March 29, 2024
On March 29,the Federal Aviation Administration (FAA) released the notice of funding opportunity (NOFO) that outlines how airports can apply for a share of approximately $268.7 million in fiscal year 2023 (FY23) supplemental discretionary grant funding, which was made available by Congress in December 2022 through the FY23 omnibus appropriations bill. In the NOFO, FAA outlines how airports can apply for a FY23 supplemental discretionary grant and how the agency will evaluate applications and proposed projects.
Based on our initial review, while FAA intends to use their regular Airport Improvement Program (AIP) process for evaluating, rating, and selecting proposed projects, the NOFO provides that the agency will also consider certain qualitative criteria and prioritize projects that advance one or more of the following goals: improve airfield operational resiliency and the safety of airfield operations; develop airport-owned infrastructure needed to facilitate increased use of sustainable aviation fuel (SAF); reduce emissions; or improve energy efficiency and reliability.
The NOFO will be officially published in the Federal Register on Monday, but you can view a pre-publication version here. The agency has set Thursday, May 2, 2024, at 5 p.m. ET, as the deadline for submitting applications. FAA indicated that the agency anticipates awarding at least 50 grants by August 2024.
Background on Supplemental Discretionary Funding. As part of the FY23 omnibus appropriations bill, which was passed in December 2022, Congress included about $558.6 million in supplemental discretionary funding for airport development projects in addition to 'regular' AIP funding. Of that amount, approximately $283.6 million was reserved for earmarks, known as 'Community Project Funding,' and $268.7 million was reserved for supplemental discretionary grants. These discretionary grants will be awarded in accordance with the process outlined in the NOFO released today.
In the FY24 FAA/DOT spending bill approved earlier this month, Congress provided $532.4 million in supplemental discretionary funding, including $482.4 million for earmarks and about $50 million for FAA to distribute at its discretion. It is unclear how FAA will distribute the $50 million in supplemental discretionary funding. The agency could release a NOFO, which would not be released until late 2024 at the earliest. Alternatively, given the relatively small amount, FAA could instead decide to add the $50 million to traditional AIP discretionary funding.
Overview of Supplemental Discretionary Grant Program. The NOFO provides an overview and detailed information regarding supplemental discretionary grants that are available for airports pursuant to the FY23 omnibus appropriations bill and congressional directives. Under the program, FAA will be providing $268.7 million to airports via discretionary, competitive grants for eligible projects. These are the key details of which airports should be aware:
Distribution by Hub Size: FAA indicated that $33.0 million in supplemental discretionary grants will be awarded to small hub, nonhub, and nonprimary airports and about $235.7 million will be awarded to medium and large hubs. FAA notes that large and medium hubs should craft project applications and request no more than a $20 million federal share. Small hub, nonhub, and nonprimary airports should submit applications requesting no more than a $1.5 million federal share.
Eligible Projects: Airports can apply for funding for any AIP eligible project, including improvements related to enhancing airport safety, capacity, security, environmental sustainability, planning, or any combination of these, including terminal development. However, FAA has identified a range of projects that will receive priority consideration.
Preferences and Priorities: Pursuant to congressional direction, FAA outlined three categories of projects that will receive priority consideration: (1) airfield operational resiliency, (2) SAF, and (3) emissions and energy improvements. These are projects, for example, that allow the airfield to more easily recover following a natural disaster and projects aimed at improving energy efficiencies and reducing emissions. Airports are highly encouraged to carefully review the types of projects that will receive priority consideration.
Local Match: The federal cost share for supplemental discretionary grants ranges between 70% and 95% depending on the airport size and type of project, the same as regular AIP grants.
Application Process. Applications for a FY23 supplemental discretionary grant that are submitted to FAA must include (a) a completed and signed SF-424 application and (b) a project narrative with financial plan. FAA provides extensive detail about what must be included in the 'project narrative' document. This includes:
Project Schedule: The narrative must include a schedule demonstrating that the airport can execute a grant agreement no later than May 31, 2025, meeting milestones throughout 2024.
Project-Specific Details: The narrative must describe the project purpose, location of the project on the airport, project scope, and how the project satisfies administration priorities on safety, equity, climate and sustainability, and workforce development, job quality, and wealth creation. If the project falls within one of the three prioritized categories above (airfield operational resiliency, SAF, or emissions and energy improvements), FAA also requires applicants to respond to a series of detailed questions about the project depending on the category.
Financial Plan: The narrative must include a financial plan showing the airport's financing to complete the project and put it to use, as well as demonstrating the project is ready to begin within the timeframe provided and will be completed and operational in a timely manner.
We highly encourage members to carefully review the application instructions in the NOFO, which outlines all the information that must be provided. All applications must be submitted electronically to the following email address by May 2, 2024: 9-ARP-AIPSupp@faa.gov.
Grant Selection Criteria. In the NOFO, FAA outlines the criteria by which applications for a grant will be rated and selected. Generally, FAA will quantitatively rate projects using its well-established Airport Capital Improvement Plan (ACIP) process, which prioritizes eligible AIP airport development projects by importance. However, FAA also outlines a range of qualitative criteria that the agency will use to evaluate proposed projects.
Based on our review, FAA highlighted several key factors that the agency would consider when making selections for supplemental discretionary grant funding. FAA encouraged airports to submit projects that meet as many of these criteria as possible. They include:
The degree to which the project enables subsequent projects, such as energy assessments or audits, if applicable;
The degree to which the applicant presents a plan to measure the impacts of the project, including how the project contributes to energy efficiency or emissions improvements or reduction in life-cycle greenhouse gas emissions (although the activities may not be eligible for reimbursem*nt);
Geographic variety;
Projects that fall within the three prioritized categories (airfield operational resiliency, SAF, or emissions and energy improvements);
New or alternative uses of technology or processes in the execution of the project; and
Projects that advance to grant very quickly or have a particular demand for funding in FY24.
Grant Selection Process. In the NOFO, FAA explained that applications are first reviewed for eligibility, certainty, and timeliness of implementation. Applications are then reviewed for how well the proposed project meets certain criteria outlined in the NOFO and ranked by program division, field, and regional office staff. The top projects for each airport category are then evaluated by a National Control Board (NCB), with consideration of the selection criteria outlined above. The NCB includes representatives from each region and headquarters management and recommends project and funding levels to senior leadership.
What's Next? Applications for FY23 supplemental discretionary grants must be submitted electronically no later than 5 p.m. ET on Thursday, May 2, 2024. FAA indicated that the agency anticipates awarding at least 50 grants by August 2024. We will keep members apprised of any updates regarding timing of potential grant awards and how FAA plans to manage the process for issuing FY24 supplemental discretionary grant funding.
