the ownership and operation of passenger terminals, the nature of each airport’s use and lease agreement, and the structure of each airport’s rates and charge. However, the FAA may consider analyses and conclusions prepared by other industry experts or stakeholders, including municipal bond rating agencies, bond insurers, institutional investors and the airlines themselves, particularly in cases where the airlines have already approved the issuance of bonds in support of the proposed action. Therefore, it can be beneficial for sponsors to provide such analyses or documentation as part of the LOI request.
k. Benefit-Cost Analysis (BCA). If not submitted previously, the sponsor must include a BCA that was prepared in accordance with the FAA Airport Benefit-Cost Analysis Guidance (see Appendix B for link). This information must include all data necessary to explain the assumptions regarding existing and proposed facilities and operational parameters. (1) Detailed Simulation Modeling. For a project over $50 million dollars, it may also be beneficial for the sponsor to conduct detailed simulation modeling. The FAA has the option to require this if they feel the complexity of the project warrants it. (2) Financial Data for Required Proposed Action Components. Sponsors must recognize that the total project cost used in the BCA may be more than that of the proposed LOI project. This is necessary if the additional project components are required to realize the benefits of the proposed action. For example, for an LOI for a new runway, the BCA may need to include taxiway and other airfield improvements to realize the benefits of the new runway. (3) Sensitivity Analysis. For the purposes of the LOI financial analysis, sponsors are also encouraged to consider evaluating the effects of more conservative growth assumptions, to minimize the potential for overestimating future airport activity levels and capacity benefits, as well as other funding sources including PFCs and entitlements. This may be accomplished by the sponsor through sensitivity analyses designed to quantify the overall effect of slower growth rates or alternative assumptions regarding demand.
l. Additional Information for New and Replacement Airports. The FAA may require additional information about any aspect of the proposed development, including phasing of the new or replacement airport, the facility’s functional and operational position relative to other existing or proposed airport facilities, population and demographic patterns, air service (including passenger and cargo) and underlying economic activity.
m. Additional Information for High Federal Participation. Sponsors seeking the highest levels of Federal participation may be required to provide additional documentation of forecast demand levels, sensitivity analyses, and/or more heavily backend loaded disbursement schedules.

6-7. LOI Evaluation Criteria.

49 USC § 47115(d)(1) contains the six criteria that the FAA must use when selecting systemwide capacity enhancement projects for discretionary funding. The FAA interprets 49 USC § 47110(e) to require the FAA to use these criteria, which are listed in Table 6-6, for LOI evaluation.

The FAA will also consider the sponsor’s requested rate of Federal participation relative to comparable projects, airport revenue diversion or other compliance issues, and grandfathered payments to other governmental offices.

The ADO and regional office must contact APP-510 to request the preferred format for the ADO and region office evaluation and recommendation to ensure a consistent review process throughout the FAA Office of Airports.

Table 6-6 Evaluation Criteria for LOI Requests

The criteria, which are used by the FAA to evaluate LOI requests, are….
a. The effect that the project will have on overall national transportation system capacity.
b. The benefit and cost of the project, including, in the case of a project at a reliever airport, the number of operations projected to be diverted from a primary airport to the reliever airport as a result of the project, as well as the cost savings projected to be realized by users of the local airport system.
c. The financial commitment from non-United States Government sources to preserve or improve airport capacity.
d. The airport improvement priorities of the States to the extent such priorities are not in conflict with items a and b in this table.
e. The projected growth in the number of passengers or aircraft that will be using the airport at which the project will be carried out.
f. The ability of the project to foster United States competitiveness in securing global air cargo activity at a United States airport.

6-8. LOI Offer Package.

An LOI Offer Package is normally comprised of two documents, the cover letter and the LOI Offer. Both documents are developed by APP-510 and signed by the ADO. Per FAA policy required contents of this LOI Offer are included in Table 6-7.

In addition, the ADO has the option to include any additional guidance or information that the ADO deems necessary. For example, the ADO may wish to include a spreadsheet with a detailed cost breakdown that shows the project component costs that are included in the proposed action and/or a project sketch that clearly shows the approved project components.

Table 6-7 LOI Offer Contents

APP-510 must include the following information in the LOI Offer…
a. LOI Number. Currently this is based on the regional office’s three letter code, the fiscal year of issuance, and a sequential number (for example: AGL-88-02 is the second LOI issued by AGL in FY 1988). APP-510 is in the process of converting this to the following format, which must be used by the ADO once officially adopted: 3-AA-BBBB-LCC-YYYY Where: 3 = The program code for AIP. AA-BBBB = The NPIAS code for the airport. L = A single letter designator indicating this is an LOI. CC = The sequential number of LOIs issued for that airport. YYYY = The fiscal year in which the LOI is executed.
b. Airport Name.
c. Project Description. A brief, but complete, project description.
d. Maximum Federal Funding. The maximum amount of federal funds which will be made available for the project.
e. Funding Schedule. A schedule of reimbursements by fiscal year and type of funds (apportionment and/or discretionary).
f. Sponsor Compliance Statement. A statement that the sponsor must be in compliance with all statutory and administrative requirements.
g. Intent to Obligate Statement. A statement that the LOI is not considered an obligation of the United States, must not be deemed an administrative commitment for funding, but only an intention to obligate from future budget authority as such funds become available.
h. Amendment Statement. A statement that the LOI, with sufficient justification, may be amended to adjust the maximum federal obligation, the payment schedule, or both.
i. Requirements before Proceeding Statement. A statement that if a sponsor proceeds without satisfying all of the statutory and administrative requirements associated with an actual grant, the commitment to reimburse the sponsor under the LOI may be voided.
j. Failure to Comply with Federal Requirements Statement. A statement that a sponsor’s failure to comply with all federal requirements could lead to a requirement to repay paid amounts and jeopardize later reimbursements.

6-9. LOI Grant Administration.

Once an LOI is approved, the ADO is responsible for issuing and administering the associated grants according to the approved LOI payment schedule. This includes ensuring that all of the sponsor (Chapter 2), project (Chapter 3), funding (Chapter 4), and grant (Chapter 5) requirements have been met.

The ADO has the flexibility to determine which phases of the LOI project will be included in each grant as long as the ADO is able to accurately track what is being funded.

The sponsor is required to maintain a current record of the physical and financial status of the project. The ADO has the option to request this information in the format and frequency the ADO determines is necessary.

6-10. LOI Amendments.

