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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2019. Revolving Funds for Sustainability Projects at Airports. Washington, DC: The National Academies Press. doi: 10.17226/25567.
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Page 1
Page 2
Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2019. Revolving Funds for Sustainability Projects at Airports. Washington, DC: The National Academies Press. doi: 10.17226/25567.
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Page 2
Page 3
Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2019. Revolving Funds for Sustainability Projects at Airports. Washington, DC: The National Academies Press. doi: 10.17226/25567.
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Page 3

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

1 Airports continually balance demands to improve infrastructure with the realities of available budgets. Green revolving funds (GRFs) offer an alternative approach for invest- ing in projects that generate operational savings. The fund works by tracking verified cost reductions from implemented actions, and then transferring those savings to a reserve that provides capital for future qualified projects such as energy system upgrades. These savings become a new resource that can reduce pressure on existing capital and operational budgets. A number of universities have managed GRFs for over a decade. Municipalities are starting to adopt them as well. Airports require a modified GRF approach because of financial struc- tures, Federal Aviation Administration (FAA) regulatory requirements, airline agreements, and the wide range of tenant roles. This ACRP report provides guidance to determine whether this innovative funding approach is suitable for a particular airport and instructions on how to deploy it. Airports that have the ability and determination to launch a GRF will gain a robust method for advancing their sustainability goals. Airport Sustainability Funding Dynamic Many worthwhile airport sustainability actions are often not pursued because of a lack of funding. Airports may have a limited ability to pursue capital projects that are dedicated solely to increasing efficiency. Planning teams prioritize opportunities that support air- craft operations or enhance passenger terminal capacity. Operational budgets have limited potential to support new projects over other existing recurring expenses. A GRF solves these challenges by creating a dedicated funding stream for sustainability projects that does not compete with existing capital and operating budget priorities. How a GRF Fund Works A GRF is an internal investment vehicle dedicated to financing energy efficiency, renew- able energy, and other sustainability measures that generate cost savings. These savings are tracked and “revolved” back into the GRF, maintaining the funding stream for sustainability projects over time. GRFs are broadly defined by two criteria: 1. The fund must finance measures to reduce resource use (e.g., energy, water, or waste) or to reduce carbon emissions (e.g., by installing renewable energy technology). 2. The fund must revolve. Savings generated from operating cost reductions attributed to funded projects must be used to fully repay the initial loan or investment. Once funded, a GRF continues in perpetuity and can invest in sustainability projects without impacting airport capital or operational budgets. S U M M A R Y Revolving Funds for Sustainability Projects at Airports

2 Revolving Funds for Sustainability Projects at Airports Determining If a GRF Is a Good Fit GRFs are ideal for airports that want to pursue ambitious efficiency goals and are willing to invest in an unconventional approach. If airports have the vision and commitment to start a GRF, they will typically require 6 to 18 months to obtain resources, educate stake- holders, establish accounting and governance procedures, and promote the program. Air- ports that have greater autonomy under compensatory contract structures with airlines will be able to move more quickly. Residual and hybrid (combining residual and compensatory) contract structures will require additional effort to negotiate shared savings and create the contractual agreements. The larger the airport property and assets, the greater the potential benefit associated with a GRF. It is possible that smaller airports, with annual utility costs under $200,000, may find that the labor required to invest in and maintain an airport-level GRF does not justify the potential savings; however, alternative approaches for small airports, such as establishing a state-level GRF, are possible. How to Implement a GRF This report presents a 10-step process for planning, implementing, and operating an airport GRF, as shown in Figure 1. Readers will find more detailed implementation guidance and additional background material within the chapters that follow. The development and deployment of a GRF requires the support of a variety of key stake- holders. For example, the airport’s office of planning and environment or another appropri- ate line of business needs to designate a point person who can serve as the champion to take ownership and maintain momentum. The airport finance departments need to ensure that either the current accounting system is sufficiently robust to support the GRF accounting and financial reporting requirement or agree to modify or change the system as needed. Facility engineering needs to create a list of potential projects. Operational groups must agree to roles regarding project prioritization and tracking savings. For airports that have a third party manage their utility payments, a new system to monitor bills and payment must be established. Coordination with key tenants is essential. For airlines, this may require new agreements or modified contracts to change the way operational savings are split between parties. Airports may need to start the process for establishing a GRF by incorporating it within airport planning documents for future consideration. Once there is an agreed process for managing savings, an airport GRF committee can either designate seed money to start the fund (endowment model) or capitalize the GRF through savings from existing projects (savings reclamation model). There are a wide range of funding sources to capitalize the fund, and airports should review the Frequently Asked Questions (FAQs) provided in Appen- dix A to understand the requirements including those regarding FAA grant funding. Finally, airports must establish a governance process that is accept- able to all key parties. Then, when funds are available to invest, an airport can install new equipment or other resource efficiency mea- sures from a prioritized project list. Projects with a quick payback are especially attractive for GRFs, because they return money to the Who Are the Airport GRF Key Parties? The following airport stakeholders should be part of the GRF process: • Airport Finance • Airport Operations and Maintenance • Airport Environmental Affairs and/or Sustainability • Airport Planning and Development • Engineering • Airlines • Other Major Tenants

Summary 3 fund quickly, but a GRF can invest in projects with long and short payback periods. Based on a baseline measurement or actual metered data, the post-project savings can be tracked. Savings from the utility bills are then directed back to the GRF. New investments can be made from the fund, once it holds sufficient resources. Airports can also contribute additional funding to make the GRF grow faster. Once the fund is operational, airport GRF committees should review performance periodically to optimize it. This report groups the 10 steps into three phases: Phase 1: Planning—Initiating an Airport GRF • Step 1: Perform Research—Understand Your Airport • Step 2: Select a GRF Model • Step 3: Assess Investment Potential • Step 4: Engage Stakeholders and Build Buy-In Phase 2: Implementation—GRF Activation Steps • Step 5: Secure Seed Capital • Step 6: Establish Fund Governance and Procedures • Step 7: Launch the Fund Phase 3: Operations—GRF Project Implementation and Ongoing Management • Step 8: Implement Projects • Step 9: Track, Analyze, and Assess Performance • Step 10: Optimize and Improve Figure 1. GRF implementation steps.

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Airports continually balance demands to improve infrastructure within the realities of available budgets. Green revolving funds (GRFs) offer an alternative approach for investing in projects that generate operational savings. These funds work by tracking verified cost reductions from implemented actions, and then transferring those savings to a reserve that provides capital for future qualified projects such as energy system upgrades.

A number of universities have managed GRFs for over a decade. Municipalities are starting to adopt them as well. ACRP Research Report 203: Revolving Funds for Sustainability Projects at Airports includes several non-airport-related case examples that have managed GRFs and two airport-related case examples. Airports require a modified GRF approach because of financial structures, Federal Aviation Administration (FAA) regulatory requirements, airline agreements, and the wide range of tenant roles.

This ACRP report provides guidance to determine whether this innovative funding approach is suitable for a particular airport and instructions on how to deploy it. Airports that have the ability and determination to launch a GRF will gain a robust method for advancing their sustainability goals.

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