Ch 8 Development Plan - PVD

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__ Development Program and Implementation Plan • Sponsors are authorized under Part 158 to use PFC revenue as the matching local share of an AIP project. • PFC revenue can be used by a sponsor to supplement an AIP project. • PFC revenue can be used to pay debt service and financing costs. AIP funds cannot be used for this purpose, except under the AIP Innovative Finance Pilot Program. • Eligible projects under the AIP also are eligible for PFC funding. Therefore, future changes to the AIP in regard to project eligibility also apply to the PFC program. However, PFC eligibility also differs from AIP eligibility in a number of areas. For instance, noise projects eligible under 49 U.S.C. §47504 can be funded with PFC’s, even if a Part 150 program for those projects has not been approved. PFC’s constitute a special form of local airport revenue, subject to restrictions imposed by the PFC statute and regulation. Accordingly, some Federal statutory and regulatory requirements that apply to projects funded with AIP monies do not apply to projects funded solely with PFC’s. For instance, projects funded totally with PFC revenue or with financing other than Federal funds are not subject to the labor minimum wage rates under the Davis-Bacon Act, Disadvantaged Business Enterprise (DBE) requirements, Buy-American Preferences or the Uniform Relocation Assistance and Real Property Acquisition Policy Act requirements. However, in cases where PFC funds are commingled with AIP funds to complete a project, all AIP requirements apply. In addition, the AIP requirements may apply if the PFC funded project is part of a past, current or future FAA grant funded program or project. Airport Master Plan The potential PFC revenue, based on projected enplanements through 2021, is tabulated in Table 8-5. The round-trip fare for a Westerly-BID flight in November 2004 on New England Airlines was approximately $60. A $1 PFC would constitute approximately 1.7 percent of the total airfare; a $4 PFC would constitute approximately 6.7 percent of the total fare. Given the low enplanement levels at BID, the revenue raised by PFC’s is considered minimal in relation to the burden it would place on the sole air carrier, New England Airlines, in collecting and administering a PFC program at BID. Table 8-5 Potential Revenue from PFC’s at Block Island Airport Projected Air Carrier Enplanements 2006 2011 2021 11,500 12,100 14,300 PFC Potential Revenue $1.00 $11,500 $12,100 $14,300 $2.00 $23,000 $24,200 $28,600 $3.00 $34,500 $36,300 $42,900 $4.00 $46,000 $48,400 $57,200 $4.50 $51,750 $54,450 $64,350 Note: The above revenue figures would be reduced slightly by allowable administrative fees due the air carriers for collecting the PFC’s. 8-10
__ Development Program and Implementation Plan 8.3.3 State Transportation Bonds BLOCK ISLAND AIRPORT A second source of state funding is a specific appropriation or line item earmarked for BID from a state transportation bond. Bonds are a means of spreading the costs of capital improvements or equipment purchases over multiple years. Bonds generally are sold in the investment markets and the proceeds used to fund the desired improvements/ purchases. In return, the borrower (government, local entity, airport sponsor, and so on) promises to repay the borrowed amount by a set date and, in the meantime, pays a fixed amount of interest on a pre-determined basis. The interest income earned from such a bond generally is free from federal income taxes and state and local income taxes for residents of the state where the bond is issued. 8.3.4 Short and Long Term Borrowing Two additional sources of revenue open to RIAC/BID airport management are short and long term borrowing in the open market. Interest rates vary but generally track the present market rate for short term borrowing. Table 8-6 lists the monthly payments required to amortize $1,000,000 borrowed at various interest rates for various terms. Table 8-6 Monthly Payments to Amortize $1 Million Over Various Periods at Various Rates Monthly Payment Term Annual Interest Rate (%) (Years) 3 4 5 6 7 8 9 10 RIAC 1 84,694 85,150 85,607 86,066 86,527 86,988 87,451 87,916 2 42,981 43,425 43,871 44,320 44,773 45,227 45,685 46,145 3 29,081 29,524 29,971 30,422 30,877 31,336 31,800 32,267 4 22,134 22,579 23,029 23,485 23,946 24,413 24,885 25,363 5 17,969 18,417 18,871 19,333 19,801 20,276 20,758 21,247 6 15,194 15,645 16,105 16,573 17,049 17,533 18,026 18,526 8 11,730 12,189 12,660 13,141 13,634 14,137 14,650 15,174 10 9,656 10,125 10,607 11,102 11,611 12,133 12,668 13,215 15 6,906 7,397 7,908 8,439 8,988 9,557 10,143 10,746 20 5,546 6,060 6,600 7,164 7,753 8,364 8,997 9,650 25 4,742 5,278 5,846 6,443 7,068 7,718 8,392 9,087 Example: $1 million borrowed at 6 percent interest for a term of 10 years requires 120 monthly payments of $11,102 to pay back or amortize loan amount. 8.3.5 Operating Proceeds The RI Aviation System Plan Update (ASPU) contains an extensive analysis of the past, present and future financial underpinnings of BID. The reader interested in obtaining information on the financial affairs of BID is referred to this information, which can be obtained through RIAC’s office at the T.F. Green Airport or upon application to the BID airport manager. 8-11
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