Regulatory Alert: FAA Releases Updated FAQ on CARES Act Airport Grants
May 29, 2020
Requesting Full Grant Awards. In the updated FAQ, FAA recommended that an airport request its full CARES Act Airport Grants award amount even if it intends to use a portion of those funds for airport development. This would allow the airport to simply request a Development Addendum later and use such funds for airport development, if needed.
Appropriate Use of Grant Funds. As AAAE has heard from members, there are a number of questions that have arisen over the appropriate use of CARES Act Airport Grant funds. The updated FAQ contained additional guidance in this area.
Q-U7: Can CARES Act Airport Grants funds be used to reimburse operational and maintenance expenses?
A: Yes. The FAA will reimburse sponsors for operational and maintenance expenses directly related to the airport incurred on or after January 20, 2020. Operational expenses are those expenses necessary to operate, maintain, and manage an airport. They include expenses such as payroll, utilities, service contracts, and items generally having a useful life of less than one year, including personal protective equipment and cleaning supplies.
Q-U10: Can CARES Act Airport Grants funds be used to reimburse monthly payments into a debt service reserve fund?
A: Yes. The FAA will reimburse sponsors for monthly payments into a debt service reserve fund (also called a debt service sinking fund or similar name), which are directly related to the airport, that are due on or after March 27, 2020, which is the date of enactment of the CARES Act. The airport sponsor must ensure that these payments are restricted to only debt service payments. The airport sponsor will continue the current practice of submitting underlying payment request documentation. This documentation should show the monthly payment, and the airport sponsor should follow up with documentation once the semiannual payment is made.
Q-U11: Can CARES Act Airport Grants funds be used to reimburse lost revenue?
A: No. CARES Act funds are available to reimburse operational expenses, debt service payments, and capital expenditures directly related to the airport. Lost revenue is not an eligible airport sponsor expense, and the airport sponsor does not need to identify any amount or type of lost revenue as part of its grant application, grant agreement, or invoice.
Q-U12: Can CARES Act Airport Grants funds be used to reimburse the local share on previously awarded AIP or Supplemental Discretionary grants?
A: Yes, with several limitations. CARES Act Airport Grants funds are available to reimburse eligible expenses, such as the local share, of a previously awarded AIP or Supplemental Discretionary grant provided the reimbursed expenses are directly related to the project approved under the grant, and the expenses are incurred on or after March 27, 2020. An airport sponsor should contact its local Airports District Office or Airports Regional Office prior to submitting a request for payment for these expenses to ensure adequate underlying documentation.
Q-U14: Can CARES Act Airport Grants funds be used to reimburse for a cost associated with an aeronautical service or product provided by the airport sponsor?
A: Yes, in certain circumstances. CARES Act Airport Grants funds are available to reimburse the costs associated with aeronautical products or services offered by the airport sponsor but only when the sponsor certifies it is the only provider of the same product or service at the airport. These services include aviation fuels, equipment, parts, supplies, and facilities for aircraft storage or maintenance. Costs associated with flight training or aviation training are not eligible for reimbursement.
Documentation for Payment Requests. With a number of airports having already executed grant agreements, questions have arisen over appropriate documentation requirements to support requests for payments. FAA listed out the following examples of acceptable forms of documentation: invoices; bills; time and effort reports; payroll reports from the payroll system of record; general ledger reports and subsidiary ledger reports; current and approved indirect cost rate agreement; or most recently approved local or statewide cost allocation plans.
CARES Act Grant Assurances Effective Period. FAA indicated that the grant assurances contained in the CARES Act Airport Grant Agreement, which many airports have already executed, remain in effect for four years from the date of acceptance. This is consistent with FAA's position that an airport's initial grant amount will be capped at four times their annual operating expenses, unless the remaining amount available to grant to the airport would be less than $1 million.
Reobligation of Unused Funds. FAA indicated that the agency will reobligate elsewhere funds that are not expended by airports within the four-year period of performance, provided that the new obligation is consistent with the purpose of the CARES Act. More specifically, the CARES Act made $500 million available to increase the federal share to 100% for grants awarded under the FY 2020 appropriations. FAA indicated that any remaining funds after this apportionment will be distributed in accordance with the formula used to distribute the $7.4 billion to commercial service airports. It is unclear to AAAE whether this means there will be another distribution of funds to these airports based upon any unused amounts.
