Airport sponsors and their legal counsel have been forced by the COVID-19 pandemic to exercise judgment and make tough decisions regarding the financial accommodations they will offer their commercial aeronautical tenants to help them weather the current storm. In many ways, these decisions have mirrored the difficult decisions employers have had to make to pare down their workforces in order to survive in the wake of this public health emergency and the resultant economic downturn. Airport sponsors are highly motivated to support their valued commercial tenants and to negotiate mutually beneficial financial terms (including rent abatement). But federally-obligated airports must also balance their regulatory obligations to maintain an economically self-sustaining airport and to treat similarly situated tenants equally.

Buchalter’s airport regulatory attorneys have developed the following best practices airport sponsors should consider as they navigate the growing tidal wave of negotiations with commercial aeronautical tenants.


Continue Reading Financial Accommodations for Airport Tenants in Response to COVID-19

If there is anything to be learned from the FAA’s distribution of the $10 billion in funds allocated to airports in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, it is that allocating billions of dollars in just a few weeks is more difficult than it sounds. On March 27, 2020, the CARES Act was signed into law as Public Law No. 116-136. The CARES Act is aimed at mitigating the effects of the COVID-19 pandemic on most segments of American business and infrastructure. Title XII of the Act specifically supports airports by directing the FAA to make $10 billion available based on each airport’s level of operations and debt. However, when it came to calculating each airport’s share of the pie, the FAA botched the process by employing a formula that allocated massive amounts to some smaller airports while snubbing larger, busier airports.

In April, the FAA attempted to correct the problem by capping each airport’s CARES Act funding at four times the airport’s annual operating budget. The FAA then issued guidance stating that grant funds not used within four years are “subject to recovery by the FAA,” and designated a four year “period of performance” pursuant to 2 C.F.R. section 200.309. In other words, if you don’t use it, you lose it. But just as the FAA has experienced hiccups distributing the grant funds, airport sponsors will inevitably encounter thorny regulatory issues as they attempt to spend millions of dollars in new grant funding while navigating their compliance obligations under the CARES Act. This begs the question, “What are permissible uses of CARES Act grant funds by airport sponsors?”


Continue Reading Permissible Uses of CARES Act Grant Funds by Airport Sponsors