Capital Program: Grant Application Instructions

• General
• Dear Colleague Letter
• Chapter I: Introduction and Background
• Chapter II: How to use this Circular
• Chapter III: Buses and Related Acquisitions
• Chapter IV: Fixed Guideway Modernization
• Chapter V: New Starts
• Chapter VI: Requirements Common to all Capital Program Grant Applications
• Chapter VII: Grant Application Contents
• Chapter VIII: Instructions for Preparing a Project Budget
• Chapter IX: Examples
• Chapter X: Regional Offices
• Appendix A: Relationship Between Capital Program Grants and the Metropolitan and Statewide Planning Process
• Appendix B: Joint Development Projects
• Appendix B: Exhibit A
• Appendix C: Annual Certifications and Assurances

1. PURPOSE. . This circular describes the Capital Program administered by the Federal Transit Administration (FTA) and provides guidance for applying for grants under the Capital Program. The program is authorized by 49 U.S.C. § 5309. The circular addresses the requirements that must be met in the application for Section 5309 capital program assistance and gives information about the basis of those requirements. The circular is a revision of FTA Circular 9300.1. This revision incorporates current statutory and programmatic requirements and includes changes based on the Transportation Equity Act for the 21st Century (TEA-21), Public Law 105-178, enacted June 9, 1998, as amended by the TEA-21 Restoration Act, Public Law 105-206, enacted July 22, 1998.
2. CANCELLATION. This circular cancels FTA Circular 9300.1 "Capital Program: Grant Application Instructions," dated 9-29-95.
3. CODIFICATION OF FEDERAL TRANSIT LAWS. Since July 1994, the bulk of Federal transit law has been codified in chapter 53 of Title 49, United States Code. Upon codification, substantially all of the Federal Transit Act, as amended, was repealed as redundant.
4. REFERENCES.

