Order 20 10

- 10

- 15 Served: October 2 6 , 20 10
UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued b y the Department of Transportation on the 2 6 th day

of October 20 10
In the Matter of the SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM under 49 U.S.C. 41743 et seq. DOCKET DOT - OST - 20 10 - 0124

ORDER AWARDING GRANTS Summary By this order, the Department selects 1 9 communities in 1 9 states to receive financial grants under the Small Community Air Service Development Program (Small Community Program) to implement the air service initiatives proposed in their grant applications. The communities and the amount of each award are listed in the Appendix to this Order. Award recipients must execute a grant agreement with the Department before they can begin to spend funds under the grants . Individual agreements must be executed by December 17 , 20 10 , or the Department’s offer may be withdrawn. Background The Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR

- 21), P.L. 106

- 181, April 5, 2002, established a new pilot program, to be administered by the Department of Transportation, designed to help smaller communities enhance their air service and address issues related to high airfares. 1 AIR
- 21 authorized the Small Community Program through FY 2003. Vision 100

- Century of Aviation Reauthorization Act (V ision 100), P.L . 108

- 176,

1 See Orders 2002

- 6

- 14 and 2003

- 9

- 14 for a complete description of the history of the program.- 2

-

December 12, 2003, amended the program, reauthorized it through FY 2008, and eliminated the “pilot” status of the program. The FY 2010 Federal Aviation Administration Extension Act (P.L . 111

- 69) extends the authorization of appropriations through FY 2010. The Department was appropriated $6 million to carry out the Small Community Program. 2 However, the Department will make $7 million available for grant awards. 3 When selecting applicants to participate in the Small Community P rogram, the Department is statutorily

required to apply

the following eligibility

criteria: 1. As of calendar ye ar 1997, the airport serving the community was not larger than a small hub airport, and had insufficient air carrier service or had unreasonabl y h igh air fares. 2. The airport presents characteristics, such as geographic diversity or unique circumstances that demonstrate the need for, and feasibility of, the Small Community Program. 3. Not more than 4 communities or consortia of communities, or a combination thereof, from the same State may

be selected to participate in the program in any fiscal year. 4. No more than 40 communities or consortia of communities, or a combination thereof, may be selected to participate in the program in each ye ar for which the f unds are appropriated. 5. An applicant may

not receive an additional grant to support the same project. 4 6. An applicant may

not receive an additional grant, prior to the completion of its previous grant. 5 In addition, the law directs the Department to give priority to those communities or consortia of communities 6 where: a) air fares are higher than the average air fares for all communities; b) a portion of the cost of the activity contemplated by

the community

is provided from local, non

airport revenue sour ces; c) a public

- private partnership has been or will be established to facilitate air carrier service to the public; d) improved service will bring the material benefits of scheduled air transportation to a broad section of the traveling public, including businesses, educational institutions, and other enterprises whose access to the national air transportation sy stem is limited; and e) the funds will be used in a timely manner. 7 T he Department is authorized to award grants to communities that seek to provide assistance to: 1. An air carrier to subsidize service to and from an underserved airport for a period not to exceed 3 years; 2. An underserved airport to obtain service to and from the underserved airport; and/or 3. An underserved airport to implement such other measures to improve air service both in terms of the cost of such service to consumers and the availability of such service,

2 A portion of the funds available for the Small Community Program are used by the Department for grants

management purposes. 3 The Department will be adding additional funds that can be reallocated from prior year recoveries. 4 However, as stated in our Request for Proposals (Order 2010

- 7
- 16), previous grant recipients were free to submit grant proposals and seek funds for new projects. Refer to Order 2010

- 7
- 16 for a discussion on same projects. 5 49 U.S.C. 41743(c). 6 A consortium of communities is defin ed as a single entity. 49 U.S.C. 41743. 7 49 U.S.C. 41743(c)(5).- 3

