E9-17093. Notice of Order Soliciting Community Proposals

AGENCY:

Department of Transportation.

ACTION:

Notice of Order Soliciting Community Proposals (Order 2009-7-11).

SUMMARY:

The Department of Transportation is soliciting proposals from communities or consortia of communities interested in receiving a grant under the Small Community Air Service Development Program. The full text of the Department's order is attached to this document. There are two mandatory requirements for filing of applications, both of which must be completed for a community's application to be deemed timely and considered by the Department. The first requirement is the filing of an Application for Federal Domestic Assistance (SF424) through http://www.grants.gov. The second is the submission of the community's proposal as an attachment to its SF424. Applicants must complete a one-time registration at http://www.grants.gov,, a process required by grants.gov that can take up to three weeks to complete. For this reason, applicants should register with grants.gov as soon as possible to ensure they can meet the application deadline.

DATES:

Grant proposals and the SF424 must be submitted no later than 5 p.m. Eastern Daylight Time (EDT), on August 28, 2009.

ADDRESSES:

Interested parties must submit applications electronically as an attachment to the SF424 through http://www.grants.gov. The application should bear the title, “Proposal under the Small Community Air Service Development Program, Docket DOT-OST-2009-0149,” as well as (1) the name of the applicant community or consortium of communities, (2) the legal sponsor and its DUNS number (including + 4), and (3) the 2-digit Congressional district code applicable to the sponsoring organization and, if a consortium, to each participating community.

FOR FURTHER INFORMATION CONTACT:

Aloha Ley, Office of Aviation Analysis, 8th Floor, Room W86-310, 1200 New Jersey Ave., SE., Washington, DC 20590 [phone].

Dated: July 10, 2009.

Christa Fornarotto,

Acting Assistant Secretary, for Aviation and International Affairs.

In the Matter of Grant Applications; Small Community Air Service Development Program; Under 49 U.S.C. 41743 et seq.; Order Soliciting Community Grant Proposals

Overview

By this order, the Department invites proposals from communities and/or consortia of communities interested in obtaining a Federal grant under the Small Community Air Service Development Program (Small Community Program) to address air service and airfare problems in their communities. Proposals must be submitted in the above-referenced docket no later than 5 p.m., Eastern Daylight Time (EDT), on August 28, 2009. Applicants must first register with http://www.grants.gov before submitting an Application for Federal Domestic Assistance (SF424), a standard Federal government grant application form, and must include their proposals as an attachment to the SF424. An application will not be deemed complete until and unless all required materials are filed by the August 28, 2009, deadline. Communities are reminded to register with Grants.gov early in the application period since the mandatory grants.gov registration process can take up to three weeks to complete. Tutorials and other guidance for completing the required registration and application procedures are available at the “Applicant Resources” page of Grants.gov.^[1]

Funding Opportunity

The Small Community Program was established under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21), Public Law 106-181, and reauthorized under the Vision 100—Century of Aviation Reauthorization Act, Public Law 108-176 (Vision 100). The program is designed to provide financial assistance to small communities to help them enhance their air service. The Department provides this assistance in the form of financial grants that are disbursed on a reimbursable basis.^[2] Under the Omnibus Appropriations Act, 2009 (Pub. L. 111-8), the Department received up to $8 million to carry out the Small Community Program.^[3]

The program is limited to a maximum of 40 grant awards, with a maximum of four grants per State, in each year the program is funded. There are no limits on the amounts of individual awards, and the amounts awarded will vary depending upon the features and merits of the proposals selected. Over the past eight years, the Department's individual grants have ranged from $20,000 to nearly $1.6 million. Authorized grant projects may include activities that extend over a multi-year period under a single grant award; however, grant funds are to be used in a timely manner. Generally speaking, individual grant awards have not exceeded a three-to-four-year period.

Eligibility Information

Who Is Eligible To Apply for a Grant?

Basic criteria. Eligible applicants are those communities that (1) are served by an airport that was not larger than a small hub airport for calendar year 1997 ^[4] and (2) have insufficient air service or unreasonably high airfares. Communities that do not currently have commercial air service are also eligible, but they must have met or be able to meet in a reasonable period all necessary requirements of the Federal Aviation Administration for the type of service involved in their grant proposals. Communities served by medium and large hubs are not eligible to apply.

Essential Air Service communities may apply. Small communities that meet the basic criteria and currently receive subsidized air service under the Essential Air Service (EAS) program are eligible to apply for funds under the Small Community Program. Indeed, a number of EAS-subsidized communities applied in past years and some have received grant awards. However, grant awards to EAS-subsidized communities are limited to marketing or promotion projects that support existing or newly subsidized air services. Grant funds will not be authorized for EAS-subsidized communities to support any new air service. Furthermore, no funds will be authorized to support additional flights by EAS carriers or changes to those carriers' existing schedules. These restrictions are necessary to avoid conflicts with the EAS program.