1. Federal transit laws, 49 U.S.C. chapter 53.
2. FTA website at www.fta.DOT.gov .
3. Federal highway and surface transportation laws, Title 23, United States Code.
4. Intermodal Surface Transportation Efficiency Act of 1991, Pub. L. No. 102-240, 105 Stat. 1914, Dec. 18, 1991 (codified as amended by Pub. L. 103-272, 108 Stat. 745, July 5, 1994, in scattered sections of 49 and 23 United States Code).
5. Transportation Equity Act for the 21st Century (TEA-21), Pub. L. No. 105-178, June 9, 1998, as amended by the TEA-21 Restoration Act, Pub.L. No. 105-206, June 22, 1998.
6. Lobbying disclosure provisions of 31 U.S.C. § 1352.
7. Clean Air Act, as amended, 42 U.S.C. §§ 7401 et seq. and scattered sections of 29 United States Code.
8. Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq.
9. Section 504 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 794.
10. National Environmental Policy Act of 1969, as amended, 42 U.S.C. §§ 4321 et seq.
11. Section 106 of the National Historic Preservation Act, 16 U.S.C. § 470f.
12. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, 42 U.S.C. §§ 4601 et seq.
13. Drug-Free Workplace Act of 1988, 49 U.S.C. § 702
14. U.S. Department of Housing and Urban Development regulations, "Community Development Block Grants," 24 C.F.R. Part 570.
15. U.S. Department of Transportation (DOT) regulations, "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments," 49 C.F.R Part 18.
16. U.S. DOT regulations, "New Restrictions on Lobbying," 49 C.F.R. Part 20.
17. U.S. DOT regulations, "Participation by Minority Business Enterprise in Department of Transportation Programs," 49 C.F.R. Part 23.
18. U.S. DOT regulations, "Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally Assisted Programs," 49 C.F.R. Part 24.
19. U.S. DOT regulations, "Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving or Benefiting from Federal Financial Assistance," 49 C.F.R. Part 27.
20. U.S. DOT regulations, "Governmentwide Debarment and Suspension (Nonprocurement) and Governmentwide Requirements for Drug-free Workplace (Grants)," 49 C.F.R. Part 29.
21. U.S. DOT regulations, "Transportation Services for Individuals with Disabilities (ADA)," 49 C.F.R. Part 37.
22. U.S. DOT regulations, "Americans with Disabilities Act (ADA) Accessibility Specifications for Transportation Vehicles," 49 C.F.R. Part 38.
23. U.S. DOT regulations, "Procedures for Transportation Workplace Drug Testing Programs," 49 C.F.R. Part 40.
24. U.S. DOT regulations, "Seismic Safety," 49 C.F.R. Part 41.
25. FTA regulations, "Charter Service," 49 C.F.R. Part 604.
26. FTA regulations, "School Bus Operations," 49 C.F.R. Part 605.
27. FTA regulations, "Transportation for Elderly and Handicapped Persons," 49 C.F.R. Part 609.
28. FTA regulations, "Uniform System of Accounts and Records and Reporting System," 49 C.F.R. Part 630.
29. FTA regulations, "Prevention of Prohibited Drug Use in Transit Operations," 49 C.F.R. Part 653.
30. FTA regulations, "Prevention of Alcohol Misuse in Transit Operations," 49 C.F.R.  Part 654.
31. FTA regulations, "Project Management Oversight," 49 C.F.R. Part 633.
32. FTA regulations, "Capital Leases," 49 C.F.R. Part 639.
33. FTA regulations, "Rail Fixed Guideway Systems; State Safety Oversight," 49 C.F.R. Part 659.
34. FTA regulations, "Buy America Requirements, 49 C.F.R. Part 661.
35. FTA regulations, "Pre-Award and Post-Delivery Audits of Rolling Stock Purchases," 49 C.F.R. Part 663; and FTA Disposition of Inquiries, "Pre-Award and Post-Delivery Audits of Rolling Stock Questions and Answers," 57 Fed. Reg. 10834 (1992).
36. FTA regulations, "Bus Testing," 49 C.F.R. Part 665.
37. Joint Federal Highway Administration (FHWA)/FTA regulations, "Planning Assistance and Standards," 23 C.F.R. Part 450 and 49 C.F.R. Part 613 (specifically, Subpart B, "Statewide Transportation Planning," and Subpart C, "Metropolitan Transportation Planning and Programming").
38. Joint FHWA/FTA regulations, "Management and Monitoring Systems," 23 C.F.R. Part 500 and 49 C.F.R. Part 613 and Part 614 dated 12-19-96.
39. Joint FHWA/FTA regulations, "Environmental Impact and Related Procedures," 23 C.F.R. Part 771. EPA regulations, "Determining Conformity of Federal Actions to State or Federal Implementation Plans," 40 C.F.R. Part 93.
40. Department of Labor Guidelines, "DOL Guidelines, Section 5333(b), Federal Transit law," 29 C.F.R. Part 215.
41. Office of Management and Budget (OMB ) Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations," dated 6-30-97.
42. FTA Circular 4220.1D, "Third Party Contracting Requirements," dated 4-15-96.
43. FTA Circular 4702.1, "Title VI Program Guidelines for Federal Transit Administration Recipients," dated 5-26-88.
44. FTA Circular 4704.1, "Equal Employment Opportunity Program Guidelines for Grant Recipients," dated 7-26-88.
45. FTA Circular 4716.1A, "Disadvantaged Business Enterprise Requirements for Recipients and Transit Vehicle Manufacturers," dated 7-26-88.
46. FTA Circular 5010.1C, "Grant Management Guidelines," dated 10-1-98.
47. FTA Circular 5200.1, "Full Funding Grant Agreements Guidance," dated 7-2-93.
48. FTA Circular 7008.1 "Urban Mass Transportation Financial Capacity Policy," dated 3-30-87.
49. FTA Circular 9030.1C, "Urbanized Area Formula Program: Grant Application Instructions," dated 10-1-98.
50. FTA Circular 9040.1E, "Nonurbanized Area Formula Program Guidance and Grant Application Instructions," dated 10-1-98.
51. FTA Circular 9400.1A, "Design and Art in Transit Projects," dated 6-9-95.
52. FTA Circular 9500.1, "Intergovernmental Review of FTA Planning, Capital and Operating Programs and Activities," dated 3-30-84.
53. FTA Notice "Policy Statements on Local Share Issues," 57 Fed. Reg., 30880 (1992).
54. FTA Notice, "Change in Policy on Sale and Replacement of Transit Vehicles," 57 Fed. Reg., 39328 (1992).