There must be ongoing ADO involvement as each project phase is completed, as subsequent phases come to bid, and as successive grants are issued under the LOI. In extremely limited circumstances, the FAA may amend an LOI in future years to adjust the total maximum Federal obligation, the schedule of payments, or both. Circumstances that warrant an amendment include, but are not limited to, a change in project cost related to unforeseen Federal or state regulatory requirements, changes in project timing or scope, or changes in future obligating authority. APP-510 approval is required prior to an ADO amending an LOI.

The sponsor has a responsibility to estimate and manage costs as accurately as possible. In cases where the sponsor faces unexpected increases in costs driven solely by economic conditions, sponsors must not view a possible LOI amendment as the first solution to be considered, particularly since the FAA’s overall participation rate will generally represent a small percentage of overall funding.

The sponsor must either consider cost reduction or deferral measures, and/or pursue the full range of funding sources available. The FAA has the option to issue an amendment, but such amendments will be the exception rather than the rule and may result in the FAA extending the LOI payment schedule beyond the term of the original schedule and/or revising the level of Federal participation.

In cases where an amendment would exceed $10 million or 20% of the original LOI discretionary funding amount, APP-510 has the option to require the sponsor to submit updated information. If such an amendment is approved, APP-510 must initiate an DOT Office of the Secretary (OST) and congressional notification process as if a new LOI were being awarded.

An LOI is amended by the FAA issuing an LOI amendment letter. The LOI amendment is not subject to grant amendment rules.

The LOI amendment may or may not affect the individual grants previously issued under the LOI. If an individual grants is affected, the amendment rules in Section 7 of Chapter 5 will apply.

6-11. LOI Closeout.

Once all of the associated LOI grants are closed, the ADO must officially close the LOI in the automated AIP system.

6-12. Revising, Suspending, or Terminating an LOI.

If a sponsor proceeds without satisfying all of the statutory and administrative requirements associated with an actual grant, the FAA has the option to suspend or terminate the LOI. In the rare instance a sponsor proposes a substantial revision to the approved project, the ADO must contact APP-500 to determine the appropriate course of action. Sponsors must fully understand that failure to comply with all Federal requirements could lead to a requirement to repay paid amounts and jeopardize later reimbursements.

Section 2. State Block Grant.

 

6-13. General.

 

The State Block Grant Program allows states to assume the administrative responsibilities that are traditionally performed by the ADO for nonprimary airports. These functions are specifically defined by a state block grant agreement that is executed between the state and the FAA once the state is chosen for participation in the program.

6-14. Limited State Flexibility.

The State Block Grant Program provides participating states with some flexibility in the administration of the state apportionment and sponsor entitlement for the airports in their program. The limitations on this flexibility are outlined in the Memorandum of Agreement that is signed by both the state and the FAA. Unless specifically waived in the Memorandum of Agreement, the state must ensure that all applicable statutory and regulatory requirements discussed in this Handbook are met.

6-15. Responsibilities Retained by the FAA.

The FAA has determined that there are key functions that must be retained by the FAA. The ADO cannot delegate these functions to the state. The current version of Advisory Circular 150/5100-21, State Block Grant Program, contains a list of the specific functions that must be retained by the FAA.

6-16. Legislative History and List of Participants.

49 USC § 47128 authorizes the FAA to allow no more than ten states to administer block grants for the nonprimary airports in the state. Table 6-8 contains the history of the State Block Grant Program and Table 6-9contains a list of the approved State Block Grant participants.

Table 6-8 History of the State Block Grant Program

 

Date	Major Milestones
December 30, 1987	The Airport and Airway Safety and Capacity Expansion Act of 1987 was passed. Section 116 of this Act amended the Airport and Airway Improvement Act of 1982, by adding new section 534 entitled State Block Grant Pilot Program.
October 20, 1988	14 CFR part 156, State Block Grant Pilot Program, was published in 53 Federal Register 41303 (October 20, 1988).
October 1, 1989	This State Block Grant Pilot Program became effective and allowed three states to apply for the program.
October 31, 1992	The Airport and Airway Safety, Capacity, Noise Improvement, and Intermodal Transportation Act of 1992 extended the State Block Grant Program until 1996. This Act also authorized the issuance of block grants for fiscal years 1993 through 1996 in four additional states (for a total of seven).
October 9, 1996	The Federal Aviation Reauthorization Act of 1996 authorized one new state block grant participant (for a total of eight) and made the State Block Grant Program a permanent feature of AIP.
April 4, 2000	The Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21) authorized one new state block grant participant in fiscal years 2000 and 2001 (for a total of nine) and an additional state block grant participant after fiscal year 2001 (for a total of ten).

Table 6-9 State Block Grant Participants

 

State	Fiscal Year Selected	Fiscal Year Exited Program
(1) Illinois	1989	N/A
(2) Missouri	1989	N/A
(3) North Carolina	1989	N/A
(4) Michigan	1993	N/A
(5) New Jersey (no longer in program)	1993	2003
(6) Texas	1993	N/A
(7) Wisconsin	1993	N/A
(8) Tennessee	1997	N/A
(9) Pennsylvania	1997	N/A
(10) New Hampshire	2008	N/A
(11) Georgia	2008	N/A

6-17. State Block Grant Program Application.

The FAA will accept applications for the State Block Grant Program at any time – there is no set application schedule. To do this, the state simply sends a letter of request with the information listed in Table 6-10 to the ADO.

States are encouraged to check with the FAA prior to submitting an application to determine if there are any available slots in the program. If a state is accepted into the program, the state can remain in the program until the state decides it wants to withdraw from the program or the FAA suspends or terminates its participation.

Table 6-10 State Block Grant Application Information

The state must describe…
a. The state’s organization and capabilities to effectively administer a block grant program.
b. The state’s airport system planning process.
c. The state’s programming process.
d. The state’s willingness and ability to comply with the State Block Grant Agreement.
e. The state’s willingness and ability to comply with the National Environmental Policy Act of 1969, state and local environmental policy acts, Executive orders, agency regulations, and other federal environmental requirements.
f. The state’s willingness and ability to provide all program information that is requested by the FAA.
g. The state’s process for determining which projects will be funded, including: (1) The state’s process for ensuring that critical safety, and security, and other national aviation priority needs will be met. (2) The state’s system for determining a project’s priority and how this process is consistent with the FAA’s national priority system.

6-18. FAA Selection of State Block Grant Participants.