Employee Retention Requirement. FAA updated its guidance on employee retention reporting, noting that if an airport has unique circumstances (such as using seasonal employees or contractors for airport management or operations), it should report that information in as much detail as possible in the initial report so any subsequent retention reporting can be substantiated.
Q12: How do small, medium and large hub airport sponsors report their respective compliance with the employee retention requirement?
A: Airport sponsors must certify compliance with the CARES Act employment requirements (outlined in Q11) at the time of 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. Airport sponsors may make adjustments for employees who perform duties at both the airport and other facilities operated by the airport sponsor. Airport sponsors also may make adjustments for retirements or voluntary employee separations when calculating the workforce retention percentage. If an airport sponsor has unique circumstances (such as using seasonal employees or contractors for airport management or operations), it should report that information in as much detail as possible in the initial report so any subsequent retention reporting can be substantiated. If an airport sponsor intends to request a waiver from the employment requirements, it should do so no less than 30 days prior to a quarterly report date and provide documentation supporting its request.
Allocation Formula for General Aviation (GA) Airports. As we have reported, the CARES Act included $100 million for GA airports with the largest airports receiving $157,000. FAA provided clarification on how they calculated the grant amounts that were awarded.
Q-F4: How did the FAA use the NPIAS airport categorization to determine CARES Act allocations for general aviation airport sponsors?
A: Under the CARES Act, not less than $100 million was allocated to general aviation airports based on the categories in the current NPIAS Report to Congress 2019-2023, issued September 26, 2018. FAA Order 5090.5, Formulation of the NPIAS and ACIP defines the criteria for each category or role. Categories and roles in the Report were determined using validated data available through February 2018.
Under the formula described in subparagraph (4) of the answer to Q6 above, providing for allocation based upon NPIAS categories: National airports received $157,000; Regional airports received $69,000; Local airports received $30,000; Basic airports received $20,000; and Unclassified airports received $1,000.
Because of activity changes at an airport since the publication of the Report, an airport's category may change in the next Report, which will be issued later in 2020. Nevertheless, such changes do not alter the allocation formula prescribed by the CARES Act.
Grant Closeouts. In the updated FAQ, FAA provided guidance on the procedures an airport will follow for closing out a CARES Act Airport Grant.
Q-C1: What are the procedures for closing out a CARES Act Airport Grant for non-development expenses?
A: Airport sponsors will submit a comprehensive narrative report via the U.S. Department of Transportation Delphi eInvoicing system. The narrative report will: (a) summarize the non-development expenses covered under the grant; (b) certify all expenses were incurred in accordance with the FAA's Revenue Use Policy and 2 CFR part 200; (c) certify that any equipment or services were procured in a manner consistent with the terms of the grant; (d) certify that operational expenses were incurred on or after January 20, 2020; (e) certify that debt service payments were due on or after March 27, 2020; and (f) submit a completed Standard Form 425, Federal Financial Report. Approval of the final payment request will follow a review of the airport sponsor's closeout report.
Today the Federal Aviation Administration (FAA) released an updated frequently asked questions (FAQ) document to provide key guidance for airport sponsors on questions and issues that have arisen since FAA began awarding grants and distributing $10 billion that Congress approved as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. AAAE is aware that many airports have already started to execute grant agreements and seek payment reimbursements from FAA. The updated FAQ addresses a number of questions that have arisen regarding the distribution of funds pursuant to those agreements, including the procedures for using grants for airport development projects, clarifications on appropriate uses for funds, acceptable documentation for payment requests, the reobligation of unused funds, and grant closeouts, among others.
FAA's updated FAQ document on CARES Act Airport Grants can be viewed here and a redlined version in comparison with the April 17 FAQ can be viewed here. If you would like to contact FAA directly with questions regarding the updated FAQ, you may email them at CARESAirports@faa.gov. Highlights from the FAQ document are included below.
