Notice Concerning the Use of Passenger Facility Change Revenue for Debt Service on Non Eligible Airport-Related Projects

AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Notice.

SUMMARY:

Section 122 of the Vision 100—Century of Aviation Reauthorization Act, (Pub. L. 108-176, December 12, 2003) reauthorizing the Federal Aviation Administration (FAA) provides the Secretary of Transportation discretion to allow Passenger Facility Charge (PFC) revenue to be used for making payments for debt service, on debt incurred to carry out a project that is not an eligible airport-related project when a determination is made that such use is necessary due to the financial need of the airport. This notice describes how this new position will be implemented administratively.

DATES:

This notice becomes effective on April 19, 2004.

ADDRESSES:

This is an informational notice only and comments are not being solicited at this time.

FOR FURTHER INFORMATION CONTACT:

Barry Molar, Manager, Airports Financial Assistance Division (APP-500), Room 620, Office of Airport Planning and Programming, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591, telephone (202) 267-8827; or Sheryl Scarborough, Financial Analysis and Passenger Facility Charge Branch (APP-510), Room 619, Airports Financial Assistance Division, Office of Airport Planning and Programming, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591, telephone (202) 267-8825.

SUPPLEMENTARY INFORMATION:

The Aviation Safety and Capacity Expansion Act of 1990, codified under 49 USC 40117 , created the PFC program on November 5, 1990. Under the PFC statute, the FAA may authorize a public agency to impose a PFC of $1, $2, $3, $4, or $4.50 for each enplaned passenger at those commercial service airports that the public agency controls. The public agency can then use this PFC revenue to finance FAA-approved eligible airport-related projects. The FAA's regulations that govern the PFC program are located in 14 CFR part 158 and became effective on June 28, 1991.

To impose a PFC, use PFC revenue or amend an approved PFC, a public agency operating an airport must apply for FAA approval by following the application process set forth in Part 158. These rules do not differ depending on the size of the airport, the type of project or whether the FAA has previously reviewed the projects details.

On December 12, 2003, President Bush signed the Vision 100—Century of Aviation Reauthorization Act (Pub. L. 108-176) (Vision 100) into law. Section 122 of Vision 100 includes a provision that allows PFC revenue to be used for making payments for debt service on debt incurred to carry out a project that is not an eligible airport-related project when the Secretary of Transportation determines that such use is necessary due to the financial need of the airport. By delegation from the Secretary of Transportation, the FAA has responsibility to administer the PFC program in its entirety.

The statutory provision provides:

SEC. 122. USE OF FEES TO PAY DEBT SERVICE.

Section 40117(b) is further amended by adding at the end of the following: “(6) DEBT SERVICE FOR CERTAIN PROJECTS.—In addition to the uses specified in paragraphs (1) and (4), the Secretary may authorize a passenger facility fee imposed under paragraph (1) and (4) to be used for making payments for debt service on indebtedness incurred to carry out at the airport a project that is not an eligible airport-related project if the Secretary determines that such use is necessary due to the financial need of the airport.”

In implementing Section 122, the FAA will process applications for funding in the same manner as traditional PFC applications. The application process will include careful review of the financial need of the individual public agency applicant. The FAA is electing to use the existing process because a determination of need is best handled on a case-by-case basis, focusing on the particular financial situation of the individual public agency submitting the PFC application. This process develops a record appropriate for the FAA to make the determination under Section 122 as to whether funding is necessary due to the financial need of the airport.

All PFC applications are developed and submitted under the guidance offered in 14 CFR 158.25. Public agencies are well acquainted with the information required for inclusion in the PFC application, including documentation of the required consultation process with air carriers. Once the application and supporting attachments have been submitted to the FAA, the Administrator renders a determination that the PFC application is substantially complete or not substantially complete. Following the initial determination for completeness and notification to the public agency, the FAA publishes a notice in the Federal Register advising the public of the application and inviting comment. At that time the public agency must make the application, notice and other documents relevant to the application available for inspection upon request, and may publish notice in a newspaper of general circulation in the area where the airport is located. After review of the application and public comments, the Administrator issues a final decision approving or disapproving the application in whole or in part, not later than 120 days from receipt of the application by the FAA Airports office.

Where an application requires a determination of need under Section 122 of Vision 100, a public agency needs to present a thorough financial analysis in accordance with 14 CFR 158.25(b) and (c). If an airport has developed a financial prospectus that would demonstrate its financial need or a financial recovery plan that identifies all available resources, it is encouraged to submit these documents with the application.

The public agency may wish to include the following types of information as indicators of its financial need in its PFC application:

• Evidence of a change in passenger enplanements for a carrier;
• Documentation of negative actions taken on the public agency's bond rating;
• Discussion of the inability of the public agency to meet bond payments and associated requirements;
• Discussion of alternative sources of revenue available to the public agency such as grant funds, state funds, concession revenue, and revenue from other carriers serving the airport.
• In the case of concession and carrier revenue, discuss the impact of any necessary increases to the rate base or landing fees as a result of the loss of revenue from a change in economic circumstances, for example, the bankruptcy or financial troubles of a carrier;
• Discussion of actions taken by the public agency to reduce its costs such as operational changes, personnel actions, or capital project deferment;
• Any other information the public agency believes will document the financial hardship of the airport.

All information submitted by the public agency through the PFC application process will be considered by the FAA in making a final agency decision. This final agency decision will include a discussion of the financial needs of the public agency under Section 122 of the Vision 100 Act.