PORT OF PORTLAND Chapter Seven CAPITAL IMPROVEMENT PROGRAM CHAPTER SEVEN PORT OF PORTLAND CAPITALCAPITAL IMPROVEMENTIMPROVEMENT PROGRAMPROGRAM The analyses conducted in the previous chapters evaluated airport development needs based upon safety, security, potential aviation activity, and operational efficiency. Through these analyses, a plan for the use and development of the airport was defined. The purpose of this chapter is to identify the projects to implement the proposed plan for the use and development of Hillsboro Airport, and those capital needs required to operate and maintain the airport in a safe and environmentally acceptable manner. The presentation of the financial plan and its feasibility has been organized into two sections. First, funding sources on the federal and local levels are identified and discussed. Second, the airport's capital needs, costs, and funding eligibility are presented in narrative and tabulated form. CAPITAL IMPROVEMENTS FUNDING Financing capital improvements at the airport will not rely exclusively upon the financial resources of the Port of Portland (Port). Capital improvement funding is available at the federal level for many airport projects. The following discussion outlines the key sources for capital improvement funding. 7-1 FEDERAL GRANTS entitlement. For eligible general avia- tion airports, Vision 100 provides up to Through federal legislation over the $150,000 of funding each year. As a years, various grants-in-aid programs general aviation airport, Hillsboro Air- have been established to develop and port does not qualify for the commercial maintain a system of public airports service entitlement; however, it does throughout the United States. The qualify for the annual $150,000 enti- purpose of this system and its federally- tlement. An airport can consolidate based funding is to maintain national four years of entitlement funding for a defense and promote interstate com- total of $600,000. However, these an- merce. The most recent legislation, Vi- nual entitlement levels can be reduced sion 100 – Century of Aviation Reau- if Congress does not appropriate the full thorization Act (Vision 100), was signed funding levels specified above. into law on December 13, 2003. After meeting entitlement obligations, Vision 100 is a four-year bill covering the remaining Airport Improvement federal fiscal years 2004, 2005, 2006, Program (AIP) funds are distributed via and 2007. Vision 100 provides national grants issued by the FAA, based upon funding levels to the FAA of $3.4 billion the priority of the project for which air- in 2004, increasing $100 million annu- port sponsors have requested federal ally, until reaching $3.7 billion in 2007. assistance through discretionary appor- tionments. A national priority ranking The source for federal funding of air- system is used to evaluate and rank ports is the Aviation Trust Fund. The each project for which an airport spon- Aviation Trust Fund was established in sor seeks federal assistance for. Those 1970, to provide funding for aviation projects with the highest priority are capital investment programs (aviation given preference in funding. Each pro- development, facilities and equipment, ject for Hillsboro Airport is required to and research and development). The follow this procedure and compete with Aviation Trust Fund also finances the other airport projects in the state for operation of the FAA. It is funded by AIP State Apportionment dollars, and user fees, taxes on airline tickets, avia- across the country for other federal AIP tion fuel, and various aircraft parts. funds. An important point to consider is that most funding for Hillsboro Airport Proceeds from the Aviation Trust Fund is not guaranteed, as the airport is cur- are distributed each year by the FAA, rently only eligible for the $150,000 an- from appropriations by Congress. A nual entitlement under Vision 100 leg- portion of the annual distribution is to islation. Therefore, the Port must rely primary commercial service airports on federal discretionary funding. (e.g., Portland International Airport), based upon enplanement levels. Com- Airport development that meets the mercial service airports enplaning more FAA’s eligibility requirements can re- than 10,000 passengers annually are ceive 95 percent of the total eligible pro- provided a minimum $1,000,000 annual ject cost from the FAA. This is a five 7-2 percent increase from past funding, Cost Center cost center income (avia- which only provided 90 percent funding tion) and/or bonds. The Post Cost Cen- for eligible projects. The 95 percent ter represents the financial conglomera- funding level is currently only provided tion of several aviation business lines by law until 2007. After 2007, the fund- including parking, rental cars, PDX air- ing level would revert back to 90 per- side and landside, and general aviation. cent (the federal share for the past two Some improvements may require pri- decades), unless extended by Congress. vate funding mechanisms, such as bank Funding at 95 percent for AIP-eligible loans or private capital