oversight

Airport Financing: Smaller Airports Face Future Funding Shortfalls

Published by the Government Accountability Office on 1999-02-22.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                    United States General Accounting Office

GAO                 Testimony
                    Before the Subcommittee on Aviation, Committee on
                    Transportation and Infrastructure, House of
                    Representatives


For Release
on Delivery
Expected at
                    AIRPORT FINANCING
11:30 a.m. EST
Monday
February 22, 1999
                    Smaller Airports Face
                    Future Funding Shortfalls
                    Statement of Gerald L. Dillingham,
                    Associate Director, Transportation Issues,
                    Resources, Community, and Economic
                    Development Division




GAO/T-RCED-99-96
    Mr. Chairman and Members of the Subcommittee:

    We are here today to discuss airport funding issues, especially as they
    apply to smaller airports. For our discussion, small airports include all but
    the 71 largest airports in the national airport system and range in size from
    small hub airports like Wichita , Kansas’, Mid-Continent Airport to small
    general aviation airports with only a few aircraft based at them.1 Today’s
    testimony focuses on three questions important to smaller airports:
    (1) how much funding has been made available to airports, particularly
    smaller airports, for their capital development and what are the sources of
    these funds? (2) if current funding levels continue, how do they compare
    with the levels small airports plan for future development? and (3) what
    effect will various proposals to increase or make better use of existing
    funding have on smaller airports’ ability to fulfill their capital development
    plans?

    In summary:

•   In 1998, we reported that the 3,304 airports that make up the federally
    supported national airport system obtained about $7 billion from federal
    and private sources for capital development.2 The nation’s 3,233 smaller
    airports accounted for 22 percent of this total, or about $1.5 billion. As a
    group, smaller airports depend heavily on federal grants, receiving half of
    their funding from the federally funded Airport Improvement Program and
    the rest from airport bonds, state grants, and passenger facility charges.3
    By contrast, the 71 largest airports in the national airport system obtained
    $5.5 billion in funding, mostly from tax-exempt bonds and relied on the
    Airport Improvement Program for only 10 percent of their funding.
•   Small airports planned to spend nearly $3 billion per year for capital
    development during 1997 through 2001, or $1.4 billion per year more than
    they were able to fund in 1996. Smaller airports’ planned development
    consists of projects eligible for Airport Improvement Program grants, like

    1
     Airports are classified according to the number of passenger boardings, or enplanements, they
    accommodate in a year. An airport is considered small if it enplaned 1,603,909 or rewer passengers in
    1997 (fewer than .25 percent of total scheduled passenger enplanements) and include small hubs,
    nonbubs, other commerical service, and general aviation airports. Large airports are defined under
    statute (49 U.S.C. sections 47109(a) and 47114(f)) as having more than .25 percent of total scheduled
    passenger enplanements and include large and medium hub airports.
    2
     Airport Financing: Funding Sources for Airport Development (GAO/RCED-98-71, Mar. 12, 1998). This
    report was based on airport funding in 1996, the most recent year for which we have conducted an
    analysis.
    3
     Passenger facility charges are fees paid by passengers to an airport. Airports may currently impose a
    fee of $1, $2, or $3 per flight segment, up to a maximum of four segments per round trip to finance
    eligible airport-related projects, subject to the Federal Aviation Administration’s approval.



    Page 1                                                                            GAO/T-RCED-99-96
                 runways, and projects not eligible for grants, like terminal retail space. At
                 least $945 million and as much as $1.4 billion of smaller airports’ planned
                 development that is eligible for grants may not be funded on an annual
                 basis. The difference between funding and planned development is much
                 greater for smaller commercial and general aviation airports than it is for
                 large airports.
             •   Several initiatives to increase or make better use of existing funding have
                 emerged in recent years, including increasing the amount of Airport
                 Improvement Program funding and raising the maximum amount airports
                 can levy in passenger facility charges. Under current formulas, increasing
                 the amount of Airport Improvement Program funding would help smaller
                 airports more than larger airports, while raising passenger facility charges
                 would mainly help larger airports. Other initiatives for making better use
                 of federal grant monies, such as Airport Improvement Program block
                 grants to states, have primarily been directed toward smaller airports, but
                 none appears to offer a major breakthrough in reducing the shortfall
                 between funding and the levels airports plan to spend on development.
                 Several initiatives to increase or make better use of existing funding have
                 emerged in recent years, including increasing the amount of funding for
                 the Airport Improvement Program and raising the maximum amount
                 airports can levy in passenger facility charges. Under current formulas,
                 increasing the amount of program funding would help smaller airports
                 more than larger airports, while raising passenger facility charges would
                 mainly help larger airports. Other initiatives for making better use of
                 federal grant monies, such as Airport Improvement Program block grants
                 to the states, have primarily been directed toward smaller aiports, but
                 none appears to offer a major breakthrough in reducing the shortfall
                 between funding and the levels airports plan to spend on development.