Additional consideration for communities/members of consortia that have previously received a grant. Communities or members of a consortia that were awarded grants in previous years and want to apply for a grant this year should be aware that (1) they are precluded from seeking new funds for projects for which they have already received an award under the Small Community Program and (2) they cannot accept a new grant while they are a party to an existing grant under the program, either as an individual community or as a member of a consortium.

Grant must be for a new project. No community may participate in the program in support of the same project more than once. 49 U.S.C. 41743(c)(4). In assessing whether a previous grantee's current proposal represents a new project, we would compare the goals and objectives of the earlier grant, including the key components of the means by which those goals and objectives were to be achieved, to the current proposal. For example, if a community received an earlier grant to support a revenue guarantee for service to a particular destination or direction, a new application for another revenue guarantee for the same service would be disqualified under § 41743(c), even if the revenue guarantee were structured differently or the type of carrier were different. However, we do not read § 41743(c) to disqualify a new application for service to a new destination or direction using a revenue guarantee, or for general marketing of the airport and the various services it offers. We recognize, for example, that not all revenue guarantees or marketing agreements are of the same nature, and that if a subsequent proposal incorporates different goals or significantly different components, it may be sufficiently different to constitute a new project under § 41743(c).

In its application, a community that is a previous grant recipient should compare and contrast its proposed project with its previously funded one(s) to demonstrate why its latest proposal represents a new project. Communities should also note that in each of the prior six years of the program, interest in participation exceeded both the funds available and the number of communities that could take part in any one year. For this reason, the fact that a community has already received one or more grants will be a consideration when comparing its new proposal with those of other applicant communities.

No concurrent grants are permitted. A community or member of a consortia may participate in the program a subsequent time only after its participation in a prior grant has terminated. 49 U.S.C. 41743(c)(4). Simply stated, a community can have only one Small Community Program grant at any time. If a grant applicant is applying for a subsequent grant and its current grant has not yet expired, it must notify the Department of its intent to terminate the current grant prior to entering into the new grant. In addition, for grant applicants that are members of a consortia grant, permission must be granted from both the grant sponsor and the Department to withdraw from the current grant prior to being eligible to receive a subsequent grant.

Subsidies for a carrier to compete against an incumbent raise concerns. The Department is reluctant to subsidize one carrier but not others in a competitive market. For this reason, communities that propose to use the grant funds for service in a city-pair market that is already served by a carrier must explain in detail why the existing service is insufficient or unsatisfactory, or provide other compelling information to support such proposals. This information is necessary for the Department to consider the competitive implications of giving financial or other tangible incentives for one carrier that the other carrier is not receiving.

Subsidy proposals should reflect market analysis and a complementary marketing commitment. A thorough understanding of the target market is essential for the ultimate success of new or expanded air service. Likewise, the chances that such a service will become self-sustaining are enhanced when its implementation is supported by a well-designed marketing campaign. For these reasons, communities requesting funds for a revenue guarantee/subsidy/financial incentive are encouraged to include in their proposals an in-depth analysis evidencing close familiarity with their target markets. Such communities also are encouraged to designate in their proposals a portion of their requested funds for the development and implementation of a marketing plan in support of the service sought.

A consortium is more than a collection of communities. The statute permits individual communities and consortia of communities to apply for grant awards under this program. In some instances in the past, several communities in a State have filed a single application as a “consortium,” but in effect the application was a collection of individual community requests involving different projects. We do not view this as a consortium. Rather, an application representing a consortium would be one that facilitates efforts of communities working together toward a joint grant project. For example, several communities surrounding an airport may apply together to improve air services at that airport, or surrounding airports may work together to provide regional air service.

Multiple applications by a community will not be considered. The Department requests that communities file only one application for a grant. In the past, some communities have filed both individual applications and applications as part of a consortium. In many cases these applications have involved the same project at the same or different funding levels. We will not consider the stand-alone application if a community is also submitting a largely identical request as part of a consortium. To the extent that a community files separately and as part of a consortium for complementary projects—for example, one for a revenue guarantee and one for marketing—we will consider such proposals. However, communities should be aware that they can receive only one grant, either the stand-alone grant or as a member of a consortium, because no community can have concurrent grants.

Cost Sharing and Local Contributions Are Important Factors

The statute does not require communities to contribute toward a grant project, but those communities that contribute from local sources other than airport revenues are accorded priority consideration. One core objective of the Small Community Program is to promote community involvement in addressing air service/air fare issues through public/private partnerships. As a financial stakeholder in the process, the community gains greater control over the type, quality, and success of the air service initiatives that will best meet its needs, and demonstrates a greater commitment towards achieving the stated goals. The Department has historically received many more applications than can be accommodated and nearly all of those applications have proposed a community financial contribution to the project. Thus, proposals that do not propose a community financial contribution will be at a competitive disadvantage.

