DEPARTMENT OF TRANSPORTATION  
AERONAUTICS COMMISSION  
AIRPORT DEVELOPMENT LOANS  
(By authority conferred on the aeronautics commission by section 3 of Act No. 107 of  
the Public Acts of 1969, as amended, and Executive Reorganization Order No.  
1973-1, as amended, being SS259.253 and 247.821 of the Michigan Compiled Laws)  
R 259.801 Definitions.  
Rule 1. As used in these rules:  
(a) "Act" means Act No. 107 of the Public Acts of 1969, as amended, being  
S259.251 et seq. of the Michigan Compiled Laws.  
(b) "Air carrier airport" means a facility receiving scheduled air service from  
certified air carriers licensed under the provisions of 14 C.F.R. S121.1 et seq.  
(c) "Commission" means the Michigan aeronautics commission.  
(d) "Commission staff" means the Michigan department of transportation, bureau of  
aeronautics.  
(e) "Fundamental development item" means an item necessary to serve the public and  
the aircraft under safe and satisfactory conditions.  
(f) "Loan agreement" means the document signed by the sponsor and commission  
which specifies the terms and conditions of a loan.  
(g) "Non-air carrier airport" means a facility that does not receive scheduled air  
service from certified air carriers.  
(h) "Publicly owned airport" means a facility owned and operated by a legally distinct  
political subdivision of the state of Michigan.  
(i) "Sponsor" means a legally distinct political subdivision of the state of Michigan  
which owns an airport.  
(j) "State airport system plan" means a continuously updated 20-year plan which is  
compiled by the Michigan aeronautics commission and which identifies airport  
development projects that are eligible for state funding.  
History: 1979 AC; 1982 AACS.  
R 259.802 Loan eligibility and priorities.  
Rule 2. (1) A publicly owned airport listed in the current state airport system plan or a  
community which does not have a publicly owned airport but is listed in the current  
state airport system plan shall be eligible for state loan funds.  
(2) State loan funds shall be allocated according to a priority system so as to maximize  
effectiveness.  
(3) Project funding shall be based on the following priorities:  
Page 1  
Courtesy of www.michigan.gov/orr  
(a) A project at a non-air carrier airport which upgrades an airport to minimum  
requirements, as described in the fundamental development items, shall have first  
priority.  
(b) A project at a non-air carrier airport involving items not defined as fundamental  
development items shall have second priority.  
(c) A project at an air carrier airport shall have third priority.  
History: 1979 AC; 1982 AACS.  
R 259.803 Loan applications.  
Rule 3. (1) A publicly owned airport sponsor shall initiate a loan request with a  
letter of application signed by a responsible official. The letter of application shall  
briefly describe the proposed improvement project.  
(2) An application shall be sent to the Michigan Aeronautics Commission, Capital  
City Airport, Lansing, Michigan 48906.  
History: 1979 AC; 1982 AACS.  
R 259.804 Commission studies and approval.  
Rule 4. (1) The aeronautics commission staff shall conduct a feasibility study of the  
proposed project upon receipt of the sponsor's application. In conducting its study, the  
commission shall consider the following factors:  
(a) Projected future growth in the airport service area.  
(b) Engineering design of the project.  
(c) Total cost of the project.  
(d) Financial ability of the sponsor to carry out the project.  
(e) Term of the loan.  
(2) The commission staff shall advise the sponsor promptly of the results of the  
feasibility study.  
(3) If the project is accepted, the commission staff shall issue a conditional  
commitment, subject to the approval of the commission. Commission approval shall  
not be withheld unreasonably.  
(4) The commission staff shall forward the following items to the sponsor upon  
approval of an application by the commission:  
(a) Model resolution.  
(b) Grant agreement.  
(c) Loan amortization schedule.  
History: 1979 AC; 1982 AACS.  
R 259.805 Legal opinion of sponsor's loan commitment authority required;  
loan amount, interest rate, and maturity; principal and interest payments.  
Rule 5. (1) A public sponsor shall execute the required documents and shall provide  
the aeronautics commission with a legal opinion, rendered by an attorney representing the  
Page 2  
Courtesy of www.michigan.gov/orr  
sponsor, on the legal authority of the sponsor to request and commit to a loan. The  
attorney's opinion shall be dated after the date shown on the loan application.  
(2) A loan shall be made in an amount, at an interest rate, and with a maturity, as  
provided for by the act.  
(3) Payments of principal and interest shall be paid promptly pursuant to covenants of  
the loan agreement at the Financial Services Division, Michigan Department of  
Transportation, 425 West Ottawa Street, P.O. Box 30050, Lansing, Michigan 48909.  
History: 1979 AC; 1982 AACS.  
R 259.806 Airport maintenance required; adherence to amortization schedule  
required; loan default.  
Rule 6. (1) The airport sponsor shall adhere to the maintenance requirements  
specified in the loan agreement. These covenants shall be enforced by the aeronautics  
commission staff.  
(2) The airport sponsor shall adhere strictly to the amortization schedule.  
(3) A sponsor shall be held in default and shall be required to immediately repay  
the outstanding loan balance if loan payments are not made on a timely basis or if the  
airport is not maintained in accordance with loan agreement specifications.  
History: 1979 AC; 1982 AACS.  
R 259.807 Records and crediting of payments.  
Rule 7. The commission staff shall keep adequate records of loan repayments of  
principal and interest. Principal and interest payments shall be credited as provided by  
the act.  
History: 1979 AC; 1982 AACS.  
Page 3  
Courtesy of www.michigan.gov/orr  
;