-

including improving air service through marketing and promotion of air service and enhanced utilization of airport facilitie s. 8 On July 3 0 , 20 1 0, the Department issued a request for proposals (RFP) from communities interested in receiving a grant this year, and requested that such proposals be filed no later than August 2 7 (Order 20 10

- 7
- 16 ). Applicants were required to submit S tandard Form 424, a standard federal government application form, in Grants.gov. Communities were requested to provide information that would help in consideration of their grant requests, including details about their existing air services, historical services, current service needs and deficiencies, a full description of the community ’s proposal, plans for implementation, funding requirements, and plans for monitoring the success of the project, including modifying or discontinuing funding if the proje ct is not meeting expectations. Drawing on our experience from p revious years, the RFP clarified various issues relating to the grant application process, including the sources of local funding, the consideration of in

- kind contributions, the use of grant funds, and the eligibility to participate by

past grant recipients and communities now receiving subsidized air service under the Essential Air Service (EAS) program. The order further emphasized that communities would be expected to meet the financial

- c ontribution commitments that they include in their proposals. 20 10 Grant Applications In response to the RFP, we received 7 4 grant applications from communities in 3 5 states
. Collectively , these communities sought nearl y $ 3 1 million in federal assistance to support new and ongoing air service development projects. The large majority of applications were filed by individual communities and a few were filed b y consortia of communities. Additionally, 13 applications were from communities with small

- hub airports and eight were from communities now receiving subsidized air service under the Department’s EAS program. Fort y - five applications were submitted by communities that had filed applications in previous years. As required, all applicants provided information on historical and current air service and airfare issues facing their communities, the economic benefits of air service, proposed initiatives to remedy air service or airfare problems, and arguments in support of their proposals. Nearl y all the communities pledged local contributions

– funds collected from local, state, airport, or in

kind sources

– to complement their requests for federal assistance. As in previous years, this year’s applications included proposals for feasibility studies, new or expanded service initiatives, service upgrades, and assorted combinations thereof. Our review of the applications confirmed that air service issues continue to be of great concern to many small communities. Nearl y all of the applicants cited both service deficiencies and high airfares as problems affecting patronage of their air services. Many applicants noted that passengers often drive to other, more distant airports that have lower fares or offer a wider range of services to more destinations. Despite these “leakage” issues, the communities seeking funds believe that demand for improved service at their local airports can be stimulated with financial assistance.

8 49 U.S.C. 41743(d).- 4

-

The large majority

of applicants specified the need to attra ct new and/or additional air services to their communities. Similar to previous ye ars, a majority of applicants also proposed to implement their projects using revenue guarantees or subsidies, together with a variety of marketing and promotional initiativ es. A critical component of most proposals was funding to support community

- based marketing and promotional initiatives to stimulate demand and community

awareness of local airport services. These efforts are directed at publicizing not only the availabi lity

of air services, but also the convenience of using the local airport compared to more congested air service hubs or other, larger, nearb y ai rports. This year, sev eral applications either did not meet the basic criteria for participation outlined abov e and were determined ineligible for selection, or the application itself was deemed incomplete. Most often, the applicant sought additional funding for the same, or essentiall y the same, project that was funded in a previous grant. 20 10 Grant Awards Th e Small Community

Program is unique in that it encourages and affords communities the opportunity

to develop their own solutions to their air service problems based on their particular needs and circumstances. By providing communities the opportunity to de velop and implement air service projects tailored to their individual needs, the program aims to maximize the potential for success in the communities’ endeavors. Since the program’s inception, the Department has sought to maximize the number of participating communities, promote geographic diversity of the selections, and support a variety of solutions to the problems identified by applicants in order to provide a wide range of approaches for dealing with the challenges faced by similarl y situated communi ties. With these considerations in mind, we are selecting 19 grant proposals with the objective of entering into grant agreements with the communities/consortia identified in the Appendix to this order. Grant agreements must be executed with the Departme nt before the recipients can begin to spend funds provided under this order. In addition, grant recipients are subject to all grant conditions and assurances required b y federal law, regulations and executive orders. 9 Funds for these awards will be obligated as of the date that each grant agreement is executed with the selected communities. Accordingl y, the Department’s grant offers and agreements will be transmitted to the selected communities upon issuance of this order. The proposals we selected incorporate the purpose of the statute, and provide an expanded opportunity

to test a variety

of approaches to improving small community air service in all regions of the country . For example:

 Seven of the awards are made to communities proposing revenue guarantees and /or marketing support as means to attract new carriers, restore lost service or capacity , and/or provide air travelers with access to additional markets . These communities are Yuma, AZ;

9 See http://ostpxweb.dot.gov/aviation/X

- 50%20Role_files/scasdp/Assurances.pdf for applicable conditions and assurances.- 5
-

Id aho Falls, ID; Bangor, ME; Lansing, MI; Sy racuse, NY; Eugene, OR ; and Charlottesville, VA

.

 Two of the awards are made to communities proposing revenue guarantees and marketing support to attract a second carrier

– Dothan, AL , and Sioux City , IA

.

 Two of the awards will assist Kinston, NC , and Provo, UT , i n acquiring their first scheduled air service in man y years.

 Two of the awards will assist Gainesville, FL , and Manhattan, KS , in provid ing assistance for marketing programs to promote existing , upgraded or recently acquired air services at their local air ports.

 T he award to Fort Way ne , IN , will help implement a shared use sy stem for infrastructure flexibility that allows for airline co

- location and cross utilization of gates.

 The award to Ke ene, NH , will enable the community to study the po ssibilities for develop ing plans for potential air service

.

 The award to Mosinee, WI(Central Wisconsin) , will enable the community to support aircraft upgrades as an existing carrier reti res turboprop aircraft and restore lost service/capacity

to other hubs

.

 T hree grant awards are targeted at EAS communities

– Kearney , NE , – to study the possibilities for financial incentives for service enhancements. Th e award s to the Missouri D epartment of Transportation (Columbia 10 , Joplin, and Way nesville ) and Parkersburg, WV , will assist the communities in marketing changes in air service providers

. 11 All of the selected communities are contributing financial resources to their respective grant projects. In addition, 16 communities have pledged in

- kind contributions in f urther support of their air service initiatives. T he local contributions reflect a commitment that is important to the success of the proposed initiatives. Moreover, nearly all of the communities have (1) established robust public/private partnerships to enhance community participation and facilitate access to air services , and (2) provided a specific plan and timetable for using their grant funds in a timely manner .

10 Columbia is a designated EAS community, but as of September 1, 2010, it receives unsubsidized scheduled air service. The grant will assist the community in promoting that service. 11 We note that grant applicants currently receiving subsidized air service under the EAS program are precluded from using SCASDP funds to secure air service by other carriers to additional destinations. As we stated in our RFP (Order 2010

- 7
- 16), we are prepared to entertain applications from EA S

- subsidized communities that are directed toward im

proving use of the EAS being provided. H ow ever, we w ill not select proposals that wo uld conflict with long

- standing EAS policies, including financial support through this program of air services that would com pete with the EA S, thus draw ing traffic from the already subsidized services and increasing the subsidy requirements for those services.- 6

-

In six instances

– Gainesville, FL , Lansing, M I , Kinston , NC, Sy racuse, N Y , the Missouri Department of Transportation , and Mosinee, WI

-- we have reduced the grant award amount below the amount requested by each community

in its proposal. In the case of Gain esville, Lansing , Kinston, Sy

racuse and Mosinee , this reduction reflects a narrowing of the proposed project’s funding to a more reasonable level for obtaining the service proposed at each community

. In the case of the Missouri DOT , the reduction limits the allowable marketing activities to three of the four communities (Columbia, Joplin, and Way nesville) 12

. We believe that our reductions should not adversel y affect any of the community ’s air