                 Airports are a linchpin in the nation’s air transportation system. This is
Background       true for both the 71 largest airports, as well as for the nation’s 3,233
                 smaller commercial and general aviation airports. While small airports
                 handle only about 10 percent of scheduled passenger traffic in total , they
                 also serve a majority of the nation’s general aviation activity. For many
                 communities, a small airport is their primary access to air transportation.
                 Smaller airports also provide important economic benefits to their
                 communities in the form of jobs and transport. The National Civil Aviation
                 Review Commission—established by the Congress to determine how to
                 fund U.S. civil aviation—reported in December 1997 that more funding is
                 needed, not only to develop system capacity at the larger airports but also
                 to preserve smaller airports.



                 Page 2                                                       GAO/T-RCED-99-96
                                        In 1996, tax-exempt bonds, the Airport Improvement Program (AIP), and
Funding Sources Vary                    passenger facility charges (PFC) together provided about $6.6 billion of the
Depending on                            total $7 billion in funding for large and small airports. State grants and
Airports’ Size                          airport revenue contributed the remaining funding for airports. Table 1
                                        lists these sources of funding and their amounts in 1996.

Table 1: Sources of Funding for Large
and Small Airports                      Dollars in billions
                                        Funding                                 Percentage
                                        source               1996 amount            of total Source of funds
                                        Tax-exempt                                              State and local governments or airport
                                        bonds                        $3,690a                 53 authorities issue tax-exampt bonds.
                                        Airport                                                 The Congress makes funds available from
                                        Improvement                                             the Airportand Airway Trust Fund, which
                                        Program (AIP)                                           receives revenues from taxes on domestic
                                                                                                and international travel, domestic cargo
                                                                                                transported by air, and noncommercial
                                                                     $1,372                  20 aviation fuel.
                                        Passenger                                               Funds come from passenger fees of $1,
                                        facility charges                                        $2, or $3 per trip segment at commercial
                                                                                                airports, up to a maximum of four trip
                                                                     $1,114                  16 segments per round trip.
                                        Special facility                                        Issued on the behalf of beneficiaries other
                                        bonds                         $.414                   6 than airports, such as airlines.
                                        State                                                   Funds come from such sources as state
                                        contributions                                           aviation fuel and airline property taxes,
                                                                                                aircraft registration fees, state bonds, and
                                                                                                state general fund appropriations. The
                                                                                                extent to which these sources are used
                                                                      $.285b                  4 varies by state.
                                        Airport revenue                                         Funds are generated from (1) revenues
                                                                                                derived from the operation and landing of
                                                                                                aircraft, passengers, or freight and (2)
                                                                                                revienues derived from concessions and
                                                                      $.153c                  2 leases.
                                        Total                        $7,028                 100d
                                        a
                                        Net of refinancing.
                                        b
                                            State grants only. Amounts for local capital subsidies are unknown but, we believe, are minimal.
                                        c
                                         Net operating revenue in excess of a minimum coverage ratio of 125 percent of debt service
                                        (principal and interest payments).
                                        d
                                            May not total to 100 percent due to rounding.



                                        The amount and type of funding varies significantly with airports’ size. The
                                        nation’s 3,233 smaller national system airports obtained about $1.5 billion




                                        Page 3                                                                            GAO/T-RCED-99-96
                                          in funding in 1996, about 22 percent of the total for 1996. As shown in
                                          figure 1, smaller airports relied on AIP grants for half of their funding,
                                          followed by tax-exempt airport and special facility bonds,4and state grants.
                                          PFCs accounted for only 7 percent of smaller airports’ funding mix.
                                          Conversely, larger airports received more than $5.5 billion in funding,
                                          relying on airport bonds for 62 percent of their total funding, followed by
                                          PFC collections. AIP grants accounted for only 10 percent of larger airports’
                                          funding.



