AAAE Urges Congress to Speed Airport Construction Projects As Part of Stimulus
For Immediate Release
October 28, 2008
ALEXANDRIA, Va. -- With Congress poised to consider legislation aimed at stimulating the U.S. economy, the American Association of Airport Executives (AAAE) has urged lawmakers to provide additional funding for airport construction projects and to make changes to existing law that would assist airports in financing infrastructure upgrades at their facilities.
“As the Federal Aviation Administration has just reported, airport infrastructure needs have grown significantly in recent years,” AAAE President Chip Barclay noted today. “Congress can make substantial progress in addressing those urgent needs and create tens of thousands of high-paying construction jobs along the way by providing additional funding for airport improvements and by making minor modifications to existing law relative to airport bonds and debt service.”
Port Authority of New York and New Jersey Aviation Director William DeCota is expected to highlight the benefits of airport infrastructure development tomorrow during a hearing before the House Transportation and Infrastructure Committee on infrastructure investment.
In a recent letter to congressional leaders, AAAE highlighted three specific items that the organization said would simultaneously help airports during these challenging financial times and stimulate the economy by creating high-paying jobs:
- Include $1 billion in additional funding for the Airport Improvement Program (AIP): FAA, in its recently released National Plan for Integrated Airport Systems (NPIAS), reported that over the next five years there will be nearly $50 billion in AIP eligible infrastructure development for civil aviation - an increase of $8.5 billion over the last NPIAS report, issued two years ago. By providing $1 billion in additional AIP funds, Congress could expedite the construction of critical safety, security and capacity projects at airports around the country and create approximately 35,000 high-paying jobs.
- Eliminate the AMT penalty on airport private activity bonds: AAAE has asked lawmakers to eliminate the Alternative Minimum Tax (AMT) penalty on airport private activity bonds. Federal tax law unfairly classifies a vast majority of airport bonds as private activity bonds even though airports use the bonds to finance runways, taxiways and other critical facilities that benefit the public. Interest payments on private activity bonds are subject to the AMT, which means that airport bond issuers are charged higher interest rates on their borrowing, typically a premium of 10 to 30 basis points (0.10% to 0.30%). Demand for AMT bonds has decreased so dramatically that airports are currently being penalized 150 basis points (1.5%) or more when bonds can be sold. This adds millions of dollars to the cost of airport projects and diverts money away from other infrastructure projects that could create jobs.
- Give airports greater flexibility to use PFC revenue and AIP entitlements for debt service: As a result of current market conditions, airports face a significant spike in debt service costs and have limited refunding and restructuring opportunities. To help mitigate the increase in financing costs, AAAE has urged lawmakers to give airports greater flexibility to use passenger facility charge (PFC) revenue and AIP entitlement funds for debt service.
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ABOUT AAAE: Founded in 1928, AAAE (www.aaae.org) is the world's largest professional organization representing the men and women who work at public-use commercial and general aviation airports. AAAE's 5,000-plus members represent some 850 airports and hundreds of companies and organizations that support the airport industry. Headquartered in Alexandria, Va., AAAE serves its membership through results-oriented representation in Washington, D.C. and delivers a wide range of cost-effective industry services and professional development opportunities including training, conferences, and a highly respected accreditation program.
American Association of Airport Executives
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