Revised Capital Program: Grant Application Instructions Circular 9300.1A

Number C-98-37
11-23-98

Dear Colleague:

It is a pleasure to issue the revised circular for the Federal Transit Administration's Capital-Program. FTA Circular 9300.lA provides program guidance and application procedures for transit capital assistance for:

• buses and bus-related facilities,
• modernization of fixed guideway systems and
• construction of new fixed guideway systems and extensions ("new starts").

In FY 1999, FTA will begin using its new Transportation Electronic Award and Management (TEAM) system for grant award and management. The system uses graphic user technology, providing point and click "smart" selections that will aid grant recipients in the process of submitting applications and reporting on the management of their grants.

The main purpose of this circular is to reflect provisions of the Transportation Equity Act for the 21st Century (TEA-21).

Sincerely,
Gordon J. Linton

Chapter I: Introduction and Background

1. THE FEDERAL TRANSIT ADMINISTRATION. The Federal Transit Administration (FTA) is one of nine operating administrations within the U.S. Department of Transportation. FTA employs approximately 460 people to administer its programs. In recent years, FTA has received annual appropriations from the Congress exceeding $4 billion to be applied to transit projects throughout the U.S.A. and its various possessions. Headquarters offices are located at 400 7th Street, S.W., Washington, D.C. 20590.
   
   FTA has 10 Regional Offices, each headed by a Regional Administrator, with staff numbering from 10 to 22 employees. The Regional Offices form a local presence to provide assistance in the development of transit projects, review grant applications, and monitor grants awarded by FTA. Capital Program applications must be submitted to the appropriate Regional Office.

   The Department of Transportation has created four metropolitan offices to provide service for the New York, Philadelphia, Chicago, and Los Angeles metropolitan areas. The metropolitan offices provide additional technical support through increased planning, program management involvement, and customer outreach initiatives, without adding another layer of bureaucracy to the process. The metropolitan offices combine staff from both FTA and the Federal Highway Administration (FHWA) and have approximately four to six employees. With the exception of the Los Angeles Metropolitan Offices, the offices are co-located with FTA's Regional Offices.

   The locations and telephone numbers of the Regional Offices and the areas they serve and the metropolitan offices are listed in Chapter X of this circular.

2. FEDERAL TRANSIT LAWS. For 30 years the legislation establishing and governing the FTA and its programs resided in the Federal Transit Act of 1964, as amended. Since July 1994, the bulk of Federal transit law has been codified at 49 U.S.C. chapter 53. (Upon codification, substantially all of the Federal Transit Act, as amended, was repealed as redundant.) Section 5309 of chapter 53 (cited as 49 U.S.C. § 5309) establishes and imposes requirements for the Capital Program. Title 49 U.S.C. chapter 53 may be seen at www.fta.DOT.gov on FTA's website.
3. AUTHORIZING LEGISLATION. Authorizing legislation is substantive legislation enacted by Congress that sets up or continues the legal operation of a Federal program or agency. Congress amends FTA's authorizing legislation every four to six years. FTA's most recent authorizing legislation is the Transportation Equity Act for the 21st Century (TEA-21). TEA-21 was subsequently amended by the TEA-21 Restoration Act. TEA-21 authorizes FTA programs from Federal Fiscal Year 1998 through Fiscal Year 2003.
4. THE CAPITAL PROGRAM.

1. Categories of Funding. Under Section 5309 of title 49, United States Code, the Secretary of Transportation is authorized to make grants to assist in financing capital projects that will benefit the country's transit systems. The Secretary has delegated that authority to the FTA Administrator. Funding from Congress is addressed to the following three categories of projects:
   1. Bus and bus-related facilities;
   2. Modernization of fixed guideway systems; and
   3. Construction of new fixed guideway systems and extensions ("new starts")

These three funding categories together form the FTA Capital Program.

2. Eligible Applicants. Public bodies and agencies (transit authorities and other state and local public bodies and agencies thereof) may apply for Capital Program assistance authorized by 49 U.S.C. § 5309. Eligible public bodies include: states; municipalities, and other political subdivisions of states; public agencies and instrumentalities of one or more states; and certain public corporations, boards, and commissions established under state law.