Types of contributions. Contributions should represent a new financial commitment or new financial resources devoted to attracting new or improved service, or addressing specific high-fare or other service issues, such as improving patronage of existing service at the airport. Contributions from already-existing programs or projects (e.g., designating a portion of an airport's existing annual marketing budget to the project) are considered less favorably than contributions for new and innovative programs or projects. For those communities that propose to contribute to the grant project, that contribution can be in the following forms:

Cash from non-airport revenues. A cash contribution can include funds from the State, the County or the local government, and/or from local businesses, or other private organizations in the community. Contributions that are comprised of intangible non-cash items, such as the “value” of donated advertising, are considered “in-kind” contributions (see further discussion below).

Cash from airport revenues. This includes contributions from funds generated by airport operations. Airport revenues may not be used for revenue guarantees to airlines.^[5] Community proposals that include local contributions based on airport revenues do not receive priority consideration for selection.

In-Kind Contributions from the airport. This can include such items as waivers of landing fees, terminal rents, fuel fees, and/or vehicle parking fees.

In-Kind Contributions from the community. This can include such items as donated advertising from media outlets, catering services for inaugural events, or in-kind trading, such as advertising in exchange for free air travel. Travel banks and travel commitments/pledges are considered to be in-kind contributions,^[6] as are reduced fares offered by airlines.

Cash vs. in-kind contributions. Only expenditures of cash contributions will be eligible for reimbursement. “In-kind” or non-cash contributions, which encompass property or services contributed by non-Federal third parties without charge to the grantee, are not eligible. Because they are not reimbursable, in-kind contributions are not considered as part of the community's cash financial contribution to the project. Of course, communities should include any in-kind contributions in their proposals and are encouraged to offer in-kind inducements as an extra incentive to facilitate air service/fare improvements. While these contributions will not be considered as part of the community's cash contribution toward the project on which reimbursements are made, they will be considered as illustrative of the community's overall commitment to the proposed grant project. If there is any question about whether a proposed contribution would be considered as “in-kind” or cash, the applicant should contact the Department before submitting its proposal.

Financial commitments must be fulfilled. Applicant communities should also note that, as part of the grant agreement between the Department and the community, the community has legally committed itself to fulfilling its proposed financial contribution to the project and that its failure to meet this commitment could lead the Department to terminate the grant. Community participation in all aspects of the proposal, including the financial aspects, is critical to the success of the authorized project initiative. As with the grant awards in past years, receipt of the full Federal contribution awarded will thus be linked to the community's fulfillment of its financial contribution. Furthermore, communities cannot propose a certain level of cash contribution from non-airport sources, and subsequent to being awarded a grant, seek to substitute or replace that contribution with either “in-kind” contributions or contributions from airport revenues, or both. Given the statute's priority for contributions from non-airport sources and the competitive nature of the selection process, a community's grant award could be reduced or terminated altogether if it is unable to replace the committed funds from non-airport revenue sources.

Application and Submission Information

Filing Deadline and Procedures

Grant applications are due by 5 p.m. EDT on August 28, 2009. As part of the submission process, an applicant must register as a grant applicant at http://www.grants.gov and complete the Application for Federal Domestic Assistance form SF424. An applicant must also include its grant proposal as an attachment to its SF424. In addition, the cover page of each application should contain the information specified under “Cover page contents,” below. Questions regarding the program should be directed to the Office of Aviation Analysis on [phone] or [e-mail]. Communities not previously registered are encouraged to register with Grants.gov early during the application period because the registration and SF424 application process required by www.grants.gov can take up to three weeks to complete. A community may file its proposal anytime after the initial registration process has been completed on http://www.grants.gov as long as the entire application is filed by August 28, 2009. Communities are encouraged to contact the Grants.gov help desk for any technical assistance in filing their applications.

SF424 required. To comply with the Grants.gov initiative, a mandate of the President's Management Agenda, all applicants must submit form SF424, Application for Federal Domestic Assistance, found on http://www.grants.gov. Further, grant proposals must be submitted as an attachment to the SF424. An application will NOT be deemed complete unless the SF424 and the attached proposal have been submitted through Grants.gov by the 5 p.m. EDT, August 28, 2009, deadline.

Applicants must complete a mandatory one-time registration process in order to submit the SF424 application. This mandatory grants.gov registration process can take up to three weeks to complete, depending on the type of organization and whether all steps are met in a timely manner. For this reason, communities intending to file applications should register with grants.gov as soon as possible to ensure they can meet the application deadline. The Grants.gov “Applicant Resources” page (http://www07.grants.gov/​applicants/​app_​help_​reso.jsp) provides instructions and guidance on completing the registration and application processes.

Cover page contents. The cover page for all applications should bear the title “Proposal Under the Small Community Air Service Development Program, Docket DOT-OST-2009-0149” and should include:

(1) The name of the community or consortium of communities applying for the grant;

(2) The legal sponsor and its Dun and Bradstreet (D&B) Data Universal Numbering System (DUNS) number, including + 4; and

(3) The 2-digit Congressional district code applicable to the sponsoring organization and, if a consortium, to each participating community.