Figure 1: Distribution of 1996 Funding Sources for Large and Small Airports


           71 larger airports                                               3,233 smaller airports
             $5.584 billion                                                     $1.547 billion

                                       10.6%           AIP            50.5%


                                         18%          PFC               7.2%


                                        1.8%                          11.9%
                                                   State grants
                                          3%                          16.2%
                                               Special facility
                                                  bonds
                                        4.6%
                                                    Airport               0%
                                                    revenue

                                       62.1%                          14.2%
                                                Airport bonds




                                          4
                                           The entire amount of special facility bond financing is attributable to a single general aviation airport,
                                          Forth Worth Alliance Airport, which issued $250 million in special facility bonds in 1996.



                                          Page 4                                                                               GAO/T-RCED-99-96
                          Small airports’ planned capital development during 1997 through 2001 may
Funding Levels Fall       cost nearly $3 billion per year, or $1.4 billion per year more than these
Short of Small            airports raised in 1996.5 Figure 2 compares small airports’ total funding for
Airports’ Plans for       capital development in 1996 with their annual planned spending for
                          development. Funding for 1996, the bar on the left, is shown by source
Development               (AIP, PFCs, state grants, and bonds). Planned spending for small airports,
                          the bar on the right, is shown by the relative priority FAA has assigned to
                          the projects, as follows:

                      •   Reconstruction and mandated projects, FAA’s highest priorities, total
                          $750 million per year and are for projects to maintain existing
                          infrastructure (reconstruction) or to meet federal mandates, including
                          safety, security, and environmental requirements (including noise
                          mitigation requirements).6
                      •   Other high-priority projects, primarily adding capacity, account for
                          another $373 million per year.
                      •   Other AIP-eligible projects, a lower priority for FAA, such as bringing
                          airports up to FAA’s design standards, add another $1.37 billion per year,
                          for a total of nearly $2.5 billion per year in projects eligible for AIP funding.
                      •   Finally, small airports anticipate another $465 million per year on projects
                          that are not eligible for AIP funding, such as expanding commercial space
                          in terminals and constructing parking garages.




                          5
                           Estimates of planned development costs are contained in our report entitled Airport Development
                          Needs: Estimating Future Costs (GAO/RCED-97=99, Apr. 7, 1997). As that report noted, estimating
                          future devleopment is fraught with complications. Unanticipated needs and political and financial
                          feasibility affect actual airport development, and the estimates themselves are subject to problems
                          with data accuracy.
                          6
                           These estimates of planned development costs generally do not include the costs of maintaining the
                          nation’s airport runways in good condition beyond the next few years. We recently reported that the
                          cost of maintaining just one-third of these runways could reach $1.38 billion over 10 years. See Airfield
                          Pavement: Keeping Nation’s Runways in Good Condition Could Require Substantially Higher Spending
                          (GAO/RCED-98-226, July 31, 1998).



                          Page 5                                                                             GAO/T-RCED-99-96
Figure 2: 1996 Funding Compared With
Annual Planned Development Costs        Dollars in millions
for Smaller Airports                    $3,500

                                                                                                   $2,957
                                        $3,000
                                                                                                            AIP-ineligible
                                                                                                            projects $465

                                        $2,500



                                        $2,000                                                              Other AIP-eligible
                                                                                                            $1,369
                                                               $1,547
                                                                        Special facility
                                                                        bonds (net) $250
                                        $1,500
                                                                        Airport bonds (net) $220
                                                                                                            Other high-priority
                                                                        State grants $184                   projects $373
                                        $1,000                          PFC $111


                                         $500                                                               Reconstruction &
                                                                        AIP $782
                                                                                                            mandates $750

                                           $0
                                                                        Available net
                                                              -$104     operating revenue
                                                                        -104
                                         -$500
                                                      Funding source 1996                    Planned development 1997
                                                                                             through 2001 (annualized)




                                       Given this picture of funding and planned spending for development for
                                       small airports, it is difficult to develop a precise estimate of the extent to
                                       which AIP-eligible projects are deferred or canceled because some form of
                                       funding cannot be found for them. FAA does not maintain information on
                                       whether eligible projects that do not receive AIP funding are funded from
                                       other sources, deferred, or canceled. We were not successful in developing
                                       an estimate from other information sources, mainly because
                                       comprehensive data are not kept on the uses to which airport and special
                                       facility bonds are put. But even if the entire bond financing available to
                                       smaller airports were spent on AIP-eligible projects, these airports would
                                       have, at a minimum, about $945 million a year in AIP-eligible projects that
                                       are not funded. Conversely, if none of the financing from bonds were




                                       Page 6                                                               GAO/T-RCED-99-96
                            applied to AIP-eligible projects, then the full $1.41 billion funding shortfall
                            for smaller airports would apply to these projects.