   States are encouraged to combine the transit capital needs of non-urbanized areas into one Capital Program grant application.

3. Eligible Projects. Federal transit law at 49 U.S.C § 5302(a)(1) provides a list of projects and activities eligible for FTA capital assistance. This section of the circular will group eligible projects and activities into three areas: Assets for which FTA Provides Assistance, Additional Eligible Project Activities, and Purposes for which FTA Provides Assistance.

1. Assets for Which FTA Provides Assistance. Although not an exhaustive list, the following are typical eligible projects under the bus, fixed guideway modernization, and new starts categories of the Capital Program.
1. Bus and Bus-related Facilities. The major purchases under this category are buses and other rolling stock, ancillary equipment, and the construction of bus facilities (i.e., maintenance facilities, garages, storage areas, waiting facilities and terminals, transit malls and centers, transfer facilities, and intermodal facilities). This category also includes bus rehabilitation and leasing, park-and-ride facilities, parking lots associated with transit facilities, and bus passenger shelters.
2. Modernization of Fixed Guideway Systems. Typically funded under fixed guideway modernization are infrastructure improvements such as track and right of way rehabilitation, modernization of stations and maintenance facilities, rolling stock purchase and rehabilitation, and signal and power modernization. Modernization of ferry terminals and the transit portion of ferry boats are also eligible costs.
3. New Fixed Guideway Systems or Extensions ("New Starts"). Capital projects under this category include preliminary engineering, acquisition of real property (including relocation costs), final design and construction, and initial acquisition of rolling stock for the system.
2. Additional Eligible Project Activities.
1. Preventive Maintenance. Preventive maintenance, an expense that became eligible for FTA capital assistance for one year with the DOT 1998 Appropriations Act, was established as eligible for FTA capital assistance under TEA-21, so FY 1998 funds and subsequent fiscal year appropriations may be used for preventive maintenance.

   Preventive maintenance costs are defined as all maintenance costs. For general guidance regarding eligible maintenance costs, the grantee should refer to the definition of maintenance in the most recent National Transit Database reporting manual. A grantee may continue to request assistance for capital expenses under the FTA policies governing associated capital maintenance items (spare parts), maintenance of vehicles leased under contract, vehicle overhauls (major re-work), mid-life rebuilds (rail), and end-of-life rebuilds; or a grantee may choose to capture all maintenance under preventive maintenance. If a grantee purchases service instead of operating service directly, and maintenance is included in the contract for that purchased service, then the grantee may apply for preventive maintenance capital assistance under the capital cost of contracting policy.

2. Education and Training. Capital Program funds may be used for education and training purposes as described in 49 U.S.C. § 5315(d).
3. Design and Art in Transit. Capital Program funds may be used to incorporate design and artistic considerations into transit projects.
4. Innovative Financing. Capital Program funds may be used to pay for costs incurred to secure or initiate an innovative financing technique (see paragraph 4k below).
5. Capital Cost of Contracting. Some FTA grantees turn to an outside source to obtain transit service, or maintenance service, or vehicles that the grantee will use in transit service. When grantees contract for such service, FTA will provide assistance with the capital consumed in the course of the contract. In the case of a contractor's providing vehicles for transit service, the capital consumed is equivalent to the depreciation of the vehicles in use in the transit service during the period of the contract. In the case of a maintenance contract, the capital consumed may be, for example, depreciation of the maintenance garage, or depreciation of the machine that lifts the vehicle. Capital consumed may also include a proportionate share of the interest the contractor might pay out as the contractor purchases and makes available to the grantee these capital assets. The concept of assisting with capital consumed is referred to as the "capital cost of contracting." FTA will provide assistance at the 80/20 FTA/local share ratio for the capital cost of contracting.

Only the costs attributable to privately owned assets are eligible under this policy. Items purchased with Federal, state, or local government assistance are not eligible. Capital consumed for service or maintenance in the provision of service outside the transit portion of the contract, such as for charter or school bus service, is not an eligible cost.

In addition, FTA provides assistance for preventive maintenance, which has been defined as all maintenance and which is discussed in paragraph a above. In some instances, grantees contract with outside sources both for maintenance and for transit service, with the contractor providing both maintenance and vehicles. In such cases, both preventive maintenance and the capital cost of contracting concept will apply.