49 USC § 47128 (b) and (c) describe the criteria that the FAA must use to select a state for the State Block Grant Program. These criteria are listed in Table 6-11. The ADO must review the state’s request against the criteria in this table and make a recommendation to the regional office. The regional office must then make a recommendation to APP-520, who is responsible for the final determination. The ADO is responsible for notifying the sponsor of the FAA’s official determination.

Table 6-11 State Block Grant Selection Criteria

In order for the FAA to select a state for the State Block Grant Program, the FAA must determine that…
a. The state has an organization capable of effectively administering a block grant program.
b. The state uses a satisfactory airport system planning process.
c. The state uses a programming process that is acceptable to the FAA.
d. The state is both willing and able to comply with the State Block Grant Agreement.
e. The state is both willing and able to provide all program information that is requested by the FAA.
f. The state is both willing and able to comply with the National Environmental Policy Act, state and local environmental policy acts, executive orders, agency regulations, and other federal environmental requirements.
g. The state uses a satisfactory process for determining which projects will be funded, including: (1) A satisfactory process for ensuring that critical safety, and security, and other national aviation priority needs will be met. (2) A satisfactory process for determining a project’s priority that is consistent with the FAA’s national priority system.

6-19. Memorandum of Agreement.

As of the publication date of this Handbook, it is FAA policy that the state and the FAA must enter into a State Block Grant Program Memorandum of Agreement in order for the state to qualify for grants under the program. The FAA officially documents that the selection criteria have been met by executing a State Block Grant Program Memorandum of Agreement (MOA) with the state. The ADO must retain a signed original of the executed State Block Grant Program MOA and forward a copy to APP-520.

This MOA outlines the responsibilities of the state and the FAA under the State Block Grant Program. The current version of Advisory Circular 150/5100-21, State Block Grant Program, contains the standard template that the ADOs must use for this MOA.

6-20. Grant Assurances.

The ADO must include Aviation Block Grant Program Assurances as part of all state block grants as well as a set of Airport Sponsors Assurances and Non-Airport Sponsors Undertaking Noise Compatibility Program Projects Assurances (see Appendix B for link to these assurances).

Per Aviation Block Grant Assurance #4, the state and or the associated airport owner receiving a subgrant are obligated to the Airport Sponsors Assurances or Non-Airport Sponsors Undertaking Noise Compatibility Program Projects Assurances as appropriate to the individual project. The state accomplishes this by attaching the applicable assurances to the subgrant agreement.

6-21. Criteria for an Airport to be in the State Block Grant Program.

Table 6-12 contains the criteria for an airport to be in the State Block Grant Program.

The state and the FAA have the option to allow specific airports to remain outside of the State Block Grant Program. This would mean that the administrative responsibilities would remain in the ADO. Both the state and the FAA must agree with this action, otherwise the airport must stay within the State Block Grant Program. The ADO must include a list of these airports in the MOA and must include the process for these airports to compete for state apportionment. In addition, the ADO provides this list annually to APP-520.

Table 6-12 Criteria for an Airport to be in the State Block Grant Program

In order for an airport to be eligible to be in a State Block Grant Program, the airport must be…
a. In the National Plan of Integrated Airport System (NPIAS).
b. Within the state boundaries of a block grant state.
c. An existing (not planned) public-use airport.
d. A general aviation, reliever, or nonprimary commercial service airport (primary airports are not eligible).
e. Listed as a block grant airport in the State Block Grant Program Memorandum of Agreement between the state and the FAA.

6-22. ADO Right to Issue Grants Directly to Airports in the State Block Grant Program.

The ADO retains the right to issue a grant directly to an airport in the state block grant program. This grant would use small airport funds per 49 USC § 47116(c). This would be a rare occurrence and would normally only be done by the ADO to address an unusual circumstance.

6-23. Decision Authority for Discretionary Funds.

As of the publication date of this Handbook, it is FAA policy that the FAA retains the decision authority regarding which airport projects will be funded with discretionary funds within the block grant. The current APP-520 discretionary policy applies to these projects.

6-24. Grant Federal Share.

The federal share rules for state block grants and their associated subgrants are included in Table 4-7.

6-25. Grant and Amendment Processes.

The ADO issues one or more grants to the state each year for the state’s available nonprimary entitlement, state apportionment, and cargo funds (where applicable). The ADO also has the option of issuing additional grants to the state with discretionary funds at specific airports. The state then issues the individual subgrants to nonprimary airports in its state.

The grant and amendment processes for the State Block Grant Program are incorporated in the applicable sections of Chapter 5.

6-26. Transfer of AIP Funding between Airports.

The rules for transferring funding between airports within the State Block Grant Program are included in Table 6-13.

Table 6-13 AIP Funding Transfer Rules for the State Block Grant Program

For the following funding type…	The following transfer rules apply…
a. State Apportionment	None.
b. Passenger, Cargo, and Nonprimary Entitlement	The state must follow the transfer rules provided in Paragraph 4-11.
c. Discretionary	Per FAA policy, states are prohibited from transferring ADO assigned discretionary to another airport or project, or using unused discretionary for new projects. This policy aligns the use of discretionary between state block and non-state block grants.

6-27. Project Eligibility and Allowable Costs.

AIP requirements for airport project eligibility and allowable cost (see Chapter 3) are the same for states receiving a block grant as they would be if the ADO were administering the project. The ADO has the final call in eligibility determinations where there are disagreements with the states interpretation.

6-28. Project Administrative Costs.

The state can charge for project administrative costs that would otherwise be an allowable cost for the project (normally done by a consultant or other hired company). Paragraph 3-60 outlines the requirements for the cost for a state’s employee’s time as well as overhead or indirect costs (overhead or indirect costs include anything more than direct employee’s time).

6-29. Program Administration Costs.

State program administration costs are unallowable. These are costs that would be incurred by the ADO if the FAA were administering the grant. Per FAA Policy, exemptions from this prohibition are not considered.

6-30. Required Timeframe to Issue Subgrants.

It is FAA policy that the state must issue all funding to subgrants in a manner that allows them to meet the period of performance and closeout deadlines contained in Paragraph 5-57. If the state does not do this, the ADO has the option to unilaterally deobligate the funds and close the grant.

6-31. Grant/Project Oversight.

Unless otherwise stated in the State Block Grant Program Memorandum of Agreement, all of the project and grant oversight requirements in Section 5 of Chapter 5 apply.

6-32. Grant Payments.

The rules for grant payments for state block grants are included in Section 6 of Chapter 5.

6-33. Grant Closeout.