investments. projects has been assumed to extend These decisions are made at project im- through the planning period, as it is ex- plementation, based on Port financial pected that subsequent legislation resources at that time. would make permanent the 95 percent funding level. Property acquisition, air- The development of general aviation fa- field improvements, aprons, perimeter cilities at Hillsboro Airport have relied service roads, and access road im- on a combination of public and private provements are examples of eligible investments in the past. The Port has items. funded many of the grant-eligible items for general aviation at the airport in- Vision 100 does provide for the Secre- cluding taxiways, apron, access roads, tary of Transportation to fund revenue- and automobile parking. Private indi- generating developments such as han- viduals or businesses have typically fi- gars and fuel facilities, which have his- nanced the construction of hangar fa- torically not been eligible for federal cilities. funding. Vision 100 limits this funding eligibility to non-primary airports such The Oregon Economic & Community as Hillsboro Airport, and the airports Development Department (OECDD) must use their annual entitlement dol- and Federal Economic Development lars. Vision 100 also requires that all Administration provide a number of airside needs at the airport are met grant and loan programs to businesses prior to an airport receiving funding for that create jobs. These programs could revenue-generating development. be used to support infrastructure im- provements at Hillsboro Airport for the attraction of a specific business. LOCAL FUNDING A continuation of public and private in- The balance of project costs, after con- vestments will be necessary to imple- sideration has been given to federal ment the proposed plan. The capital grants, must be funded through local improvement program shown on Ex- resources. There are several alterna- hibit 7A assumes the Port will be able tives for local finance options for future to fully pursue all the grant-eligible im- development at the airport. The Port provements to accommodate general can fund the local share, after FAA aviation growth in the future. This in- grants, through airport revenues, Port cludes apron development, hangar ac- 7-3 cess taxiways, public roadways and DEMAND-BASED PLAN automobile parking, and land acquisi- tion. The Master Plan for Hillsboro Airport has been developed according to a de- The T-hangars, Fixed Base Operator mand-based schedule. Demand-based (FBO) hangars, and corporate hangars planning refers to the intention to de- are all assumed to be funded by private velop planning guidelines for the air- developers through long-term ground port, based upon airport activity levels, leases. The obvious advantage of such instead of guidelines based on points in an arrangement is that it relieves the time. By doing so, the levels of activity Port of all responsibility for raising the derived from the demand forecasts can capital funds for these improvements, be related to the actual capital invest- considering the remaining capital needs ments needed to safely and efficiently at the airport. These improvements are accommodate the level of demand being demand-based; therefore, these projects experienced at the airport. More spe- should only be pursued when the need cifically, the intention of this Master for such facilities can be determined. Plan is that the facility improvements Furthermore, these facilities should needed to serve new levels of demand only be constructed when it is found should only be implemented when the that the development costs can be fully levels of demand experienced at the air- recovered through lease and rental fees. port justify their implementation. For example, the aviation demand fore- CAPITAL NEEDS AND casts projected that the addition of 101 COST SUMMARIES more based aircraft could be expected through the Year 2025. This forecast Once the specific needs for the airport was supported by the local community’s have been established, the next step is growing economy and population and to determine a realistic schedule and historical trends which yielded a grow- costs for implementing each project. The ing number of based aircraft levels at capital needs presented in this chapter the airport. outline the costs and timing for imple- mentation. The program outlined on the Future based aircraft levels will be de- following pages has been evaluated pendent upon a number of economic fac- from a variety of perspectives and tors. These factors could slow or accel- represents the culmination of a com- erate based aircraft levels differently parative analysis of basic budget fac- than projected in the aviation demand tors, demand, and priority assignments forecasts. Since changes in these fac- by both the Port and Consultants. tors cannot be realistically predicted for the entire forecast period, it is difficult to predict, with the level of accuracy needed to justify a capital investment, exactly when an improvement will be needed to satisfy demand level.