                            As a proportion of total funding, the potential funding shortfall for smaller
                            airports is more significant than it is for large airports. For large airports,
                            the difference between 1996 funding and planned development is about
                            $1.5 billion. However, because large airports obtained $5.5 billion in
                            funding in 1996 versus $1.5 billion for small airports, large airports’
                            potential shortfall represents 21 percent of their planned development
                            costs as compared to small airports’ potential shortfall of 48 percent.
                            Therefore, while larger and smaller airports’ respective shortfalls are
                            similar in size, the greater scale of larger airports’ planned development
                            causes their shortfall to differ considerably in proportion.


                            Proposals to increase airport funding or make better use of existing
Effect on Smaller           funding vary in the extent to which they would help smaller airports and
Airports of Proposals       close the gap between their funding and the costs of planned development.
to Increase and Better      For example, increasing AIP funding would help smaller airports more than
                            larger airports because current funding formulas would channel an
Use Airport Funding         increasing proportion of AIP funds to them. Conversely, any increase in PFC
Varies                      funding would help larger airports almost exclusively because they handle
                            more passengers and are more likely to have a PFC in place. Changes to the
                            current design of AIP or PFCs could, however, lessen the concentration of
                            benefits on one group of airports. FAA has also used other mechanisms to
                            better use and extend existing funding sources, such as state block grants
                            and pilot projects to test innovative financing. So far, these mechanisms
                            have had mixed success.


Increasing AIP Would Help   Under the existing distribution formula, increasing total AIP funding would
Smaller Airports Most       proportionately help smaller airports more than large and medium hub
                            airports. Appropriated AIP funding for fiscal year 1998 was $1.7 billion;
                            smaller airports received about 60 percent of this total.7 We calculated
                            how much funding each group would receive under the existing formula,
                            at funding levels of $2 billion and $2.347 billion. We chose these funding
                            levels because the National Civil Aviation Review Commission and the Air
                            Transport Association (ATA), the commercial airline trade association,

                            7
                             Fiscal year 1999 AIP funding is $1.95 billion, although AIP is authorized only through Mar. 31, 1999,
                            and therefore, not more than $975 million may be obligated until AIP is further extended. (Title I,
                            section 101(g) of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999
                            (P.L. 105-277, Oct. 21, 1998)). The President’s fiscal year 2000 budget has proposed AIP funding of
                            $1.6 billion.



                            Page 7                                                                           GAO/T-RCED-99-96
                                         have recommended that future AIP funding levels be stabilized at a
                                         minimum of $2 billion annually, while two airport trade groups—the
                                         American Association of Airport Executives and the Airports Council
                                         International-North America—have recommended a higher funding level,
                                         such as AIP’s authorized funding level of $2.347 billion for fiscal year 1998.
                                         Table 2 shows the results. As indicated, smaller airports’ share of AIP
                                         would increase under higher funding levels if the current distribution
                                         formula were used to apportion the additional funds.

Table 2: Estimated Distribution of AIP
Funds at Different Funding Levels                                                                               Small, nonhub, other
                                                                                                              commerical service, and
                                                               Large and medium hub airportsa                    general aviationa
                                                                                    Percentage of                             Percentage of
                                         AIP funding level Amountb                  total                Amountb              total
                                         $1,700.0              $628.9               39.4                 $965.8               60.6
                                         $2,000.0              $718.1               37.9                 $1,176.7             62.1
                                         $2,347.0              $821.2               36.6                 $1,420.6             63.4
                                         a
                                          Dollar amounts are based on the number of passengers boarding commercial flights in 1996 and
                                         exclude about $105.2 million in estimated carryover amounts.
                                         b
                                          The distribution of funds is based on the proportional distribution of those funds during fiscal
                                         year 1997, the first year under the revised distribution formula established in the 1996
                                         reauthorization.