The rules for grant payments for state block grants are included in Section 8 of Chapter 5.

6-34. Program Review by the FAA.

The FAA has the option of reviewing a state’s administration of the State Block Grant Program. The state must provide all documentation requested by the FAA.

6-35. Accounting and Audits.

States must have an accounting system that accurately reflects expenditures of all funding within a state block grant. State block grants and subgrants are subject to the same audit requirements as any other AIP grant.

6-36. Suspension/Termination of a Grant Issued under the State Block Grant Program.

The FAA has the option to suspend and/or terminate any state block grant. The procedures are listed in Section 9 of Chapter 5. The ADO must assume the administrative responsibilities associated with the suspended grant. This is not the same as suspending a state from the program, which is covered in Paragraph 6-37.

6-37. Suspension of a State from the State Block Grant Program.

The FAA has the option to suspend a state from the State Block Grant Program if the FAA determines the State fails to comply with mandatory requirements. The FAA must use the criteria used for admitting the state to the program (see Paragraph 6-18) and the conditions in the State Block Grant Memorandum of Agreement to make this decision. The FAA must also work with the state to determine a course for corrective action and a time frame in which it will be completed by the state.

If a state is suspended, the ADO must assume the administrative responsibilities associated with the program. Prior to suspension, the ADO must obtain copies of all subgrants (open or closed).

6-38. Removal or Voluntary Withdrawal from the State Block Grant Program.

States may voluntarily withdraw from the State Block Grant Program. In addition, failure of states to comply with block grant conditions or regional agreements may result in the FAA removing the state from the program.

a. APP-1, APP-500, and ACO-100 Coordination/Concurrence. The ADO must coordinate and obtain concurrence from APP-1, APP-500, and ACO-100 prior to initiating withdrawal or removal of a state from the State Block Grant Program.

b. Negotiations on Transfer of Responsibilities from State to ADO. Unless the FAA determines otherwise, the ADO and the state have the option to negotiate the transfer of responsibilities from the state to the ADO. For instance, the ADO might request to phase out the state’s participation in the program starting with selected categories of airports or projects.

c. Amendment to Memorandum of Agreement. The State Block Grant Program Memorandum of Agreement must be amended to reflect the transfer of responsibilities to the ADO. The memorandum must list all open and closed subgrants and must indicate what documentation must be transferred to the ADO. The ADO must obtain APP-500 and ACO-100 concurrence with the memorandum before it is executed by the ADO.

d. State Reapplication after Termination. A terminated state can reapply to be in the State Block Grant Program under the same application procedures for a new applicant.

Section 3. Military Airport Program.

 

6-39. General.

 

The Military Airport Program (MAP) allows the FAA to give grants to civil sponsors of joint-use military airfields or former military airports.

6-40. AIP Funding.

49 USC § 47117(e)(1)(B) designates a 4% set-aside of AIP discretionary funds that the FAA may use towards projects at MAP designated airports. The FAA normally directs MAP funding towards those specific projects that will allow a MAP designated airport to successfully transition from military to civilian use.

6-41. Designation Authority.

49 USC § 47118(a) allows the FAA to designate up to 15 current or former military airfields in the Military Airport Program. These airports can receive grants to help convert them to civilian use or to reduce congestion. Per 49 USC § 47118(g), three of the 15 airports may be general aviation airports and the remaining twelve must be commercial service or reliever airports.

6-42. Original MAP Designation Duration.

The FAA has the option to designate an airport as a MAP airport for one to five years per 49 USC § 47118(d). Per FAA policy, the FAA must evaluate the conversion needs of the airport in the sponsor’s capital development plan to determine the appropriate length of designation.

6-43. Redesignation Duration.

Previously designated airports may apply for redesignation of additional terms not to exceed a five year per term per 49 USC § 47118(d). Those airports must meet current MAP requirements and, per FAA policy, have remaining MAP eligible projects that were not funded by the FAA. The FAA’s goal is to graduate MAP airports to regular AIP participation by successfully converting these airports to civilian airport operations.

6-44. Requirements.

Sponsors must submit documentation that clearly shows they meet the 49 USC § 47118 and FAA policy requirements listed in Table 6-14.

