Airport Alert: DOT and FAA Officials Discuss CARES Act Grants for Airports

April 14, 2020

During a call with airports and other aviation stakeholders today, Department of Transportation Secretary Elaine Chao and Federal Aviation Administration officials outlined plans for distributing $10 billion in CARES Act funding to airports.

Secretary Chao told participants that airports are "gateways to the aviation system." She went on to say that CARES Act grants will help keep airport workers on the job and preserve airport credit ratings. She indicated on the call that the Department's goal is to execute on grants by April 21. She also said that the Department intends to be as "flexible as possible."

FAA Associate Administrator for Airports Kirk Shaffer echoed Secretary Chao's vow to move quickly. He said the FAA plans to approve 3,200 airport grants in "just a few days." He called the upcoming process the "biggest and fastest" group of grants that the FAA has ever issued. He also assured sponsors that the FAA's Airports Office and staff at the regional and district offices are up to the task.

During today's call FAA officials indicated that sponsors may contact the FAA with questions. Please submit question to CARESAirports@faa.gov.

Latest Information from FAA

Grant Amounts for Individual Airports: In advance of this morning's conference call, the FAA released a spreadsheet showing how much individual airports can expect to receive in CARES Act funding. The airport list may be viewed here, and a list of CARES Act grants by state may be viewed here.

New Slide Deck: The FAA this morning posted a 19-page slide presentation to walk through how the agency intends to distribute in CARES Act funding to airports. The presentation indicates that the FAA "will award funds on an expedited basis" and that the agency encourages sponsors to "spend funds expeditiously." The presentation may be viewed here.

Updated FAQ: Yesterday, the FAA issued an updated Frequently Asked Questions document that also sheds more light on how the agency intends to distribute $10 billion to airports made available as part the CAREAS Act. The FAA's updated FAQ may be viewed here.

Press Release: Secretary Chao issued a press release today that may be viewed here.

Grant Map: The FAA also published a map of CARES Act grants that may be viewed here.

Grant Application Process

Grant Application Form: The FAA indicates that there will be a simplified grant application process for CARES Act grants. According to the agency's updated FAQ document, "after the Secretary of Transportation announces awards under the CARES Act, each airport sponsor must submit a grant application to access those funds." The agency also indicates that "the FAA will use the Office of Management and Budget (OMB) SF-424, Application for Federal Assistance."

Grant Application Timing: The FAA also indicates that grant agreements will be completed in days. According to the FAQ, "The FAA will provide this application to airport sponsors through the local Airports District Office or Airports Regional Office shortly after the Secretary announces CARES Act Airport Grants awards. The FAA anticipates providing a grant agreement for execution within days of receiving a complete application."

According to the FAQ, the FAA "will provide a simplified Grant Agreement shortly after it receives an application. This simplified agreement includes the requirements under the CARES Act and makes funds immediately available for expenses, other than airport development, including payroll, debt service, utility expenses, service contracts, and supplies."

Airports Required to Submit Payment Requests: The FAA also indicates that the agency will "use the existing U.S. Department of Transportation Delphi eInvoicing system for payment requests. Airport sponsors will continue the current practice of submitting underlying payment request documentation. Examples of documentation include payroll receipts, janitorial contract invoices, and debt service payments." The FAA indicates that it plans to "review invoices manually to ensure adequate oversight, but it will process payments quickly."

Additional Requirements for Airport Development Projects: The FAA instructs airports that intend to use CARES Act funding for new airport development or construction to contact their local Airports District Office or Airports Regional Office. The agency also points that traditional AIP grant assurances will apply to CARES Act grants that are provided to airports for those projects.

According to the FAA's FAQ, airports use of CARES Act funding for new airport development or construction must be "consistent with all of the recipient's prior Federal obligations, meets safety and security standards, meets National Environmental Policy Act (NEPA), prevailing wage, Buy American, Veterans' Preference, and Disadvantaged Business Enterprise Program requirements, and meets other specific requirements for new airport development under the CARES Act."

Airport Funding and Distribution

$10 Billion in Overall Funding:The final bill includes $10 billion "to prevent, prepare for, and respond to the coronavirus to remain available until expended." Airports would not be required to pay a local match for federal grants like they do for traditional Airport Improvement Program grants. Funds would come the general fund rather than the Airport and Airway Trust Fund.

$7.4 Billion for Commercial Service Airports: Of the $10 billion, $7.4 billion would go toward airports for "any purpose for which airport revenues may be lawfully used" at a 100 percent federal share. Of that amount, funds would be distributed in the following ways:

Grants Based on Enplanements: The bill would require the FAA to distribute 50 percent of this category of funds, or $3.7 billion, to airports based on their "calendar year 2018 enplanements as a percentage of total 2018 enplanements for all commercial service airports."

