Pond Ingenuity V26 I1 - Winter 2022

8 Pond | www.pondco.com Pond Ingenuity Winter 2022 9 hangars. The loans are paid back in equal monthly installments over 20 years. The current rate of interest on these loans is zero percent. Payment receipts, as they become available, are then loaned out again to other airports needing hangars. The hangar loan may be used to fund hangar site prep as well as the hangar building. With a current capitalization of $4.4 million, the purpose of the program is to provide loans to publicly owned airports allowing them the ability to construct revenue-generating hangar facilities and provide protection to the fleet of general aviation aircraft. The Commissioner of Transportation maintains the account and loans are processed through the Minnesota Department of Transportation Office of Aeronautics. To date, 75 communities have used 209 loans to build 1,118 aircraft storage hangars since the first loan was issued in 1959. Currently, there are about 10 airports with hangar loans being repaid. Florida Department of Transportation Work Program FDOT’s Work Program includes significant focus on the maintenance and construction of aircraft hangars. In total, $262,874,464 was requested from the state for these types of building projects, with $82,204,794 being funded in the current program. In the next five years of the FDOT Work Program, $115,688,320 in aviation funds is expected to be spent on airports and aviation projects in Florida. Approximately 6 percent of aviation funds will be spent on aircraft storage hangars. Maintaining Market Rates for Hangars in Wisconsin Each year, the Wisconsin DOT’s Bureau of Aeronautics (BOA) surveys public-use airports regarding rates, charges, and related activities. Airports are required to submit responses as a condition of receiving state funding. More importantly, the survey results serve as a comparative tool to help airports gauge financial practices and needs. The most recent survey indicated the average annual ground lease rate for a private hangar increased by two cents to $0.16 per square foot. The most common rate also increased two cents to $0.10 per square foot. A total of 48 airports in Wisconsin, more than half of the respondents, reported having T-hangars available to rent: seven commercial service airports, 12 large general aviation airports, 23 medium general aviation airports, and six small general aviation airports. Monthly, T-hangars rates were available at 40 airports and rates ranged from $40 to $300 per month for a Cessna 172, with an average rate of $155. Annual T-hangar rental rates were rare and varied greatly. Six airports reported annual rental rates for a T-hangar. Finding Value in a Systems Approach Several states find value in a systems approach to valuation of hangar and fuel pricing. Like the development of Georgia’s Statewide Aviation System Plan and Economic Impact Studies, states often take the lead in inventory and market analysis of aircraft tie-down rents, fuel prices, and hangar rents. This effort can be undertaken by a single airport, but individual airport sponsors have no means to compel neighboring airports to respond to a survey, often fearing loss of a competitive edge. Results of a statewide analysis of hangar rates can be used to evaluate fair and equitable charges as defined in FAA’s grant assurances and could be used in a statewide effort to make system-wide adjustments. These adjustments would ensure proper return on investment for funded development. USDA as an Alternative Funding Source In 2019, the U.S. Department of Agriculture, under the leadership of avid aviation enthusiast Secretary Sonny Perdue, introduced the Community Facilities (CF) Direct Loan Program, providing affordable funding to develop essential community facilities. Under this program, airport hangars are listed as an acceptable example of an essential community facility. There are other precluding factors such as the facility must be in a rural area and primarily serve rural residents and it must be operated on a nonprofit basis which does not include private affairs, commercial, or business undertakings. The Path Forward Traditional strategies used by airports, using different combinations of FAA AIP funding, tax-exempt bonds, state and local grants, and airport revenues to finance projects, are not able to keep up with funding demand. Small airports are more likely to be dependent on FAA AIP/GDOT grants than large or medium-sized airports. FAA’s long-held Airways and Airports Trust Fund has been the primary funding source for general aviation capital expenditures. Under that program, general aviation, reliever, and nonprimary commercial service airports are apportioned 20 percent of FAA AIP funds subject to apportionment. From this share, all airports, excluding all non-reliever primary airports, receive the lesser of the following: $150,000 or one-fifth of the estimated five-year costs for airport development for each of these airports as listed in the most recent National Plan of Integrated Airport Systems (NPIAS). Any remaining funds are distributed according to a state-based population and area formula. FAA makes the project decisions on the use of these funds in consultation with the states. Nearly all states provide financial assistance to airports, primarily in the form of grants used as matching funds for federal AIP grants or as separate state grants. States fund their grant programs through a variety of sources, including aviation fuel and aircraft sales taxes, highway taxes, bonds, and general fund appropriations. According to the results of a survey conducted by NASAO, states provided an annual average of $477 million to national system airports, with $345 million (72 percent) going to smaller airports and $131 million (28 percent) going to larger airports. Matching grants accounted for $345 million (72 percent) of the state grant dollars, and state- only grants accounted for $132 million (28 percent). According to FAA airports officials, states vary significantly from one another, with some states able to provide significant support to airports, while others are not due to a variety of factors. While there is no “silver bullet” funding solution for aviation in Georgia, there are various ways in which the state can assist in the funding of airports development. Key mechanisms that should be explored by state leadership in support of airport development and operations include loans, loan guarantees, increased direct grants and equity injections, and discount on user charges funded through reinvestment of taxes of real property at airports into their maintenance upkeep. Hugh F. Weaver, Jr., PE, LEED AP BD&C | Vice President - Aviation