At the annual meeting of airports and consultants held in Denver in late February, Benito ‘Ben’ DeLeon, director of the Office of Airport Planning and Programming at the Federal Aviation Administration, related how the agency was scrambling to get to industry specific guidance on how to apply for grants from the $1.1 billion appropriated for airports by Congress. Since that time, the guidance has been issued and FAA and the industry have been aggressively moving forward to get projects underway. One month after the Denver meeting, DeLeon offered further details on how the stimulus program is progressing during an interview with AIRPORT BUSINESS.
While airport groups in Wash-ington had lobbied for as much as $3 billion in economic stimulus funds, the industry and the consultant community express relief that new dollars are being pumped into the system. Two other components of the Congressional legislation that have been welcomed are the appropriation of $1 billion to accelerate the installation of baggage screening and checkpoint security equipment; and, a two-year exemption for airport private activity bonds from the Alternative Minimum Tax.
DeLeon was appointed to his current position in 2007, following time at the FAA’s Great Lakes Region and at the Wisconsin DOT. Following are edited transcripts of our interview ...
AIRPORT BUSINESS: At Denver, you suggested that the $1.1 billion will actually fund some $900 million in projects. Can you explain the disparity in the numbers?
DeLeon: It’s 100 percent funding for all airports; the matching was waived for all airports.
The grants themselves are 100 percent federal matching. The thought is, since there is no 5 percent match coming from small airports and no 25 percent coming from the large airports, that is being covered by federal dollars. So the buying power of $1.1 billion doesn’t go as far because we have to cover that matching side.
Normally $1.1 billion would fund ten projects, say; because we have federal money at 100 percent, those ten projects drop down to eight.
Other thing is, under the ‘Buy America’ provision, it is mandatory unless a waiver is approved by FAA, both in our regular Airport Improvement Program and under the economic recovery program. The ‘Buy America’ is mandatory unless there’s a waiver that’s approved.
We need to publish in the Federal Register all the waivers and explain why we waived it.
AB: Can you put together a scenario under which an airport might be granted a waiver?
DeLeon: There are a couple of things. If they can say that there are no other materials available that are American, that is one reason. The other thing would be if the product they’re producing is 60 percent made out of U.S. materials and is actually assembled here in the United States … we would consider a waiver.
We’re going to put the onus on the contractors to give us explanations. I think we’re going to find out that most of it is produced here anyway with the types of projects we’re talking about. The concrete, the cement, the aggregate all come from here.
AB: Industry was seeking as much as $3 billion in stimulus money. Any thoughts on the amount legislated?
DeLeon: From our perspective, we can administer the $1.1 billion and can get that out the door and meet the timelines. Obviously if it got really large, it would have been a different ballgame.
Congress did this to create jobs and to help the economy, so we had to get it out really fast.
AB: How would you characterize the response by industry?
DeLeon: I think a lot of the industry has been real pleased with the money coming in for these projects, particularly with the 100 percent matching. I had a little worry at one point that the consultants couldn’t handle the work, but they were telling me they were laying off and that they were looking for the additional work.
What we’re seeing now in bids taken across the country is the bids are coming in at substantially less than the estimates, which tells you the economy is hungry for additional work. Things that we estimated at $19 million are coming in at $17 million. That’s a good sign.
AB: At Denver, you suggested that airports could find themselves competing with highway stimulus funds in terms of getting contractors and materials.
DeLeon: It’s like anything, the early bird gets the worm. So, I think that the sooner you get your projects out to bid the better prices you’re going to see. Once highways come out with their money and start rolling out the dollars, you might see an impact on how much contractors can really handle. And, accordingly, the price will go up.
AB: And recent reports show that the grant process is moving forward.
DeLeon: We’re in the process right now; the immediate target is to obligate 50 percent of that money, which in our books translates to issuing grants based on bids, by June of this summer.
We’ve processed internally roughly about $800 million of funding to the pipeline here — we’ve taken care of the necessary documentation needed. We’re moving as fast as we can internally.
The second piece is to work with airport sponsors to get it bid and let.
AB: You have stated that your goal is to have all the stimulus funds disseminated by the end of this fiscal year (September 30). Is that still the goal?
DeLeon: That’s our goal. It makes sense for us because the money was given to create jobs and get the economic recovery going. To us that means immediate need.
AB: Are you seeing particular types of projects surfacing more than others?
DeLeon: I think you’ll see them reflecting pretty much what we fund normally — runways; taxiways; aprons. We’ve added a couple of initiatives in there too that normally don’t get high priority under our regular program.
We’re looking at the terminal buildings at the smaller non-hub airports that are 50 years old and have asbestos and have really outlived their useful life and need to be replaced. Generally speaking, those terminals carry a lower priority in our book. But what we’re doing is putting a special emphasis on those projects and trying to get them ramped up.
We’re also going to continue that initiative under the regular Airport Improvement Program, too. We can’t just continue to ignore the non-hub airports across the country.
AB: You’ve processed $800 million in requests for funding. What’s the next step?
DeLeon: Once the bids are put in for advertisement, it usually takes 30 days to advertise those bids. Then the airport sponsor or the state organization reviews those bids to make sure they comply; and they select the lowest bidder. Then we can issue the grant.
AB: Are there any particular items that could serve as snafus for airports in the process?
DeLeon: There are a couple of things that we’re going to put into the grants. There will be conditions. One is to complete the project within two years, which is February 16, 2011. That’s statutory; we can’t go beyond that date. So, they have to accept that special condition.
They also have to execute a contract with a low bid within 15 days after we make the grant offer. And they have to get the contract started 30 days after we get the grant offer to them.
So, all of it directs the airport sponsor to get the project moving as fast as possible. Now if they don’t do any of those things, we have the right to go back and pull the money. Obviously, we wouldn’t do that; we’d work very closely with them to make sure things are moving forward. But we had to put that in the special conditions.
AB: How big of a challenge has all this been for the agency?
DeLeon: I want to stress we at FAA don’t do this by ourselves; we really work closely with the state aviation organizations; the airport sponsors; and the consultants/engineers. We do it as a collaborative effort. It really is true; we couldn’t be as far as we are without all those players working together.