Airport Financing

Projects Eligible for Federal Support That May Go Unfunded Gao ID: RCED-98-165R April 29, 1998

Pursuant to a congressional request, GAO identified the amount of planned development that is eligible for Airport Improvement Program (AIP) funding but may go unfunded.

GAO noted that: (1) it cannot provide a precise estimate of the AIP-eligible projects that may go unfunded each year; (2) the planned development for the 5-year period from 1997 through 2001 was estimated to cost an average of $10 billion annually, which exceeds the total funding of about $7 billion that was available in 1996; (3) however, data that would readily identify the dollar value of AIP-eligible or -ineligible projects that may go unfunded each year during the 5-year planning period are not available; (4) the data for such an analysis are not collected or maintained by the Federal Aviation Administration (FAA) or any other organization; (5) while AIP funds, passenger facility charges, and a portion of state grants are used to finance AIP-eligible projects, the majority of airport revenues comes from the issuance of tax-exempt bonds; (6) the extent to which proceeds from bond financing are used to pay for AIP-eligible and -ineligible development is unknown because no restrictions exist on the use of these funds, and the available data on issued bonds do not identify whether AIP-eligible or -ineligible projects are funded through the bonds; (7) FAA maintains an inventory of projects eligible for AIP as part of its national planning process; (8) it is likely that at least $945 million, and possibly as much as $3.012 billion, of AIP-eligible projects may go unfunded each year during the 5-year period from 1997 through 2001; (9) at a minimum, if all of the funds available to the smaller airports in the national system were spent on AIP-eligible projects only, there would still remain about $945 million a year in AIP-eligible projects at those airports that would need to be funded; (10) however, because it is unlikely that all available funding at those airports would be spent on eligible projects, the dollar value of unfunded AIP-eligible projects is likely to be higher; (11) however, because all the ineligible projects at airports are unlikely to be funded in any given year, the dollar value of unfunded AIP-eligible projects is likely to be lower; (12) given the AIP funding available in 1996, it is unlikely that any of the planned safety and security projects would remain unfunded; and (13) also, according to FAA officials, unfunded development may be deferred for a variety of reasons other than a lack of funding, such as projects' low priority, environmental issues, social and political obstacles, and a lack of support from airport users.

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