Table 6-14 MAP Requirements

For the following requirement…	The following criteria apply…
a. System Benefits	Per 49 USC § 47118(c), the proposed projects will accomplish at least one of the following: (1) Reduce delays at an airport with more than 20,000 hours of annual delays in commercial passenger aircraft takeoffs and landings. (2) Enhance airport and air traffic control system capacity in a metropolitan area or reduce current and projected flight delays. (3) Preserve or enhance minimum airfield infrastructure facilities at former military airports to support emergency diversionary operations for transoceanic flights in locations where both of the following criteria are met: (a) The location is within United States jurisdiction or control. (b) The location has a demonstrable lack of diversionary airports within the distance or flight-time required by regulations governing transoceanic flights.
b. Current or Former Military Airport	Per 49 USC § 47118(a), the airport is either a current or former military airport under at least one of the following conditions: (1) The airport was closed or realigned under Section 201 of the Defense Authorization Amendments and Base Closure and Realignment Act, and/or Section 2905 of the Defense Base Closure and Realignment Act of 1990 (Installations Approved for Closure by the Defense Base Realignment and Closure Commissions). Only public agencies qualify under these acts. (2) The airport was closed or realigned under 10 USC § 2687 as excess property. These are bases announced for closure by the Department of Defense after September 30, 1977 (this is the date of announcement for closure and not the date the property was deeded to the sponsor). Only public agencies qualify under this regulation. (3) The airport is a commercial service or reliever airport that is a military installation with both military and civil aircraft operations (also called a joint use airport). Per 49 USC § 47118(g), a joint use airport that is not a commercial service or reliever airport is not eligible under MAP unless the airport meets conditions (1) or (2) above.
c. Public-Use Airport	Per 49 USC § 47105(b)(2), the airport is a public-use airport (see the definition Appendix A for the criteria) in the National Plan of Integrated Airport Systems.
d. MAP Slots are Available	Per 49 USC § 47118(a) and § 47118(g), three of the 15 airports may be general aviation airports and the remaining twelve must be commercial service or reliever airports.
e. Eligible Sponsor	The sponsor is an eligible sponsor per the requirements of the Act (see Chapter 2 for a listing of the requirements).
f. Airport Layout Plan	Per 49 USC § 47107(a)(16), the airport has an FAA approved airport layout plan.
g. Capital Improvement Plan	Per FAA policy, the sponsor has a five-year capital improvement plan that includes all eligible AIP projects that can be funded with MAP and AIP.
h. Environmental Requirements	Per FAA policy, the environmental review necessary to convey the property, enter into a long-term lease, or finalize a joint-use agreement must have been completed. The military department conveying or leasing the property, or entering into a joint-use agreement, has the lead responsibility for this environmental review. Per FAA policy, the environmental reviews for each specific MAP project are separate processes. These environmental reviews must meet the normal AIP requirements and timeframes.
i. Good Title	Per 49 USC § 47106(b), the sponsor has to have good title. Per FAA policy, good title requirements are as follows: (1) Former Military Airport. The sponsor must hold or will hold satisfactory title, a long-term lease in furtherance of conveyance of property for airport purposes, or a long term interim lease more than 20 years or longer to the property on which the civil airport is being located. This is because the lease term must be longer than the grant assurances for AIP construction projects. Documentation that an application for surplus or BRAC airport property has been accepted by the federal government is sufficient to indicate the eligible sponsor holds or will hold satisfactory title or a long term lease. In addition, the sponsor must possess all necessary property rights prior to accepting a grant for a proposed project. (2) Current Military Airport. The sponsor must have an existing joint-use agreement with the military department having jurisdiction over the airport. If the sponsor is a first time applicant, the sponsor must submit a copy of the existing joint-use agreement no later than the time of the application. This is necessary to permit the ADO to issue grants to the sponsor. In addition, the sponsor must possess all necessary property rights prior to accepting a grant for a proposed project.
j. Marketing Plan	For a commercial service airport to qualify for redesignation, it is FAA policy that the sponsor must provide a reanalysis of their original business/marketing plans (for example, a plan previously funded by the Department of Defense Office of Economic Adjustment or the original Master Plan for the airport) and prepare a report. If there is no existing business/marketing plan, the sponsor must develop a business/marketing plan or strategy. The report must contain all of the following information: (1) Whether the original business/marketing plan is still appropriate. (2) Whether the airport is continuing to work towards the goals established in the business/marketing plan. (3) How the MAP projects contained in the application contribute to the goals of the sponsor’s marketing plan. (4) If the business/marketing plan no longer applies to the current goals of the airport, how the airport has altered the business/marketing plan. Specifically, how have they established a new direction for the facility, how projects contained in the MAP application aid in the completion of the new direction and goals, and by what date they anticipate completing the MAP projects.

6-45. Typical MAP Projects.

The FAA will normally only consider MAP funding for projects that aid in the conversion of a military or former military facility to civilian use. These projects can include revenue generating projects that may not normally be eligible at the airport. These projects can also include lower priority AIP project that would not compete well for regular discretionary funding. A list of the MAP project requirements is contained in Appendix T.

It is FAA policy to use regular discretionary or entitlement funding, not MAP funding, for projects that compete well for discretionary funding or are not necessary to convert the airport to civilian use. Some examples of projects that APP-520 would anticipate an ADO use regular AIP funding are in Table 6-15.

Table 6-15 Examples of Projects That May Not Be Suitable for MAP Funding

The following project…	May not be suitable for MAP funding because…
a. Runway rehabilitation	This type of project normally competes well for regular AIP funding.
b. A runway extension	This type of project is normally not necessary to convert the airport to civilian use (most military runways are a suitable length for civilian use).

6-46. Use of Regular AIP on a MAP Designated Airport.

MAP designated airport projects are not limited to MAP funding. They may also qualify for other AIP funding if they meet all associated project eligibility and justification requirements. In fact, it is FAA policy that the ADO not recommend an airport for the MAP program unless the ADO is willing to support the airport’s needs for higher priority projects with regular discretionary funding (if necessary).

6-47. MAP Funding Limitations.

Per 49 USC § 47118(e), total MAP funding may not exceed $7 million per year per airport for terminal projects. Per 49 USC § 47118(f), total MAP funding may not exceed $7 million per year per airport for construction, improvement, or repair of airport surface parking lots, fuel farms, utilities, hangars and air cargo terminal building facilities, only if the hangar or air cargo terminal building facility is 50,000 square feet or less.

6-48. Reimbursement with Discretionary.

Per 49 USC § 47118(f)(2), the FAA has the option to use discretionary to reimburse approved MAP projects if the sponsor incurred the costs during fiscal years 2003 and 2004.

6-49. Application Process.

Every year, the FAA publishes the information that a sponsor must submit if it wants to be designated or redesignated into the MAP program. The publication also announces the number of available MAP slots and the factors that the FAA will use to evaluate the MAP candidates for that fiscal year.

Each fiscal year, APP-520 will provide the regional offices and ADOs with instructions for the current internal MAP application review process.

 

Section 4. Innovative Finance Demonstration Program.

 

 

6.50 Legislative History and References.

 

The legislative history of the innovative finance demonstration program is outlined in Table 6-16. This program has been retained without change in subsequent legislation under 49 USC § 47135.

Table 6-16 Innovative Finance Demonstration Program Legislative History

The following legislation…	Provided the following…
a. Section 148 of the Federal Aviation Reauthorization Act of 1996	Established the program and allowed the FAA to approve applications for 10 airport development projects.
b. Section 132 of AIR -21 (Wendell H. Ford Aviation Investment and Reform Act for the 21st Century)	Allowed the FAA to approve applications for 20 airport development projects during fiscal years 2000-2003.
c. Section 156 Vision 100 – Century of Aviation Reauthorization Act	Allowed the FAA to approve applications for 20 airport development projects beginning in fiscal year 2004 and beyond.

6-51. Program Rules.

The rules for the innovative finance demonstration program are included in Table 6-17.