- service project s . Accordingl y, we are also reducing the require d local cash contribution match offered by the communities by

the same amount as the reduction in grant award

. However, since we are changing the terms of the grant proposals, our award in all six cases is conditioned on the community ’s acceptance of the lower amount. Air Service Development Zone The statute directs the Department to designate an airport in one community awarded a grant under this program as an “Air Service Development Zone” (ASDZ), and to work with the community

or consortium on means to attract business to the area surrounding the airport, to develop land

- use options for the area, and to provide data, working with the Department of Commerce and other agencies. 49 U.S.C. 41743(h). A current grant recipient

— with its grant award period extending into FY2011

— remains active as the ASDZ designee. As a result, the Department did not solicit applications for selection as an ASDZ designee. Grant Agreements As noted above, the Department will execute grant agreements with each recipient. In the RFP, we stated that a community cannot accept a new Small Community Program grant while it is a party to an existing grant under the program, either as an individual community or as a member of a consortium. Accordingl y, a community still party to an agreement pursuant to a SCASDP grant awarded in a previous year must terminate its participation in that agreement before it can accept a 20 1 0 grant award and execute a new implementing agreement with the Department. Further, if such community is a member of an existing consortia grant, it must also be granted permission to withdraw from the agreement b y the grant’s legal sponsor as well as the Department. We also stated in the RFP that communities must establish milestones to monitor the progress o f the proposed projects to determine whether amendments are necessary or whether the grant agreement should be terminated. As we have done in the past, milestones and progress reporting requirements will be included in the grant agreements. Federal funds under this grant program are disbursed on a reimbursable basis, with the communities expending funds for the grant project and then seeking reimbursement. Communities will not be reimbursed for funds expended prior to the date on which the grant agreement is executed. In seeking reimbursements, grant re cipients must provide invoices or other evidence of the expenditure,

12 The fourth community in its proposal , Kirksville, is not eligible for funding because it would duplicate activities that occurred under a grant the community received in 2007.- 7
-

details about the expenditure and how it relates to the grant project, and evidence of pay ment. In addition, the legal sponsor is requi red to certify that each invoice is relevant to the authorized grant project and has been paid. Communities will be required to comply fully with the terms of their proposals and the grant agreements. ACCORDINGLY, 1. We select the communities/consortia lis ted in the Appendix to receive grant awards under the Small Community

Air Service Development Program as described in this order; 2. Grant recipients are subject to all grant conditions and assurances that appear at http://ostpxweb.dot.gov/aviation/X

- 50%20Role_files/scasdp/Assurances.pdf

. Inaddition, to the extent that this agreement permits expenditure of the awarded SCASDP funds in any manner that would not be permitted for funds received as part of FAA’s Airport Improvement Program (AIP), such permission is strictly limited to the expenditure of the SCASDP funds awarded under this agreement. Nothing in this agreement negates the recipient’s obligations to fully compl y with FAA Order 5100

- 38C ; 3. Grant recipients must execute a grant agreement with the Department before they can begin to spend funds provided under this order; and 4. A cop y of this order will be served on the legal sponsor for each of the communities awarded grants. By :

S USAN L. KURLAND Assistant Secretary

for Aviation and International Affairs (SEAL) An electronic version of this document is available at http://www.regulations.govAppendix
SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAM

20 1 0 GRANT SELECTIONS

GRANT COMMUNITY STATE AMOUNT Dothan AL $750,000 Yuma AZ $400,000 Gainesville * FL $1 4 0,000 Sioux City IA $500,000 Idaho Falls ID $500,000 Fort Wayne IN $203,000 Manhattan KS $ 3 00,000 Bangor ME $500,000 Lansing* MI $750,000 Missouri DOT * MO $210,000 Kinston * NC $ 35 0,000 Kearney N E $ 5 0,000 Keene NH $30,000 Syracuse* NY $ 50 0,000 Eugene OR $500,000 Provo UT $500,000 Charlottesville VA $500,000 Mosinee (Central Wisconsin) * WI $ 2 50,000 Parkersburg WV $60,000 TOTAL $6, 993, 000 * Grant proposal is conditionally selected since the amount awarded is less than the Community requested.