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Flexible Funding For Transit and Highway Improvements

(FYI, the following overview was originally referred to as "Attachment 1" to internal FHWA-FTA guidance.)


Many Federal-aid Highway programs have specific eligible transit activities identified in legislation. In addition, funds from other programs that do not have specific transit eligibility may be transferred by states – under the uniform transferability provisions of 23 USC §126 – to other Federal-aid Highway programs that do have such eligibility. If funds are transferred from one Federal-aid Highway program to another, those funds then have the same eligibility as the program that they are transferred to. For example, Interstate Maintenance (IM) funds transferred to the Surface Transportation Program (STP) would have the same eligibility as STP funds. The table in Attachment 2 shows which Federal-aid Highway programs have eligible transit activities and those programs that do not, but where funds may be transferred to another program that does have such eligibility. This table also lists federal transit programs that may be used for highway related activities.

In addition to the project eligibility identified in Attachment 2, there are other projects that support both transit and highway systems, either directly or indirectly (e.g., construction of park and ride lots, carpool/vanpool programs), that are eligible for funding under both Title 23 and Chapter 53 of Title 49, United States Code.

As with all other projects proposed for funding under Title 23 and Chapter 53 of Title 49 USC, it is important to remember that the requirements of the metropolitan and statewide transportation planning processes must be met for flexibly funded projects, including project selection requirements.

Interagency Transfers

Under the transfer provisions in 49 USC §5334(h), Section 5307 Urbanized Area Formula Grant funds made available for a highway project must be transferred to the FHWA for administration under the provisions of Title 23, USC.

Under the transfer provisions first enacted under the Intermodal Surface Transportation Efficiency Act(ISTEA), Title 23 funds made available for transit projects had to be transferred to the FTA for administration under the provisions of Chapter 53 of Title 49 USC.  However, under current transfer provisions in 23 USC §104(k), states may request transfer of the Title 23 funds used for transit projects to FTA for administration orhave the FHWA administer the funds under Title 23 without transfer.

Following are a few important points to keep in mind when considering interagency transfers:

Funds transferred to or from FHWA or FTA can be used only for purposes eligible under the original program that the funds are transferred from.
Funds that are transferred from FHWA to FTA shall be administered under the requirements of Chapter 53 of Title 49 USC and funds transferred from FTA to FHWA shall be administered under the requirements of Title 23 USC, except that the non-federal share for the original source of the funding applies to the transferred funds [see 23 USC §104(k) and 49 USC §5334(h)].
To transfer funds from FHWA to FTA, the state department of transportation must request that the funds be transferred, with the concurrence of the metropolitan planning organization (MPO) if the project is within a metropolitan planning area, in a letter to the FHWA Division Office.
In a Transportation Management Area (TMA), the MPO may elect to transfer portions of its FTA Section 5307 funds that cannot be used for operating assistance to FHWA for highway projects, subject to the requirements of 49 USC §5307(b)(2).
To transfer 49 USC §5307 funds from FTA to FHWA, the MPO must submit a request to the FTA Region Office with a certification that: (1) Americans with Disabilities Act (ADA) needs have been met, (2) notice and opportunity for comment and appeal have been provided to affected transit providers, and (3) local funds used for the non-federal match are eligible to provide assistance for either highway or transit projects.
Funding transfers are permitted only for projects contained in an approved metropolitan transportation improvement program (TIP) and/or statewide transportation improvement program (STIP).

* Note: Because the issue of which, if any, 49 USC, Chapter 53 provisions apply to Title 23 funded transit capital projects administered by the FHWA is under consideration by DOT legal counsel, former item #3 that addressed this issue has been deleted from this attachment.

Attachment 2 – FHWA and FTA Funds That May be Used for Either Highway or Transit Purposes

Attachment 3 – FHWA and FTA Funds That May be Used for Bicycle and Pedestrian Activities

Updated: Wednesday, March 16, 2016
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