Table 6-17 Innovative Finance Demonstration Program Rules

The current Innovative Finance Demonstration Program rules include…
a. Eligible Airports. Per 49 USC § 47135(a), the program is open to all airports except large and medium hub airports. Only 20 airport development projects may be approved beginning in fiscal year 2004.
b. No Guarantee of Debt Instruments. Per 49 USC § 47135(c)(1), FAA approval of the project does not (directly or indirectly) create a guarantee by the United States Government of any airport debt instrument.
c. Allowable Innovative Techniques. Per 49 USC § 47135(c)(2), the program is limited to the following innovative techniques. (1) Payment of interest. (2) Commercial bond insurance and other credit enhancement associated with airport bonds for eligible airport development. Per FAA policy, this may include underwriting fees. (3) Flexible non-federal matching requirements. (A) This may include increased local and state shares using contribution from private sources. (B) The FAA has determined that this technique has been adequately tested; therefore the FAA is less inclined to pursue future uses of these techniques. (4) Use of entitlement and state apportionment funds to pay principal and interest costs for terminal development if the costs were incurred before December 12, 2003 (the date of the enactment of Vision 100 – Century of Aviation Reauthorization Act). The FAA has determined that this technique has been adequately tested. Therefore the FAA is less inclined to pursue future uses of these techniques.
d. Justification. Per FAA policy, the sponsor must demonstrate that the innovative finance proposal will result in cost savings or improved performance of the national aviation system. For instance, it might show that the airport development would either not be built or would be built earlier than would have been possible without the program.
e. Application Deadline. Per FAA policy, sponsors may submit an innovative finance demonstration application to the ADO at any time unless otherwise established by APP-500.
f. Project Selections. Per FAA policy, ADOs must forward all applications to APP-500 for their review. APP-500 will approve or disapprove all project applications.
g. Normal AIP Requirements. Per FAA policy, all other applicable AIP sponsor, funding, project, and grant rules apply. Changes to FAA standards will not be considered under this program.
h. Additional Sponsor Reporting. Per FAA policy, sponsors must submit all additional documentation and reporting as required by the ADO.

Section 5. Voluntary Airport Low Emission Program (VALE).

6-52. Legislative History.

In fiscal year 2004, Sections 151, 158 and 159 of Vision 100 – Century of Aviation Reauthorization Act established a voluntary program to reduce airport ground emissions at commercial service airports located in nonattainment and maintenance areas designated by the U.S. Environmental Protection Agency.

6-53. Legislative References.

Table 6-18 contains the legislative references applicable to the VALE program.

Table 6-18 VALE Legislative References

The following…	Provides...
a. 49 USC § 47102(3)(K) and § 47102(3)(L)	The language that makes certain VALE projects eligible as airport development.
b. 49 USC § 47110(b)(6)	Guidance on VALE project funding restrictions.
c. 49 USC § 47117(e)(1)(A)	Guidance on the use of noise and environmental set aside funding.
d. 49 USC § 47139	Guidance on emission credits for air quality projects.
e. 49 USC § 47140	Guidance on the airport ground support equipment emissions retrofit pilot program.

6-54. Purpose and General Overview.

The goal of the Voluntary Airport Low Emission (VALE) Program is to improve airport air quality by providing commercial service airports with grants to acquire low emission vehicles and infrastructure. The VALE Program helps airport sponsors meet their general conformity obligations under the Clean Air Act (42 USC § 7401, et. seq.). It also assists state planning to meet health-based national ambient air quality standards.

The airports must be located in nonattainment or maintenance areas designated by the Environmental Protection Agency (EPA) per 49 USC § 47140(b). Some of the key equipment requirements are that the equipment must provide cleaner technology then the conventional equipment, be airport-owned, provide the best achievable emissions reductions based on EPA standards, and rely exclusively on alternative fuels that are substantially non-petroleum based (as defined by the U.S. Department of Energy, not excluding hybrid systems). Typical projects include gate electrification, boiler pollution control devices, and new or retrofitted low emission vehicles and ground support equipment.

6-55. Available Guidance.

The authorizing legislation requires the FAA to publish program guidance in areas of project eligibility, how air quality benefits are demonstrated, and how sponsors receive appropriate airport emission reduction credits. Specific program guidance is contained in the VALE Program Technical Report, which is available on the FAA Office of Airports website (see Appendix B for link) under the Environmental Program section. Associated guidance on airport emission reduction credits is contained in the EPA Report, Guidance on Airport Emission Reduction Credits for Early Measures through Voluntary Airport Low Emission Programs, which is available on the same website.

6-56. Application and Grant Process.

Sponsors interested in applying for VALE grants must submit a project application as outlined in the VALE Technical Report. VALE requirements and special conditions supplement AIP requirements and grant assurances unless otherwise stated in VALE guidance. The automated AIP system contains the current available special conditions. Sponsors must submit VALE applications concurrently to the ADO, regional office and APP-400. VALE grants are processed similarly to other AIP grants.

APP-400 determines funding priority primarily on the basis of project cost-effectiveness, as defined by project lifetime emission reductions per dollar spent.

6-57. Project Funding Requirements.

Appendix S includes the funding requirements for environmental planning/mitigation projects, including VALE projects.

Section 6. Zero Emission Vehicle and Infrastructure Pilot Program.

6-58. Legislative History.

In fiscal year 2012, Section 511 of the FAA Modernization and Reform Act of 2012 (Public Law 112-95) added a pilot program for zero emission vehicles and infrastructure.

6-59. Legislative References.

Table 6-19 contains the legislative references applicable to the zero emission vehicle and infrastructure pilot program.

Table 6-19 Zero Emission Vehicle and Infrastructure Pilot Program Legislative References

The following…	Provides...
49 USC § 47117	Guidance on the use of set aside funding for these projects. (Note: The only set aside discretionary funding that the FAA anticipates using toward these projects is Noise and Environmental Set Aside funding, even though 49 USC § 47117 includes MAP and Reliever Set Aside funding.)
49 USC § 47136a	Guidance on zero emission airport vehicles and infrastructure. (Note that this section is after 49 USC § 47136, not part of it.)

6-60. Purpose.

The goal of the Zero Emission Vehicle and Infrastructure Pilot Program is to improve airport air quality by providing eligible airports with grants to purchase zero emission airport vehicles and infrastructure.

6-61. Available Guidance.

Specific program guidance is contained in the Zero Emissions Airport Vehicle and Infrastructure Pilot Program Technical Guidance, which is available on the FAA Office of Airports website (see Appendix B for link) under the Environmental Program section.

6-62. Application and Grant Process.

ADOs and regional offices must contact APP-400 for application information and APP-500 for grant information.

6-63. Project Funding Requirements.

Appendix S includes the funding requirements for environmental planning/mitigation projects, including zero emission airport vehicles and infrastructure projects. The federal share for these projects is restricted to 50% per 49 USC § 47136a(d). These projects are eligible for noise and environmental set aside funding per 49 USC § 47136a(a), as further discussed in Paragraph 4-6.

 

Section 7. Program to Increase Energy Efficiency of Airport Power Sources.

 

 

6-64. Legislative History.

