On February 17, 2009, President Obama signed into law H.R. 1, the American Recovery and Reinvestment Act of 2009, generally referred to as the Stimulus Act. The Stimulus Act provides $1.1 billion for "Grants-In-Aid for Airports" to remain available through September 30, 2010 with not less than 50 percent of the funds to be awarded by June 17, 2009 and the remaining amount awarded not later than February 17, 2010. The Federal Aviation Administration (FAA) has indicated that it intends to have the remaining amount under grant prior to the close of Fiscal Year 2009. The awarding of these funds will not be subject to apportionment formulas, special apportionment categories or minimum percentages. Instead, the Secretary of Transportation must award grants on a discretionary basis, with priority given to those projects to be completed by February 17, 2011. Although grants awarded for these projects must be to supplement rather than replace planned expenditures from airport-generated revenues or from state or local sources, the federal share for project costs under a grant will be 100 percent.

Eligible Projects

The Secretary of Transportation must award grants from the $1.1 billion allocated for airport aid for discretionary projects under 49 USC 471(1) and 49 USC 475(1) (respectively, for "airport development projects," and "noise exposure maps" and "noise compatibility programs"), and for the purchase and installation of runway incursion prevention devices and systems. Summarized below are the projects for which the Secretary of Transportation will make these grants available.

Airport Development Projects

The Secretary of Transportation may issue grants for "airport development projects" under 49 USC 471(1). Generally, airport development projects are projects at public-use airports (i.e., a "public airport; or . . . a privately-owned airport used or intended to be used for public purposes that is . . . a reliever airport; or . . . determined by the Secretary [of Transportation] to have at least 2,500 passenger boardings each year and to receive scheduled passenger aircraft service") including:

  1. constructing, repairing and improving a public-use airport;
  2. acquiring and installing a navigation aid, safety and security equipment, equipment to remove snow or to measure runway surface friction, firefighting and rescue equipment, aircraft deicing equipment, interactive training systems, wind shear detection equipment, stainless steel adjustable lighting extensions, engineered materials arresting systems and baggage conveyor systems;
  3. acquiring an interest in land or airspace to carry out airport development or to remove or mitigate an existing airport hazard or limit the creation of a new hazard;
  4. acquiring land for or constructing a burn area training structure on or off the airport;
  5. relocating air traffic control towers;
  6. improving the airport to comply with the Americans with Disabilities Act, Clean Air Act or Federal Water Pollution Act;
  7. acquiring land for or constructing a pad for deicing aircraft before takeoff;
  8. performing routine work to repair and extend the useful life of runways, taxiways and aprons;
  9. constructing, reconstructing or improving an airport, or purchasing certain equipment, to transfer passengers, cargo or baggage to and from ground transportation;
  10. constructing certain air traffic control towers or acquiring and installing air traffic control equipment; and
  11. providing low-emission fuel systems at airport facilities, gate electrification and related air quality improvements and the acquisition or conversion of vehicles and ground support equipment to low-emission technology in nonattainment or maintenance areas under the Clean Air Act.

Public agencies, private owners of public-use airports and states may submit grant applications to the Secretary of Transportation for airport development projects. The application process includes a number of project requirements, some of which depend on the type of project, and requires the applicant to give certain assurances about airport operations. Additionally, prevailing wage and veteran preferences apply, under certain circumstances, to labor required to carry out airport development projects.

Noise Exposure Maps and Noise Compatibility Programs

The Secretary of Transportation may also issue grants to develop noise exposure maps, which show noncompatible uses in the airport's area, and noise compatibility programs, to reduce noncompatible uses and prevent additional noncompatible uses, and to carry out a project under an approved noise compatibility program, under 49 USC 475(1). Projects under such a noise compatibility program include (1) establishing a preferential runway system; (2) restricting the use of the airport by type or class of aircraft because of the noise characteristics of the aircraft; (3) constructing barriers and acoustical shielding and soundproofing public buildings; (4) using flight procedures to control the operation of aircraft to reduce the exposure of individuals to noise in the area surrounding the airport; and (5) acquiring land, air rights, easements, development rights and other interests to ensure that the property will be used in ways compatible with airport operations. Additionally, the Secretary of Transportation may make grants to soundproof residential buildings, acquire residential properties at which noise levels are not compatible with normal airport operations and soundproof a building in the noise impact area surrounding the airport that is used primarily for educational or medical purposes and that the Secretary of Transportation decides is adversely affected by airport noise.

Grants under this subchapter are available to airport operators and to local governments surrounding the airport that have had their noise compatibility program approved by the Secretary of Transportation. Airport operators and local governments surrounding the airport may submit a noise compatibility program to the Secretary of Transportation, after submitting a noise exposure map to that official. Under certain circumstances, public agencies surrounding the airport may be eligible to use grants to carry out noise compatibility programs.

Runway Incursion Prevention Devices and Systems

The Secretary of Transportation may also make grants for discretionary projects for the "procurement, installation and commissioning of runway incursion prevention devices and systems at airports under . . . title [49]."

Temporary Repeal of AMT on Exempt Facility Private Activity Bonds

In addition to the airport grant provisions described above, the Stimulus Act provides that interest on tax-exempt bonds that are private activity bonds and are issued in the years 2009 and 2010 for (i) new money purposes or (ii) refunding of new money or refunding bonds issued in the years 2004 through 2008 will not be a tax preference item for the individual or corporate alternative minimum tax (AMT), nor will it be included in the corporate AMT adjustment based on adjusted current earnings. Further information about these provisions is available in our February 2009 Public Finance Alert.