Grants Based on Debt Service/Unrestricted Reserves: The bill would require the FAA to distribute the remaining 50 percent based on "an equal combination of each sponsor's fiscal year 2018 debt service as a percentage of the combined debt service for all commercial service airports and each sponsor's ratio of unrestricted reserves to their respective debt service."

So, 25 percent of the total allocation in this category would be based on FY18 enplanements, and the other 25 percent would be based on an airport's FY18 ratio of unrestricted reserves to respective debt service.

FAA Guidance: Page 12 of the FAA's slide deck provides more information on how the agency intends to calculate the ratio of unrestricted reserves to respective debt service. It points out that there will be a cap on the ratio in order "to prevent disproportionately high award levels."

$2 Billion for Primary Commercial Airports: The bill includes another $2 billion that primary airports could use for any lawful purpose without paying a local match. Funds would be distributed based on a modified apportionment formula in a way that would help large and small airports. It would eliminate PFC "turnbacks" for large and medium hub airports and remove the maximum apportionment cap.

It would preserve doubled entitlements and retain the $1 million minimum entitlement for smaller primary airports, which are in place when Congress appropriates $3.2 billion or more for AIP in a fiscal year. The bill would also preserve the $600,000 apportionments for airports that have between 8,000 and 10,000 enplanements. Any remaining funds after the apportionment run would be distributed like the $7.4 billion category above.

FAA Guidance: The FAA's slide presentation indicates that funding in this category will go to "large, medium, small and non-hub primary airports and non-primary commercial service airports with 8,000-9,999 passenger boardings."

$500 Million for 100 Percent Federal Share of FY20 AIP Grants: The bill calls for not less than $500 million to pay a 100 percent federal share for AIP funding that Congress already approved as part of the Fiscal Year 2020 appropriations process.

FAA Guidance: The FAA's FAQ provided some guidance to airports on the 100 percent federal share for traditional AIP and supplemental discretionary grants in FY20: "The FAA will amend FY 2020 grants that already have been executed to adjust to the 100% Federal share. The FAA will award and execute the remaining FY 2020 grants with a 100% Federal share. The agency goes on to say that the "Federal share for FY 2018 and 2019 Supplemental Discretionary grants will not increase."

FAA Guidance on Multi-Year Grants: The FAQ also indicates that the agency will provide a 100% federal share for multi-year grants issued in FY 2020. However, the FAA maintains that in future years the agency will "continue to provide a 100% Federal share as long as CARES matching funds remain. Once matching funds are exhausted, FY 2020 multi-year grants will revert to the normal sponsor share."

$100 Million for General Aviation Airports: $100 million would be reserved for general aviation airports. GA airports could use the funds "for any purpose for which airport revenues may lawfully be used." The bill requires DOT to apportion the funds "directly to each eligible airport" based on categories published in the most current National Plan of Integrated Airport Systems. The bill would also eliminate the local match requirement for GA airports.

FAA Guidance: The FAA in its FAQ document elaborated on the distribution requirements for GA airports: "These funds are allocated based on the categories published in the most current NPIAS, reflecting the percentage of the aggregate published eligible development costs for each such category, and then dividing the allocated funds evenly among the eligible airports in each category, rounded up to the nearest thousand dollars."

Workforce Retention: The final bill includes a House proposal that would require large-, medium- and small-hub airports receiving federal funds to continue to employ "at least 90 percent of the number of individuals employed by the airport" from when the bill is enacted into law through December 31, 2020.

However, the requirement would not apply to non-hub or non-primary airports. The bill would also allow DOT to waive the workforce retention requirement if the agency determines the airport is experiencing "economic hardship" or if the requirement would undermine aviation safety and security. It is our understanding that this requirement applies only to direct employees of the airport, not tenants.

FAA Guidance: In its FAQ, the FAA indicates that airport sponsors "must certify compliance with the CARES Act employment requirements at the time of the grant execution and report employment totals quarterly on June 30, September 30 and December 31, 2020. That report and certification should include the number of full-time equivalent (FTE) employees working at the airport as of March 27, 2020, as the baseline comparison."

Miscellaneous

State Block Grant Program: FAA's FAQ provide information on how the agency intends to distribute CARES Act grants under the State Block Grant Program. That FAA indicated that it will aggregate the amounts announced for each sponsor into a single award for participating states. These states will use a streamlined application and grant agreement process similar to what FAA is proposing to use for all CARES Act grant funds.