Theory and Law of Airport Revenue Diversion (2008) / Chapter Skim
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Pages 15-22
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17 provide guidance, and airports seek that guidance on whether a particular expenditure would violate the statutory requirements for the use of airport revenue. The airport sponsor must submit an annual auditing report and other financial reports that the U.S.
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18 New York State.142 At this writing, Stewart is the only airport to have been privatized under this program, and it is abandoning privatization in favor of a purchase by the Port Authority of New York and New Jersey.143 4. Grandfathered Airports Certain grandfathered airport operators may use airport revenue for local purposes that are forbidden under the revenue-diversion prohibition.
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19 B What Constitutes "Airport Revenue"?
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20 that it did not consider such a waiver a use of airport revenue, though it did express concerns that such a waiver might jeopardize its statutory obligation to make the airport as self-sustaining as possible.165 In the early 1990s, when Trans World Airlines (TWA) was in financial extremis and had entered one of its three bankruptcies, the City of St.
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21 • Payments to other governmental units for lost tax revenue exceeding the stated tax rates applicable to the airport; • Loans or investment of funds in a governmental unit at less than prevailing interest rates; • Land rented or used for nonaeronautical purposes at less than FMV;173 • Impact fees paid to a governmental unit exceeding the value of facilities or services provided;174 • Fees paid for certain community activities or events;175 and • Direct subsidies of airline operations, except waivers of fees or discounted landing or other fees for a promotional period.176 The FAA also has taken the position that proceeds from the sale or rental of surplus airport land should be used for airport operation maintenance or development. According to the FAA, 173 An exception exists "to the extent permitted by SectionVII.D of this policy." The DOT has taken the position that an airport proprietor need not charge fair market value for aeronautical uses of airport land.
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22 • Cooperative airline–airport marketing expenses promoting air service at the airport;182 • Reimbursements of certain sponsors of capital or operating costs;183 • Support of community activities or organizations so long as the expenditures are directly and substantially related to airport operations;184 • Certain mass transit airport access projects located entirely on airport property and designed and intended exclusively for use by airport passengers;185 182 However, such expenses must be consistent with applicable grant assurances prohibiting unjust discrimination between carriers. Moreover, the direct payment of subsidies to airline involves the expenditure of airport funds and hence raises questions under the revenue-use requirements.
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23 Presumably then, had the tax been imposed upon parking lot companies holding an airport concession, rather than individuals, it would have been prohibited. In City of Syracuse v.
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24 Expansion Act made it clear that all revenue generated by a public airport and any local taxes on airport fuel must be expended for airport purposes.204 The FAA concluded that the State of Tennessee may not rely on the fact that its 1986 State aviation fuel tax may be grandfathered to enact new measures to divert, directly or indirectly, airport revenue. In other words, if a tax on aviation fuel was in effect prior to December 30, 1987, but proceeds were on that date limited to purposes permitted by 47107(b)
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