Confidential treatment of information. Applicants will be able to provide certain information relevant to their proposals on a confidential basis. Under the Department's Freedom of Information Act regulations (49 CFR 7.17), such information is limited to commercial or financial information that, if disclosed, would either likely cause substantial harm to the competitive position of a business or enterprise or make it more difficult for the Federal Government to obtain similar information in the future.

Applicants seeking confidential treatment of a portion of their applications must segregate the confidential material in a sealed envelope marked “Confidential Submission of X (the applicant) in Docket DOT-OST-2009-0149,” and include with that material a request in the form of a motion seeking confidential treatment of the material under 14 CFR 302.12 (Rule 12) of the Department's regulations. The applicant should submit an original and two copies of its motion and an original and two copies of the confidential material in the sealed envelope. The confidential material should not be included with the original of the applicant's proposal that is submitted via http://www.grants.gov. The applicant's original submission, however, should indicate clearly where the confidential material would have been inserted. If an applicant invokes Rule 12, the confidential portion of its filing will be treated as confidential pending a final determination. All confidential material must be received by August 28, 2009, and delivered to the Office of Aviation Analysis, 8th Floor, Room W86-310, 1200 New Jersey Ave., SE., Washington, DC 20590.

Types of Projects and Application Content

The statute is very general about the types of projects that can be authorized so that communities are provided flexibility in addressing their particular air service and airfare issues. Because circumstances may differ among communities, applicants have some latitude in identifying their own objectives and developing strategies for accomplishing them.

One objective of the Small Community Program is to help communities secure enhancements that will be responsive to their air transportation/air fare needs on a long-term basis after the financial support of the grant has ended. There are many ways that a community might enhance its current air service or attract new service, such as:

• Promoting awareness among residents of locally available service;
• Attracting a new carrier through revenue guarantees or operating cost offsets;
• Attracting new forms of service, such as on-demand air taxi service;
• Offering an incumbent carrier financial or other incentives to lower its fares, increase its frequencies, add new routes, or deploy more suitable aircraft, including upgrading its equipment from turboprops to regional jets;
• Combining traffic support from surrounding communities with regionalized service through one airport; or
• Providing local ground transportation service to improve access to air service to the community and the surrounding area.^[7]

Communities are encouraged to be innovative and to consider a wide range of initiatives and air transportation services in developing their proposals, such as intermodal or regional solutions. At the same time, proposals must not be general, vague, or unsupported. The more highly defined and focused the proposal, the more competitive it will be, particularly in light of the priority consideration afforded by the statute to those applicants that can use the funds in a timely manner. 49 U.S.C. 41743(c)(5)(E).

There is no set format that must be used in submitting grant proposals. At a minimum, however, a proposal must provide the following information:

• A description of the community's existing air service, including the carrier(s) providing service, service frequency, direct and connecting destinations offered, available fares, and equipment types.
• A synopsis of the community's historical service, including destinations, traffic levels, service providers, and any extenuating factors that might have affected traffic in the past or that can be expected to influence service needs in the near to intermediate term.
• A description of the community's air service development efforts over the past five years and the results of those efforts. Many communities have been active on an on-going basis for many years in air service development efforts, while others are just beginning. To the extent that a community has previously engaged in other air service initiatives, including through public/private partnerships, it should describe those efforts and their results in its grant proposal. The description should include marketing and promotional efforts of airport services as well as efforts to recruit additional or improved air service and airfare initiatives.
• A description of the community's air service needs or deficiencies. A community should submit any information about (1) major origin/destination markets that are not now served or are not served adequately, and (2) fare levels that the community deems relevant to consideration of its grant request, including market analyses or studies demonstrating an understanding of local air service needs.
• A strategic plan for meeting those needs under the Small Community Program, including the community's specific project goal(s) and detailed plan for attaining such goal(s). Plans should:

○ Clearly identify the target audience of each component of the proposed transportation initiative, including all advertising and promotional efforts.

○ Set forth a realistic timetable for implementation of the grant project. Because the statute includes timely use of the grant funds as a priority consideration, a community must have a well-developed project plan and a detailed timetable for implementing that plan. In establishing the timetable, however, the community should be realistic about its ability to meet its project deadlines.⁸

○ For proposals involving new or improved service, explain how the service will become self-sufficient. Under the statute, a community cannot seek grant funding in subsequent years in support of the same project. Moreover, in developing a proposal, it is important that a community seriously consider the scale of its proposed project and the timetable for achieving it. To the extent that a proposed project is dependent upon or relevant to the completion of other federally funded capital improvement projects, the community should provide a description of, and the construction time-line for, those projects, keeping in mind the statutory requirement to use Small Community Program funding in a timely manner.