Airport Development Projects. In the FAQ, FAA noted that if an airport wants to use grant funds for an airport development project, it may amend its initial CARES Act Airport Grant Agreement and execute a Development Addendum. This addendum is expected to outline additional reviews and requirements, such as satisfying the National Environmental Policy Act (NEPA), prevailing wage, and Buy American requirements, among others. FAA also explained what additional information would be expected for a Development Addendum.
Q-GA9: What information is required for a Development Addendum?
A: An airport sponsor seeking to use its grant funds for airport development should be prepared to provide its local Airports District Office or Airports Regional Office with the following information:
- Application form (Application for Federal Assistance, SF-424) for the proposed development project;
- A description of project;
- Estimated costs; and
- Timeline for completion.
- Complete any standards, airspace, and environmental reviews or approvals including airport geometry assessments, if applicable;
- Complete any other approvals required for the development with the FAA and other agencies;
- Ensure the proposed development is consistent with the approved Airport Layout Plan (ALP) and depicted on the ALP;
- Initiate safety-risk and construction phasing reviews, if applicable; and
- Bid the project to determine the amount to be amended from the initial CARES Act Airport Grant and added to the Development Addendum.
Requesting Full Grant Awards. In the updated FAQ, FAA recommended that an airport request its full CARES Act Airport Grants award amount even if it intends to use a portion of those funds for airport development. This would allow the airport to simply request a Development Addendum later and use such funds for airport development, if needed.
Appropriate Use of Grant Funds. As AAAE has heard from members, there are a number of questions that have arisen over the appropriate use of CARES Act Airport Grant funds. The updated FAQ contained additional guidance in this area.
Q-U7: Can CARES Act Airport Grants funds be used to reimburse operational and maintenance expenses?
A: Yes. The FAA will reimburse sponsors for operational and maintenance expenses directly related to the airport incurred on or after January 20, 2020. Operational expenses are those expenses necessary to operate, maintain, and manage an airport. They include expenses such as payroll, utilities, service contracts, and items generally having a useful life of less than one year, including personal protective equipment and cleaning supplies.
Q-U10: Can CARES Act Airport Grants funds be used to reimburse monthly payments into a debt service reserve fund?
A: Yes. The FAA will reimburse sponsors for monthly payments into a debt service reserve fund (also called a debt service sinking fund or similar name), which are directly related to the airport, that are due on or after March 27, 2020, which is the date of enactment of the CARES Act. The airport sponsor must ensure that these payments are restricted to only debt service payments. The airport sponsor will continue the current practice of submitting underlying payment request documentation. This documentation should show the monthly payment, and the airport sponsor should follow up with documentation once the semiannual payment is made.
Q-U11: Can CARES Act Airport Grants funds be used to reimburse lost revenue?
A: No. CARES Act funds are available to reimburse operational expenses, debt service payments, and capital expenditures directly related to the airport. Lost revenue is not an eligible airport sponsor expense, and the airport sponsor does not need to identify any amount or type of lost revenue as part of its grant application, grant agreement, or invoice.
Q-U12: Can CARES Act Airport Grants funds be used to reimburse the local share on previously awarded AIP or Supplemental Discretionary grants?
A: Yes, with several limitations. CARES Act Airport Grants funds are available to reimburse eligible expenses, such as the local share, of a previously awarded AIP or Supplemental Discretionary grant provided the reimbursed expenses are directly related to the project approved under the grant, and the expenses are incurred on or after March 27, 2020. An airport sponsor should contact its local Airports District Office or Airports Regional Office prior to submitting a request for payment for these expenses to ensure adequate underlying documentation.
Q-U14: Can CARES Act Airport Grants funds be used to reimburse for a cost associated with an aeronautical service or product provided by the airport sponsor?
A: Yes, in certain circumstances. CARES Act Airport Grants funds are available to reimburse the costs associated with aeronautical products or services offered by the airport sponsor but only when the sponsor certifies it is the only provider of the same product or service at the airport. These services include aviation fuels, equipment, parts, supplies, and facilities for aircraft storage or maintenance. Costs associated with flight training or aviation training are not eligible for reimbursement.