Increasing PFC-Based                     Increasing PFC-based funding, as proposed by the Department of
Funding Would Aid Larger                 Transportation and backed by airport groups, would mainly help larger
Airports                                 airports, for several reasons.8 First, large and medium hub airports, which
                                         accounted for nearly 90 percent of all passengers in 1996, have the greatest
                                         opportunity to levy PFCs. Second, such airports are more likely than
                                         smaller airports to have an approved PFC in place.9 Finally, large and
                                         medium hub airports would forgo little AIP funding if the PFC ceiling were
                                         raised or eliminated. Most of these airports already return the maximum




                                         8
                                          The President’s fiscal year 2000 budget has proposed that the current ceiling on PFCs be raised from
                                         $3 to $5.
                                         9
                                          As of Oct. 1, 1998, 273 commercial service airports—about 52 percent of eligible airports—imposed a
                                         PFC, but 80 percent of all large and medium hub airports had a PFC.



                                         Page 8                                                                            GAO/T-RCED-99-96
amount that must be turned back for redistribution to smaller airports in
exchange for the opportunity to levy PFCs.10

If the airports currently charging PFCs were permitted to increase them
beyond the current $3 ceiling, total collections would increase from the
$1.35 billion that FAA estimates was collected during 1998. Most of the
additional collections would go to larger airports. For every $1 increase in
the PFC ceiling, we estimate that large and medium hub airports would
collect an additional $432 million, while smaller airports would collect an
additional $46 million (see fig. 2). In total, a $4 PFC ceiling would yield
$1.9 billion, a $5 PFC would yield $2.4 billion, and a $6 PFC would yield
$2.8 billion in total estimated collections.11




10
  49 U.S.C. section 47114(f) requires that the yearly grants to large and medium hub airports be
reduced by 50 percent of their annual collections or 50 percent of their annual apportionment,
whichever is less. The foregone grants are redistributed as discretionary grants, primarily to smaller
airports. Through fiscal year 1998, $921 million in AIP funding had been redistributed under this
provision, $806 million of it to smaller airports.
11
  Estimates are based on FPCs in place as of Oct. 1, 1998, 1997 passenger boardings, and median
collection rates for each airport category in 1997. We are currently studying the effects of a PFC
increase and plan to report our results later this year.



Page 9                                                                             GAO/T-RCED-99-96
Figure 3: Projected PFC Collections
Under $3, $4, $5, and $6 PFC Ceilings,   Dollars in billions
January 1999
                                           3


                                         2.5


                                           2


                                         1.5


                                           1


                                         0.5


                                           0
                                                        $3                $4             $5                  $6
                                                                               PFC Ceiling
                                                   Large and Medium Hub
                                                   Other Airports



FAA’s Efforts to Make                    In recent years, the Congress has directed FAA to undertake steps to find
Better Use of Existing AIP               ways to extend existing AIP funds, especially for small airports that rely
Grants Have Had Mixed                    more extensively on AIP funds than do large airports. The airport
                                         community’s interest in these efforts has varied. For example, the state
Results                                  block grant program, which allows the participating states to direct grants
                                         to smaller airports, has been proven successful. Others efforts, such as
                                         pilot projects to test innovative financing and privatization, have received
                                         less interest from airports and are still being tested. Finally, one idea,
                                         using AIP grants to capitalize state revolving loan funds, has not been




                                         Page 10                                                     GAO/T-RCED-99-96
                                attempted but could help smaller airports. Implementing this idea would
                                require legislative changes.

State Block Grant Program Has   In 1996, we testified before this Subcommittee that FAA’s pilot program for
Helped Smaller Airports         state block grants was a success.12 The program allows FAA to award AIP
                                funds in the form of block grants to designated states, which, in turn,
                                select and fund AIP projects at small airports. In 1996, the program was
                                expanded from seven to nine states and made permanent. Both FAA and
                                the participating states believe that they are benefiting from the program.

Benefits of Innovative          In recent years, FAA, with congressional urging and direction, has sought to
Financing Are Being Tested      expand airports’ available capital funding through more innovative
                                methods, including the more flexible application of AIP funding and efforts
                                to attract more private capital. The 1996 Federal Aviation Reauthorization
                                Act gave FAA the authority to test three new uses for AIP
                                funding—(1) projects with greater percentages of local matching funds,
                                (2) interest costs on debt, and (3) bond insurance. These three innovative
                                uses could be tested on up to a total of 10 projects.13 Another innovative
                                financing mechanism that we have recommended—using AIP funding to
                                help capitalize state airport revolving funds—while not currently
                                permitted, may hold some promise.14

                                FAA is testing 10 innovative uses of AIP funding totaling $24.16 million, all at
                                smaller airports. Five projects tested the benefits of the first innovative
                                use of AIP funding—allowing local contributions in excess of the standard
                                matching amount, which for most airports and projects is otherwise fixed
                                at 10 percent of the AIP grant.15 FAA and state aviation representatives
                                generally support the concept of flexible matching because it allows
                                projects to begin that otherwise might be postponed for lack of sufficient
                                FAA funding; in addition, flexible funding may ultimately increase funding
                                to airports. The remaining five projects test the other two mechanisms for
                                innovative financing. Applicants have generally shown less interest in
                                these other options, which, according to FAA officials, warrant further
                                study.