○ Fully and clearly outline the goals and objectives sought to be achieved; e.g., “to broaden the awareness by residents in the Tri-County area of the various services provided by passenger carriers at the Tri-County airport,” or “to obtain new and affordable service to a hub airport in a direction where there is no such service.” When an application is selected, these goals and objectives will be incorporated into the grant agreement and define its basic project scope. Once an agreement is signed, if circumstances change and an amendment is sought to allow for different activities or a different approach, the Department will look to whether the change being sought is consistent with those fundamental project goals and objectives. Proposed changes that would alter those fundamental goals and objectives cannot be authorized, because doing so would undermine the competitive nature of the selection process. Applicants are also encouraged to include in their proposals alternative or back-up strategies for achieving their desired goals and objectives. By incorporating such information into the grant agreement, desired changes may be accommodated.

○ If the applicant received a Small Community Program grant in the past, explain how its proposed project differs from its earlier one by comparing and contrasting project goals, objectives and methods of achieving them.

• A description of any public-private partnership that will participate in the project. Full community involvement is a key aspect of the Small Community Program. The statute gives a priority to those communities that already have established, or will establish, a public-private partnership to facilitate air service to the public. The proposal should fully describe the public-private partnership that will participate in the community's proposal and how the partnership will actively participate in the implementation of the proposed project. In addition, applicants should identify each member of the partnership, the role that each will play, and the specific responsibilities of each member in project implementation. If the application does not include specific information on the partnership participation in the project, the Department will not be able to evaluate how well a community has met this consideration, and the applicant will not be deemed to have met this priority consideration in the Department's evaluation of the community's proposal.
• A detailed description of the funding necessary for implementation of the community's project, including the Federal and non-Federal contributions. Proposals should clearly identify the level of Federal funding sought. They should also clearly identify the community's cash contributions to the proposed project, “in-kind” contributions from the airport, and “in-kind” contributions from the community. Cash contributions from airport revenues should be identified separately from cash contributions from other community sources. Similarly, cash contributions from the State and/or local government should be separately identified and described.

Applicant communities should be aware that, if awarded a grant, the Department will not reimburse the community for pre-award expenses such as the cost of preparing the grant application or for any expenses incurred prior to the community executing a grant agreement with the Department. In addition, 10 percent of the grant funds will be withheld until the Department receives the final report of the grant project. See “Award Administration Information,” below.

• An explanation of how the community will ensure that its own funding contribution is spent in the manner proposed.
• Descriptions of how the community will monitor the progress of the grant project and the identity of critical milestones to be met during the life of the grant, including the need to modify or discontinue funding if identified milestones cannot be achieved. This is an important component of the community's proposal and serves to demonstrate the thoroughness of the community's planning of the proposed grant project.
• A description of how the community plans to continue with the project if it is not self-sustaining after the grant award expires. A particular goal of the Small Community Program is to provide long-term, self-sustaining improvements to air service at small communities. A community cannot seek further grant funding in support of the same project. 49 U.S.C. 41743(c)(4). It is possible that a new or improved service at a community will be well on its way to becoming self-sustaining, but not have reached that goal before the grant expires. Similarly, it is possible that extensive marketing and promotional efforts may be in process, but not have been completed at the end of the grant period and will require continued support. Therefore, in developing its proposal, the community should carefully consider and describe in detail its plans for providing continued financial support for the project after the grant funding is no longer available. This aspect of the application reflects on the community's commitment to the grant project and is an important component to the Department's consideration of the community's proposal for selection for a grant award.
• Designation of a legal sponsor responsible for administering the program. The legal sponsor of the grant project must be a government entity. If the applicant is a public-private partnership, a public government member of the organization must be identified as the community's sponsor to receive program reimbursements. In this regard, communities can designate only a single government entity as the legal sponsor, even if applying as consortium, that consists of two or more local government entities. Private organizations cannot be designated as the legal sponsor of a grant under the Small Community Program.^[9]

Air Service Development Zone Designation

The statute authorizing the Small Community Program also provides that the Department will designate one of the grant recipients in the program as an Air Service Development Zone (ASDZ). Because a previous grant recipient is still active as an ASDZ designee, the Department is not required by the statute to make another ASDZ designation in the FY 2009 round of awards. However, communities are welcome to apply for the designation, as described below.

The purpose of the designation is to provide communities interested in attracting business to the area surrounding the airport or in developing land-use options for the area with an opportunity to work with the Department on means to achieve those goals. There are no additional funds associated with this designation, and applying for the designation will provide no special benefit or preference to a community in receiving a grant award under the Small Community Program.

If selected, the Department will assist the designated community in establishing contacts with and obtaining advice and assistance from appropriate government agencies, including the Department of Commerce as well as other offices within the Department of Transportation, and in identifying other pertinent resources that may aid the community in its efforts to attract businesses and to develop land-use options. The community receiving the designation (if any) will be responsible for developing, implementing, and managing activities related to the air service development zone initiative. Only communities that are interested in these objectives and have a plan to accomplish them should consider applying for the designation since none is required.