Documentation for Payment Requests. With a number of airports having already executed grant agreements, questions have arisen over appropriate documentation requirements to support requests for payments. FAA listed out the following examples of acceptable forms of documentation: invoices; bills; time and effort reports; payroll reports from the payroll system of record; general ledger reports and subsidiary ledger reports; current and approved indirect cost rate agreement; or most recently approved local or statewide cost allocation plans.
CARES Act Grant Assurances Effective Period. FAA indicated that the grant assurances contained in the CARES Act Airport Grant Agreement, which many airports have already executed, remain in effect for four years from the date of acceptance. This is consistent with FAA's position that an airport's initial grant amount will be capped at four times their annual operating expenses, unless the remaining amount available to grant to the airport would be less than $1 million.
Reobligation of Unused Funds. FAA indicated that the agency will reobligate elsewhere funds that are not expended by airports within the four-year period of performance, provided that the new obligation is consistent with the purpose of the CARES Act. More specifically, the CARES Act made $500 million available to increase the federal share to 100% for grants awarded under the FY 2020 appropriations. FAA indicated that any remaining funds after this apportionment will be distributed in accordance with the formula used to distribute the $7.4 billion to commercial service airports. It is unclear to AAAE whether this means there will be another distribution of funds to these airports based upon any unused amounts.
Employee Retention Requirement. FAA updated its guidance on employee retention reporting, noting that if an airport has unique circumstances (such as using seasonal employees or contractors for airport management or operations), it should report that information in as much detail as possible in the initial report so any subsequent retention reporting can be substantiated.
Q12: How do small, medium and large hub airport sponsors report their respective compliance with the employee retention requirement?
A: Airport sponsors must certify compliance with the CARES Act employment requirements (outlined in Q11) at the time of 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. Airport sponsors may make adjustments for employees who perform duties at both the airport and other facilities operated by the airport sponsor. Airport sponsors also may make adjustments for retirements or voluntary employee separations when calculating the workforce retention percentage. If an airport sponsor has unique circumstances (such as using seasonal employees or contractors for airport management or operations), it should report that information in as much detail as possible in the initial report so any subsequent retention reporting can be substantiated. If an airport sponsor intends to request a waiver from the employment requirements, it should do so no less than 30 days prior to a quarterly report date and provide documentation supporting its request.
Allocation Formula for General Aviation (GA) Airports. As we have reported, the CARES Act included $100 million for GA airports with the largest airports receiving $157,000. FAA provided clarification on how they calculated the grant amounts that were awarded.
Q-F4: How did the FAA use the NPIAS airport categorization to determine CARES Act allocations for general aviation airport sponsors?
A: Under the CARES Act, not less than $100 million was allocated to general aviation airports based on the categories in the current NPIAS Report to Congress 2019-2023, issued September 26, 2018. FAA Order 5090.5, Formulation of the NPIAS and ACIP defines the criteria for each category or role. Categories and roles in the Report were determined using validated data available through February 2018.
Under the formula described in subparagraph (4) of the answer to Q6 above, providing for allocation based upon NPIAS categories: National airports received $157,000; Regional airports received $69,000; Local airports received $30,000; Basic airports received $20,000; and Unclassified airports received $1,000.
Because of activity changes at an airport since the publication of the Report, an airport's category may change in the next Report, which will be issued later in 2020. Nevertheless, such changes do not alter the allocation formula prescribed by the CARES Act.
Grant Closeouts. In the updated FAQ, FAA provided guidance on the procedures an airport will follow for closing out a CARES Act Airport Grant.
Q-C1: What are the procedures for closing out a CARES Act Airport Grant for non-development expenses?
A: Airport sponsors will submit a comprehensive narrative report via the U.S. Department of Transportation Delphi eInvoicing system. The narrative report will: (a) summarize the non-development expenses covered under the grant; (b) certify all expenses were incurred in accordance with the FAA's Revenue Use Policy and 2 CFR part 200; (c) certify that any equipment or services were procured in a manner consistent with the terms of the grant; (d) certify that operational expenses were incurred on or after January 20, 2020; (e) certify that debt service payments were due on or after March 27, 2020; and (f) submit a completed Standard Form 425, Federal Financial Report. Approval of the final payment request will follow a review of the airport sponsor's closeout report.