 

In fiscal year 2012, Section 512 of the FAA Modernization and Reform Act of 2012 (Public Law 112-95) added a program for certain projects that increase the energy efficiency of airport power sources. This legislation simply made these projects eligible for AIP. The legislation did not make these projects eligible for any special set aside funding (including the noise and environmental set aside).

6-65. Legislative References.

Table 6-20 contains the legislative references applicable to the program to increase the energy efficiency of airport power sources.

Table 6-20 Program to Increase the Energy Efficiency of Airport Power Sources Legislative References

The following…	Provides...
49 USC § 47140a	Guidance on increasing the energy efficiency of airport power sources. (Note that this section is after 49 USC § 47140, not part of it.)

6-66. Purpose.

The goal of the program to increase the energy efficiency of airport power sources.

6-67. Available Guidance.

As of the publication date of this Handbook, APP-400 was developing guidance for the program to increase the energy efficiency of airport power sources. Until this new guidance is published, ADOs and regional offices must contact APP-400 for guidance.

6-68. Application and Grant Process.

As of the publication date of this Handbook, APP-400 was developing guidance for the program to increase the energy efficiency of airport power sources. Until this new guidance is published, ADOs and regional offices must contact APP-400 for application information and APP-500 for grant information.

6-69. Funding and Federal Share.

Because 49 USC § 47117(e)(1)(A) limits the funding of the noise and environmental set-aside to specific projects, projects to increase the energy efficiency of airport power sources are not eligible for noise and environmental set aside funding. In addition, the airport’s regular federal share applies.

6-70. Project Funding Requirements.

Appendix S includes the funding requirements for environmental planning/mitigation projects, including airport energy assessments and projects to increase the energy efficiency of airport power sources.

 

Section 8. Airport Development Rights Pilot Program.

 

 

6-71. Legislative History.

 

In fiscal year 2004, Section 152 of Vision 100 – Century of Aviation Reauthorization Act created a pilot program for the purchase of development rights for up to 10 privately-owned public-use airports. The rules for this pilot program are provided for in 49 USC § 47138. This pilot program allows the FAA to issue a grant to a state (or a political subdivision of the state) for the purchase of airport development rights to ensure the airport property will continue to be available for use as a public use airport in perpetuity (in this case, public use airport means that the airport is open to the public). Through this pilot program, the FAA will evaluate the merits of purchasing airport development rights instead of the purchase of fee simple interests for the airports.

6-72. Rules of the Pilot Program.

The rules and requirements of the pilot program are outlined in Table 6-21.

Table 6-21 Rules for the Airport Development Rights Pilot Program

The requirements for…	Include…
a. The Number of Participants	(1) Per 49 USC § 47138(e), the FAA is only allowed to issue grants to purchase airport development rights at 10 airports under this pilot program.
b. The Airport and Airport Owner	(1) Per 49 USC § 47138(a), the airport must be a privately-owned public-use airport. (2) Per FAA policy, the airport owner must have filed a notice with the ADO in accordance with 14 CFR part 157, Notice of Construction, Alteration, Activation, and Deactivation of Airports, indicating that the airport status is privately-owned, public-use. (3) 49 USC § 47138 does not require the airport to meet the privately-owned public-use airport requirements in 49 USC § 47102(22)(B) or to be in the National Plan of Integrated Airports (NPIAS). (4) Per FAA policy, the airport owner must not have any existing grant obligations requiring the airport to remain open.
c. The Grant Sponsor	(1) Per 49 USC § 47138(a), the sponsor must be a state or a political subdivision of a state (such as a city, municipality, or state agency) in the same state as the airport.
d. The Grant Purpose	(1) Per 49 USC § 47138(b)(1)(A), the airport property must continue to be available for use as a public airport (in this case, public airport means that the airport is open to the public). (2) Per 49 USC § 47138(b)(1)(B), the airport must remain a public use airport in perpetuity.
e. Requesting Participation	(1) Per FAA policy, the FAA may contact potentially interested owners and/or sponsors at any time and informally invite them to express interest in the pilot program. (2) Per FAA policy, the sponsor must express interest in a letter to the FAA. If the airport owner does not cosign the letter, then the sponsor must indicate that the airport owner has agreed in the sponsor’s letter.
f. The Selection	(1) Per FAA policy, the regional office will send a joint ADO/regional office recommendation to APP-500. APP-500 is the selecting office. Once an airport has been selected, the ADO will inform the sponsor of the selection and request a grant application.
g. The Grant Application	(1) 49 USC § 47138(c) requires that the FAA set the requirements for the grant application and approval procedures. (2) Per FAA policy, the sponsor must use the standard grant application as discussed in Paragraph 5-19. (3) Per FAA policy, grant application must include a property inventory map (Exhibit A) that is approved by both the sponsor and the airport owner and clearly shows the land and development subject to the agreement. (4) Per FAA policy, the airport owner must provide a letter to the FAA describing its concept for ownership and operation of the airport over the next ten years. (5) Per FAA policy, if the airport owner does not operate the airport, the airport owner must provide a copy of the associated lease or agreement. (6) Per FAA policy, the ADO must determine whether the costs of the proposed grant are less than buying the airport outright. The issuance of the grant documents a positive determination by the ADO. (7) Per FAA policy, the sponsor must provide a signed certification from their attorney as outlined in Table 6-22. (8) The FAA has the option of not issuing a grant for the purchase of airport development rights if the FAA determines that it is not in the best interest of the federal government or that the requirements will not be met.
h. Option for FAA Site Visit	(1) Per FAA policy, airport owner must agree to allow a site inspection by the FAA and sponsor prior to the grant being issued.
i. FAA Coordination	(1) Per FAA policy, the ADO must discuss the terms and conditions of the pilot program with the airport owner as well as the sponsor to ensure both parties understand their obligations.
j. Acquisition	(1) Per FAA policy, the FAA, sponsor, and airport owner must follow the same policies and procedures for airport acquisition in fee simple as contained in Appendix Q. This includes meeting the requirements of the current version of FAA Order 5100.37, Land Acquisition and Relocation Assistance for Airport Projects, and in the current version of Advisory Circular 150/5100-17, Land Acquisition and Relocation Assistance for Airport Improvement Program Assisted Projects.
k. AIP Fund Types	(1) 49 USC § 47138(a) allows of all types of apportionment and entitlement funds available to the sponsor that are listed under 49 USC § 47114 to be used on this type of grant.
l. AIP Federal Share	(1) Per 49 USC § 47138(b)(2), the federal share is limited to 90% of the costs to acquire the development rights.
m. AIP Grant Description and Amount	(1) Per FAA policy, the FAA can only compensate the airport owner for the market value of the development rights sold based on an acceptable before and after appraisal. Under this appraisal method, the market value of the development rights conveyed is appraised at the difference between the market value of the property for continued airport use and the current market value of the property for some other development. (2) Per FAA policy, planning costs to prepare the Exhibit A and/or associated documentation are allowable project formulation costs under the grant (not as a separate grant). (3) Per FAA policy, the property interests must be for a complete airfield or those combined parcels that collectively allow the airport to serve as a public-use airport. The property interests cannot be for only select areas of the airport (such as only the runway protection zones).
n. Grant Template	(1) The ADO must consult with APP-500 on how the standard grant template must be modified for a grant of this type.
o. Instrument Recording the Purchase of Airport Development Rights	(1) Per FAA policy, the instrument recording the purchase of airport development rights must include all of the terms and conditions listed in Table 6-23. The instrument recording the purchase of development rights is the document evidencing the purchase of the airport development rights by the sponsor, and the easement or covenant given by the airport owner that the airport must remain a public-use airport in perpetuity.
p. Grant Assurances	(1) Per FAA policy, the standard grant assurances (Sponsor, Planning Agency, or Non-Sponsors Undertaking Noise Compatibility Program Projects) must not be included in the grant. Instead, the requirements in Table 6-23 must be contained in the instrument recording the purchase of airport development rights, as discussed above.
q. Final Payment	(1) Per FAA policy, ADO must not allow the payment for the full amount of the grant until the instrument recording the purchase of development rights and easement has been recorded in the local registry of deeds and land transfers in compliance with local law.
r. Release of Purchase Rights and Covenant	(1) Per 49 USC § 47138(d), the state or political subdivision may not transfer or dispose of the development rights unless the FAA determines that it is in the best interest of the federal government.
s. Advisory Circular for Airport Safety Self-Inspection	(1) Per FAA policy, the ADO has the option to provide the airport owner/operator with the current version of Advisory Circular 150/5200-18, Airport Safety Self Inspection.