Grant applicants interested in being selected for the Air Service Development Zone designation must include in their applications a separate section, titled, Support for Air Service Development Zone Designation. That section should include:

Detailed information regarding the property and facilities available for development such as an existing airpark or land for such an airpark near or adjacent to the local airport;

• The other modes of transportation that would be available to support additional economic development, such as rail, road, and/or water access;
• Information concerning historic, existing, and any future business activity in the area that would support further development;
• Demographic information concerning the community and its environs relevant to the developmental efforts, including population, employment, and per capita income data;
• Information as to whether the community has or had applied to other State or Federal agencies for economic assistance in the previous five years, including the Economic Development Administration of the United States Department of Commerce, and if so whether its application(s) were approved and the result, if any, of the assistance provided; and
• Any other information that the community believes is relevant to its plans to enhance air service development.

The community should provide as detailed a plan as possible, including the goals it expects to achieve from the air service development zone designation and the types of activities on which it would like to work with the Department in achieving those goals. The community should also indicate whether further local government approvals are required in order to implement the proposed activities, and, if so, the projected timeframe under which decisions on applications would be expected.

Application Review Information

The Department will carefully review each proposal, and the staff may contact applicants if clarification is needed. The grant awards will be made as quickly as possible so that communities awarded grants can complete the grant agreement process and proceed to implement their plans. Pending unforeseen circumstances, the grant selection process should be completed by December 2009. Given the competitive nature of the grant process, the Department will not meet with grant applicants with respect to their grant proposals. The Department's selection of communities for grant awards will be based on the communities' written submissions.

Priority factors considered. The law directs the Department to give priority consideration to those communities or consortia where: ^[10]

• Air fares are higher than the national average air fares for all communities;
• The community or consortium will provide a portion of the cost of the activity from local sources other than airport revenue sources;
• The community or consortium has established or will establish a public-private partnership to facilitate air carrier service to the public;
• The assistance will provide material benefits to a broad segment of the traveling public, including business, educational institutions, and other enterprises, whose access to the national air transportation system is limited; and
• The assistance will be used in a timely manner.

Additional factors considered. Applications will be evaluated against the priority considerations listed above. Our experience has been that more applications are received than can be funded under the Small Community Program. Consequently, consistent with the criteria stated above, the selection process will take into consideration such additional factors as:

• The relative size of each applicant community;
• The geographic location of each applicant, including the community's proximity to larger centers of air service and low-fare service alternatives;
• The community's existing level of air service and whether that service has been increasing or decreasing;
• Whether the community's proposal, if successfully implemented, could serve as a working model for other communities;
• Current demographic indicators for the community, such as population, income and business activity;
• The community's demonstrated commitment to and participation in the proposed grant project;
• The grant amount requested compared with total funds available for all communities;
• The proposed Federal grant amount requested compared with the local share offered;
• Whether the community has a realistic plan to use the funds in a timely manner;
• The uniqueness of an applicant's claimed problems and whether the proposed project addresses those problems;
• The extent to which the applicant's proposed solution(s) to solving the problem(s) is new or innovative;
• Whether the community's proximity to an existing grant recipient could impact its proposal; and
• Whether the applicant community has previously received a grant award under this program and, if so, whether its application includes an explanation of how the community's proposed project differs from its previously funded project.

Full community participation is a key goal of this program as demonstrated by the statute's focus on local contributions and active participation in the project. Therefore, applications that demonstrate broad community support will be more attractive. For example, communities providing proportionately higher levels of cash contributions from other than airport revenues will have more attractive proposals. Communities that provide multiple levels of contributions (cash and in-kind contributions) also will have more attractive proposals. Similarly, communities that demonstrate participation in the development and execution of the proposed air service project will enhance the attractiveness of their proposals. In this regard, the Department welcomes letters of intent from airlines on behalf of community proposals that are specifically intended to enlist new or expanded air carrier presence. Such letters will be accorded greater credence when authorized by airline planning departments.

Proposals that offer innovative solutions to the transportation issues facing the community will be more attractive. Small communities have faced many problems retaining and improving their air services and in coping with air fares that are higher than typical for larger communities. Therefore, proposals that offer new, creative approaches to addressing these problems, to the extent that they are reasonable, will have their attractiveness enhanced. Proposals that provide a well-defined plan, a reasonable timetable for use of the grant funds, and a plan for continuation and/or monitoring of the project after the grant expires also will have greater attractiveness.

Award Administration Information

The Department will announce its grant selections in a selection order, which will be served on each grant recipient, all other applicants, and all parties served with this solicitation order. The selection order will also be posted in the Docket at http://www.regulations.gov and on the Department's Web page.

