The Balanced Development Approach: Funding and Timing (Part 3)
Written by Jenny Watts, C.M.
Previously, we explored the critical role of planning and promotion in an airport’s quest for expansion and growth. Here we explore the final two considerations—funding and timing—which are just as critical in ensuring an airport’s successful development.
Airport sponsors can pursue either traditional or non-traditional funding sources. For public-use airports in the U.S. that are part of the Federal Aviation Administration’s (FAA’s) National Plan of Integrated Airport Systems (NPIAS), funding is available through the Airport Improvement Program (AIP). To receive AIP funding, funding must be available and programmed on the airport capital improvement plan (ACIP); airport sponsors must not be in violation of any grant assurances; and projects must meet strict eligibility parameters, one of which is justification. Justification is defined in the AIP Handbook as advancing AIP policy, fulfilling an actual need, and having an appropriate project scope.
Projects related to airfield safety and capacity—such as extending a runway, correcting non-standard pavement geometry or safety areas, or expanding terminal space—will always take priority over projects such as constructing an airport maintenance building or reconstructing an airport entrance road or parking lot. It’s the classic scenario of “must-have versus nice-to-have.” Since public-use airports are funded with public money, the FAA has to ensure projects are truly justifiable and will provide a fair return on investment, given the high price tags of airport development projects.
If an airport’s visionary future development is deemed justifiable, it is important to begin working early with internal government leaders, the fiscal team, the state aeronautics division, and the FAA to identify and earmark potential funds early. The project should be added to the next iteration of the ACIP. Even if it gets pushed out year after year for various reasons, it gives all parties responsible for funding a heads up of what may be coming down the pipeline in the future.
If an airport sponsor’s visionary future development is not justifiable from the FAA’s perspective, they should begin researching alternative forms of funding, such as a P3 or municipal bonds. Engagement with the sponsor’s economic and airport business development personnel is paramount. If going the non-traditional route, airports should be cautious about unvetted business propositions or developers who sense their vulnerability due to a lack of funding. Airport development should focus on the best opportunities mutually beneficial for all parties, including the community, even if it takes time to find the right opportunities.
Funding plays a significant role in the lifecycle of the development process. Although traditional federal and state funding is viable (if justifiable), the process is lengthy and time-consuming, even for a relatively “easy” project. Alternative funding may speed up the process and may be necessary if the project does not meet FAA eligibility requirements. Still, it can be challenging to find an entity with the same vision that is willing to take a risk with large amounts of money.
The timing from concept to construction often depends on the funding source. Traditional FAA funding can take many years to procure depending on the priority status of the development project, AIP funding authorization from Congress, environmental review and clearance lead time, changes in political affiliations at the national and local level, or controversy associated with the project. Even if the project is justified, it could take years or even decades to receive FAA funding. In many cases, the airport sponsor may want or need to identify some non-traditional or alternative funding sources to make their vision come to fruition.
Although non-traditional funding may be procured more rapidly than traditional government funding, the process can still be complicated and lengthy. Pre-planning and environmental clearance, in most cases, must still occur, and the design and construction industry are always in a state of ebb and flow in terms of labor and materials. Timing must be planned to align with funding—and planning and promotion jumpstart the whole process. It is important to look at the whole process and see how the vision fits into the big picture.