                                12
                                 Airport Improvement Program: State Block Grant Pilot Program Is a Success (GAO/RCED-96-86,
                                Mar. 14, 1996).
                                13
                                  Section 148 of the Federal Aviation Reauthorization Act of 1996 (P.L. 104-264).
                                14
                                  Airport Financing: Funding Sources for Airport Development (GAO/RCED-98-71, Mar. 12, 1998).
                                15
                                  There are three exceptions to the 10-percent local matching requirement, each of which entails a
                                higher local contribution: terminal development (25 percent), airport planning and development for
                                large and medium hub airports (25 percent), and noise compatibility programs for large and medium
                                hub airports (20 percent).



                                Page 11                                                                             GAO/T-RCED-99-96
State Revolving Loan Funds          Some federal transportation, state aviation, and airport bond rating and
Could Extend the Use of AIP         underwriting officials believe using AIP funding to capitalize state revolving
Grants for Smaller Airports         loan funds would help smaller airports obtain additional financing.
                                    Currently, FAA cannot use AIP funds for this purpose because AIP
                                    construction grants can go only to designated airports and projects.
                                    However, state revolving loan funds have been successfully employed to
                                    finance other types of infrastructure projects, such as wastewater projects
                                    and, more recently, drinking water and surface transportation projects.16
                                    While loan funds can be structured in various ways, they use federal and
                                    state moneys to capitalize the funds from which loans are then made.
                                    Interest and principal payments are recycled to provide additional loans.
                                    Once established, a loan fund can be expanded through the issuance of
                                    bonds that use the fund’s capital and loan portfolio as collateral. These
                                    revolving funds would not create any contingent liability for the U.S.
                                    government because they would be under state control.

Interest in Airport Privatization   Declining airport grants and broader government privatization efforts
Pilot Program Is Limited            spurred interest in airport privatization as another innovative means of
                                    bringing more capital to airport development, but thus far efforts have
                                    shown only limited results. As we previously reported, the sale or lease of
                                    airports in the United States faces many hurdles, including legal and
                                    economic constraints.17 As a way to test privatization’s potential, the
                                    Congress directed FAA to establish a limited pilot program under which
                                    some of these constraints would be eased.18 Starting on December 1, 1997,
                                    FAA began accepting applications from airports to participate in the pilot
                                    program on a first-come, first-served basis for up to five airports, at least
                                    one of which must be a general aviation airport. Thus far, two
                                    airports—one general aviation and one nonhub commercial service
                                    airport—have applied to be part of the program.19



                                    16
                                      Florida has an established revolving loan program. Between 1985 and 1998, the state has provided
                                    $75 million in loans to airports for land acquisition and capital projects. While some of the loans are
                                    later reimbursed through AIP funding for eligible projects, the state funds the loan program itself. In
                                    addition, the Virginia legislature is considering establishing a state airport revolving fund. In total, 39
                                    states have established state infrastructure banks using federal and state grant money fo fund surface
                                    transportation projects. This same arrangement could be used if authorized by the state to fund
                                    aviation projects, and at least one state—Ohio—has already authorized its state infrastructure bank to
                                    fund aviation projects with state funds.
                                    17
                                     Airport Privatization: Issues Related to the Sale or Lease of U.S. Commercial Airports
                                    (GAO/RCED-97-3, Nov. 7, 1996).
                                    18
                                      Section 149 of the Federal Aviation Reauthorization Act of 1996 (P.L. 104-264).
                                    19
                                      These airports are Brown Field near San Diego, a general aviation airport, and Stewart International
                                    in New York, a nonhub airport, which has submitted its final application to participate in the pilot.



                                    Page 12                                                                              GAO/T-RCED-99-96
           Mr. Chairman, this concludes my prepared statement. I would be happy to
           respond to any questions that you or Members of the Subcommittee may
           have.




(348153)   Page 13                                                 GAO/T-RCED-99-96
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