Grant agreement. Communities awarded grants are required to execute a grant agreement with the Department before they begin to spend funds under the grant award. Grant funds will be provided on a reimbursable basis only, with reimbursements made only for expenses incurred and billed during the period that the grant agreement is in effect. Applicants should not assume they have received a grant, nor should they obligate or spend local funds prior to receiving and fully executing a grant agreement with the Department. Expenditures made prior to the execution of a grant agreement, including costs associated with preparation of the grant application, will not be reimbursed. Moreover, there are numerous assurances that grant recipients must sign and honor when Federal funds are awarded. All communities receiving a grant under the Small Community Program will be required to accept the responsibilities of these assurances and to execute the assurances when they execute their grant agreements. Copies of the applicable assurances are available for review on the Department's Web page at http://ostpxweb.dot.gov/​aviation/​X-50%20Role_​files/​smallcommunity.htm#Funds (click on “FAA Grant Assurances”).

Grantee reports. The grant agreement between the Department and each selected community will require the submission of quarterly reports on the progress the community has made during the previous quarter in implementing its grant project. In addition, the grant agreement will require the submission on a quarterly or other time-specific basis other materials relevant to the grant project, such as copies of advertising and promotional material and copies of contracts with consultants and service providers. In addition, each community will be required to submit a final report on its project to the Department, and 10 percent of the grant funds will not be reimbursed to the community until such final report is received.

Cost reimbursement. Communities will be permitted to seek reimbursement of project implementation costs on a regular basis. The frequency of such requests will be established in the grant agreement, which will be tailored to the specific features of the community's grant project. In most cases, reimbursements will be made on a monthly basis. In this regard, the Department will provide the grant recipient communities with details and procedures for securing reimbursements electronically.

Grant amendments. A grantee may wish to amend its agreement with the Department in the event of a change in circumstances after the date the agreement is executed. Typically, amendments involve an extension to the time period for completing the grant or a change in the types of activities authorized for reimbursement under the goals and objectives (“project scope”) of the grant agreement. Grantees are cautioned, however, that the Department cannot authorize amendments that are incompatible with the scope of the agreement. For example, a grant awarded solely for the purpose of developing an airport marketing plan cannot be amended to permit subsidization of an air carrier's startup costs, since the latter was never contemplated by the original agreement.

Grantees are also advised that the Department will not extend the expiration date of an agreement simply to allow more time for a community to solicit air carriers for new air service. Many grants have been awarded for the purpose of subsidizing new or additional air service for a small community, with the goal of that service becoming self-sustaining by the end of the subsidy period. In virtually all cases, the community seeking the grant funds received expressions of interest from one or more air carriers. In some instances, these expressions of interest failed to pan out and the community was left without any immediate prospects, at which time it asked for a grant extension to allow more time to pursue other carriers. Because the Department is charged by law to consider timely use of funds when selecting grant recipients, the Department will grant an extension only when the community can provide strong evidence of a firm commitment on the part of an air carrier to deliver the desired service.

To avoid misunderstandings, grantees contemplating amendments to their agreements are urged to discuss their situations with the Small Community Program staff before requesting a formal amendment.

This order is issued under authority delegated in 49 CFR 1.56a(f).

Accordingly,

1. Community proposals for funding under the Small Community Air Service Development Program should be submitted via http://www.grants.gov as an attachment to the SF424 no later than August 28, 2009; and

2. This order will be published in the Federal Register and also will be served on the Conference of Mayors, the National League of Cities, the National Governors Association, the National Association of State Aviation Officials (NASAO), the Association of County Executives, the American Association of Airport Executives (AAAE), and the Airports Council International—North America (ACI), and posted on http://www.grants.gov.

By:

Christa Fornarotto,

Acting Assistant Secretary for Aviation and International Affairs.

Appendix A—Small Community Air Service Development Program

United States Code Annotated

Title 49. Transportation

Subtitle VII. Aviation Programs

Part A. Air Commerce and Safety

Subpart II. Economic Regulation

Chapter 417. Operations of Carriers

Subchapter II. Small Community Air Service

• § 41743. Airports Not Receiving Sufficient Service

(a) Small community air service development program.—The Secretary of Transportation shall establish a program that meets the requirements of this section for improving air carrier service to airports not receiving sufficient air carrier service.

(b) Application required.—In order to participate in the program established under subsection (a), a community or consortium of communities shall submit an application to the Secretary in such form, at such time, and containing such information as the Secretary may require, including—

(1) An assessment of the need of the community or consortium for access, or improved access, to the national air transportation system; and

(2) An analysis of the application of the criteria in subsection (c) to that community or consortium.

(c) Criteria for participation.—In selecting communities, or consortia of communities, for participation in the program established under subsection (a), the Secretary shall apply the following criteria:

(1) Size.—For calendar year 1997, the airport serving the community or consortium was not larger than a small hub airport, and—

(A) Had insufficient air carrier service; or

(B) Had unreasonably high air fares.

(2) Characteristics.—The airport presents characteristics, such as geographic diversity or unique circumstances, that will demonstrate the need for, and feasibility of, the program established under subsection (a).

(3) State limit.—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) Overall limit.—No more than 40 communities or consortia of communities, or a combination thereof, may be selected to participate in the program in each year for which funds are appropriated for the program.