Table 6-22 Required Sponsor’s Attorney Certification Language

The following certification language must be completed and signed by the sponsor’s attorney…
CERTIFICATE OF SPONSOR’S ATTORNEY
I, ________________ , acting as Attorney for the Sponsor do hereby certify that in my opinion the Sponsor is empowered to file the Application for Federal Assistance for the purchase of development rights in accordance with Title 49, United States Code, section 47138, under the laws of the State of _____________and has the authority from its governing body. Further, the actions taken by said sponsor and sponsor’s representative has been duly authorized and that the execution thereof is in all respects due and proper and in accordance with the laws of the said State. Dated at _________________ (location) this _____ day of _____________, _______. By: ______________________________________________ (Signature of Sponsor’s Attorney)

Table 6-23 Requirements for the Instrument Recording the Purchase of Airport Development Rights

Per FAA policy, the instrument recording the purchase of airport development rights must include the following terms and conditions…
a. Exhibit A (Property Inventory Map). Parcels of land obligated under the development rights agreement must be described on the Exhibit A. The Exhibit A must be approved by both the sponsor and the airport owner.
b. Notice to Airmen. The airport owner must promptly notify pilots of any condition affecting aeronautical use of the airport property.
c. Acquisition of Development Rights. The acquisition of development rights by the sponsor is for the right to develop and use the property depicted on the Exhibit A for a purpose other than as an airport open to the public or enhancing convenience of aviation activities. The purpose of the acquisition of development rights is to ensure that the airport will continue to be available as a public use airport (in this case, public use airport means that the airport is open to the public).
d. Hazardous Substance. The FAA and state (or political subdivision of the state) do not assume any right to control the means by which the airport owner complies with restrictions on airport property; and do not assume any liability for discharge of a hazardous substance.
e. Public-Use Airport in Perpetuity. The airport owner, for good and valuable consideration, must grant the sponsor an easement or covenant that the airport must remain open to the public for use as an airport in perpetuity. Such easement or covenant must be in effect in perpetuity unless modified or released with the approval of the FAA.
f. Modification or Release of Purchased Rights and Covenant. The sponsor must not modify, transfer, or disposal of the airport development rights unless the FAA has made a written determination that the action is in the best interest of the federal government.
g. Recordation. The sponsor must record the instrument evidencing the purchase of development rights and the granting of the easement or covenant that the airport must remain open to the public for use as an airport in perpetuity, in the local registry of deeds and land transfers in compliance with local law.
h. Sponsor’s Obligation for Airport Operation. The sponsor may be obligated to operate and maintain the airport if it is closed during other than periods of temporary climatic conditions that interfere with safe operation and maintenance. The airport owner and sponsor agree that in the event the airport owner discontinues safe airport operation and maintenance, the sponsor, in consultation with the FAA, may be required to assume that obligation.
i. Airport Owner’s Obligation for Airport Operation in Perpetuity. The airport owner or its successor is obligated to own the airport and operate it as an airport except for periods of temporary climatic conditions that interfere with safe operation and maintenance. In the event the airport owner discontinues safe airport operation and maintenance, the airport owner must notify the FAA within 24 hours.
j. Enforcement of Development Rights by the FAA. The instrument recording the purchase of development rights must grant the FAA third party beneficiary rights to enforce the easement or covenant that the airport must remain a public-use airport in perpetuity and the sponsor’s obligation for airport operation.

Section 9. Redevelopment of Airport Properties Pilot Program.

6-73. Legislative History.

In fiscal year 2012, Section 822 of the FAA Modernization and Reform Act of 2012 (Public Law 112-95) created a pilot program to fund activities related to the redevelopment of airport properties purchased for airport noise compatibility. Note that the pilot program language was not incorporated into 49 USC Chapter 471, therefore the text of the pilot program can only be found in Section 822 of the FAA Modernization and Reform Act of 2012 (Public Law 112-95). As of the publication date of this Handbook, the current sunset date is September 30, 2018 per the Consolidated Appropriations Act, 2018 (Public Law 115-141).

6-74. Purpose.

The purpose of this pilot program is to expedite redevelopment of airport property purchased for noise mitigation by the airport with AIP or Passenger Facility Charge (PFC) funds.

6-75. Availability of Guidance.

Guidance for this pilot program is available in Pilot Program for Redevelopment of Airport Properties (Acquired Noise Land) (see Appendix B for link).

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