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OCR for page 40
$ 17. Use of Airport Revenue general Key Po i nt It is critical that policy makers for your airport understand that once an airport receives grant-in-aid funding through the AIP, federal law prohibits using airport-generated revenue for non-airport uses. Use of airport revenue in this fashion is referred to as revenue diversion because airport-generated funds are being used for purposes other than airport capital or operating costs. Revenue diversion is the use of airport revenue for purposes other than airport capital or operating costs. With the exception of a few grandfathered situations, revenue diversion violates federal law. The Airport D i s cu s s i on Airport revenue includes: Fees, rents, charges, or other payments received by the airport sponsor; Proceeds from the sale or disposal of airport property; Revenue received from sponsor activities at the airport; and State and local aviation fuel taxes in effect after December 30, 1987. Revenue generated by a tenant in the normal course of that tenant's business is the tenant's revenue, not airport revenue. The airport sponsor's revenue from the tenant's occupancy and business rights is normally paid in the form of fees, rentals, lease agreements, etc. and is considered to be airport revenue. Revenue generated from natural resources such as sub- F INAN C IAL surface minerals is considered to be airport revenue; however, contact the local FAA Airports office for specific policy. FAA policy and federal law identify several specific examples of permitted uses of airport revenue including: Capital development of airport facilities; General operating costs of the airport; Operating costs such as the promotion of public and industry awareness of the airport's facilities and services; and Operating costs for the promotion of new air service and competition at the airport, but not directly subsidizing air carrier operations. FAA policy and the law identify specific examples of revenue diversion, such as: Direct or indirect payment by the airport that exceeds the fair and reasonable value of those services and facilities provided to the airport; Inconsistent or inequitable costs allocated to the airport by a local governing body providing services to the airport; rules General economic development; 40

OCR for page 40
Marketing and promotion unrelated to airport operations; GENERAL Rental of land to, or use of land by, the airport sponsor for non-aeronautical purposes at less than fair market value rent; Impact fees assessed by any governmental body that exceeds the value of services or facilities provided by the airport; Use of airport funds to support community (non-airport) activities, participate in community events, or use airport property for commercial purposes; and Direct subsidy of air carrier operations. Prohibited direct subsidies do not include waivers of fees or discounted landing or other fees during a promotional period. However, the airport owner must offer the same promotional fee, waiver, or discount to all similarly situated users of the airport willing to provide the same type and level of new service consistent with the promotional offering. There are many other examples of permitted and prohibited uses of airport revenue. Local FAA offices can assist airport sponsors to better understand the legal requirements relative to the use of airport revenue. FAA can also advise about the few grandfathered situations where certain airports are legally permitted to divert revenue from the airport. THE AIRPORT App l i c at i o n Be careful. From time to time, you will be approached by local officials or constituents to use airport-generated revenue for non-airport purposes. This is generally illegal. For further reference, see Chapter 15, FAA Airport Compliance Manual, Order 5190.6B, September2009: http:// FINANCIAL RULES 41