No community, consortia of communities, or combination thereof may participate in the program in support of the same project more than once, but any community, consortia of communities, or combination thereof may apply, subsequent to such participation, to participate in the program in support of a different project.

(5) Priorities.—The Secretary shall give priority to communities or consortia of communities where—

(A) Air fares are higher than the average air fares for all communities;

(B) The community or consortium will provide a portion of the cost of the activity to be assisted under the program from local sources other than airport revenues;

(C) The community or consortium has established, or will establish, a public-private partnership to facilitate air carrier service to the public;

(D) The assistance will provide material benefits to a broad segment of the traveling public, including business, educational institutions, and other enterprises, whose access to the national air transportation system is limited; and

(E) The assistance will be used in a timely fashion.

(d) Types of assistance.—The Secretary may use amounts made available under this section—

(1) To provide assistance to an air carrier to subsidize service to and from an underserved airport for a period not to exceed 3 years;

(2) To provide assistance to an underserved airport to obtain service to and from the underserved airport; and

(3) To provide assistance to an underserved airport to implement such other measures as the Secretary, in consultation with such airport, considers appropriate to improve air service both in terms of the cost of such service to consumers and the availability of such service, including improving air service through marketing and promotion of air service and enhanced utilization of airport facilities.

(e) Authority to make agreements.—

(1) In general.—The Secretary may make agreements to provide assistance under this section.

(2) Authorization of appropriations.—There is authorized to be appropriated to the Secretary $20,000,000 for fiscal year 2001, $27,500,000 for each of fiscal years 2002 and 2003, and $35,000,000 for each of fiscal years 2004 through 2008 to carry out this section. Such sums shall remain available until expended.

(f) Additional action.—Under the program established under subsection (a), the Secretary shall work with air carriers providing service to participating communities and major air carriers (as defined in section 41716(a)(2)) serving large hub airports to facilitate joint-fare arrangements consistent with normal industry practice.

(g) Designation of responsible official.—The Secretary shall designate an employee of the Department of Transportation—

(1) To function as a facilitator between small communities and air carriers;

(2) To carry out this section;

(3) To ensure that the Bureau of Transportation Statistics collects data on passenger information to assess the service needs of small communities;

(4) To work with and coordinate efforts with other Federal, State, and local agencies to increase the viability of service to small communities and the creation of aviation development zones; and

(5) To provide policy recommendations to the Secretary and Congress that will ensure that small communities have access to quality, affordable air transportation services.

(h) Air Service Development Zone.—The Secretary shall designate an airport in the program as an Air Service Development Zone and 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 provide data, working with the Department of Commerce and other agencies.

Footnotes

1.  See http://www07.grants.gov/​applicants/​app_​help_​reso.jsp.

2.  For detailed background on the Small Community Program, see our Web site at: http://ostpxweb.dot.gov/​aviation/​X-50%20Role_​files/​smallcommunity.htm.

3.  Program funding for this year may be affected by a provision that directs the Secretary to transfer funds from any program within or administered by the Office of the Secretary to the Essential Air Service program if that program does not have sufficient funds to meet its statutory obligations. In addition, a portion of the funds available for the Small Community Program are used by the Department for grants-management purposes.

4.  The hub classifications are based on the Federal Aviation Administration's CY 1997 enplanement data.

5.  49 U.S.C. 47107, 47133.

6.  A travel “bank” involves the actual deposit of funds from participating parties (e.g., businesses, individuals) into a designated bank account for the purpose of purchasing air travel on the selected airline, with defined procedures for the subsequent use or withdrawal of those funds under an agreement with the airline. Often, however, what communities refer to as a travel “bank” in reality involves travel “pledges” from businesses in the community without any collection of funds or formal procedures for use of the funds. As with other types of in-kind contributions, the Department views travel banks and pledges included in grant proposals as an indicator of local community support.

7.  These examples are illustrative only and are not meant as a list of projects favored by the Department. Interested communities can view actual proposals submitted in prior years. Go to http://www.regulations.gov and, under “Search,” enter one of the following depending on the desired filing year: DOT-OST-2002-11590, DOT-OST-2003-15065, DOT-OST-2004-17343, DOT-OST-2005-20127, DOT-OST-2006-23671; DOT-OST-2007-27370 and DOT-OST-2008-0100 for proposals filed in 2002, 2003, 2004, 2005, 2006, 2007 and 2008, respectively.

8.  The projected timetable will be an integral part of the grant agreements between the selected communities and the Department. Therefore, there is no advantage to a community in proposing an aggressive timetable that cannot be met, and there may be disadvantages if the community finds that it cannot meet its timetable. Communities should carefully consider all factors affecting implementation of their projects and develop realistic timeframes for achieving those objectives, keeping in mind that authorized projects generally have averaged three to four years.

9.  The community has the responsibility to ensure that the recipient of any funding has the legal authority under State and local laws to carry out all aspects of the grant.

10.  49 U.S.C. 41743(c)(5).