5. Federal Airport Improvement Program Funding

In the United States, all publicly-owned airports are eligible for Federal funds from the Airport and Airway Trust Fund available for construction of airport facilities. These funds are collected from airport users, administered by the Federal Aviation Administration, and distributed as grants by the U.S. Secretary of Transportation.

The law specifies that these funds are only available for airport development at an airport whose land is owned by "a public agency" which is defined as "a state or any agency of a state, a municipality or other political subdivision of a state, a tax-supported organization, or an Indian tribe or pueblo." [42] This provision would seem to preclude the possibility of federal funds being available for development of a privately-owned airport.

However, there are available options to resolve this problem:

a) Eliminate the tax which provides funds to the Trust. Instead of paying the tax, airport user fees could be adjusted (if necessary) to provide this revenue directly from the airport user to the airport being used. This would be a more efficient system of funding airports. Airports depending on federal funds to expand before user fees could be collected would more appropriately rely on regional or state resources since airports are regional economic development tools.

b) Amend the federal law to allow funds for airport development for certain "primary airports" (if privatized, Metro would be the only privately-owned primary airport in the U.S.).

c) Use an Economic Development Corporation created for municipal bonding purposes as the "public agency" which owns the land on which Metro is located. This public agency could then enter into an agreement with the owner of the facilities located on the land to lease back the facilities from the EDC (for perhaps $1 per year on a long term lease).

d) The airport could effectively be sold to the state of Michigan through the creation of a Public Building Corporation. [43] This corporation would be a state entity (and therefore a public agency) which could then lease the land and facilities to a private owner (also for $1 per year over a long period of time).

Options b, c, and d are offered only as alternatives in the event private airports must compete with public airports receiving these funds. Eliminating the tax and the trust fund is the most efficient method of avoiding competitive advantages for airports which remain publicly owned.

An EDC or Public Building Corporation could be adapted to particular circumstances through terms of the lease (amount and length of time), ownership of certain facilities, and provision for certain activities (which may or may not be limited to traditional airport activities).

While no major U.S. airport has ever been privatized, if the conditions are created in which all parties would appear to benefit, the likelihood of persuading the U.S. Congress to amend the statute would improve. In divesting the federal government of Dulles and National Airports in Washington, D.C., the Congress recognized the importance of "timely improvements at both airports to meet the growing demand of interstate air transportation occasioned by the Airline Deregulation Act of 1978." [44] This recognition would seem to indicate the willingness of Congress to meet changing capacity needs, including the use of privatization.

The federal law also provides that federal funds can't be used at a privately-owned airport "unless the Secretary [of Transportation] receives appropriate assurance that such airport will continue to function as a public-use airportduring the economic life (which in no case shall be less than ton years) of any facility at such airport...." [45] This should not be an obstacle because it is unlikely a buyer of Metro would have any desire to use the site for anything other than an airport.