In order to avoid imposing burdensome accounting rules, with regard to contracts for bus- and paratransit-related services, FTA will allow a percentage of leased service or contracted maintenance to be considered capital costs without further justification and will provide assistance for 80 percent of the resultant amount. The percentages and the corresponding type of contract service are shown in EXHIBIT I-1 for bus and paratransit-related services. The percentages are calculations using data from the National Transit Database. Presented by type of contract, the calculations represent industry averages in counting capital-eligible activities as a share of total cost. The percentages apply whether the service is local, express, shuttle, or paratransit.

The table of Exhibit I-1 is based on the assumption that the contractor provides the assets. Thus, for example, if a contractor provides maintenance, it is assumed in the calculations that the contractor does so in a facility provided by the contractor.

A grant applicant may request FTA participation in a higher percentage of the contract than is shown in the table, but must provide actual costs. Rail-related contracts will be evaluated on a case-by-case basis.

A grant applicant applying for assistance with costs that contain any of the capital costs of contracting permutations listed in Exhibit I-1 may list costs for the contracted service all in the capital cost of contracting budget category, or the grantee may use both that category and another appropriate category such as preventive maintenance or leasing.

 

EXHIBIT I-1 percent of contract allowed for capital assistance without further justification* (*based on assumption that contractor provides the assets)
Type of Contract	Percent of Contract Eligible for 80 Percent Federal Share
1. Service Contract (contractor provides maintenance and transit service; grantee provides vehicles)	40 percent
2. Service Contract (contractor provides transit service only; grantee provides vehicles and maintenance)	0 percent
3. Vehicle Maintenance Contract (contractor provides maintenance; grantee provides vehicles and transit service)	100 percent
4. Vehicle Lease Contract (contractor provides vehicles; grantee provides maintenance and transit service)	100 percent
5. Maintenance/Lease Contract (contractor provides vehicles and maintenance; grantee provides transit service)	100 percent
6. Turnkey Contract (contractor provides vehicles, maintenance, and transit service)	50 percent
7. Vehicle/Service Contract (contractor provides vehicles and transit service; grantee provides maintenance)	10 percent

 

6. Leasing. When a grantee leases tangible capital assets from another party, leasing costs are eligible for capital assistance, provided leasing is more cost effective than purchase or construction. Leasing costs eligible for capital assistance include finance charges, including interest, and ancillary costs such as delivery and installation charges.
7. Rail Trackage Agreements. Capital portions of rail trackage rights agreements are also eligible for Capital Program assistance.
8. Intelligent Transportation Systems. TEA-21 expanded the definition of a capital project to include transit-related intelligent transportation systems (ITS). ITS refers to the use of electronics, communications, or information processing used singly or in combination to improve efficiency or safety of a transit or highway system. Examples of transit-related ITS projects include automatic vehicle location, automated passenger counters, vehicle component monitoring (diagnostics), advanced fare payment methods, computer-aided dispatching and real-time ridesharing, and automated information for travelers using more than one mode of transportation.

3. Purposes for Which FTA Provides Assistance. Federal transit law at 49 U.S.C. § 5302(a)(1) provides a list of activities eligible for FTA capital assistance for the following purposes:
1. Capital projects needed for efficient and coordinated transportation systems. Examples include replacement of transit buses or facilities, or construction of a bus transfer facility that links to a subway system.
2. Capital costs of coordinating transit with other transportation. An example might be transit linkages to an airport or to intercity bus or passenger rail services.
3. Introduction of new technology. An example may be a project to install real-time bus arrival information available through electronic displays at bus stops.
4. Transportation projects that enhance urban economic development or incorporate private investment. This category can include "joint development projects," i.e., projects that involve a public/private partnership and result in a higher return on investment for both the public and private sector dollar. These types of projects must enhance the effectiveness of a transit project and must be related "physically or functionally" to the transit project, or they must establish new or enhanced coordination between transit and other forms of transportation. Such projects must provide a fair share of revenue that will be used for transit. (See Appendix B for discussion of joint development projects and explanation of "physically" or "functionally" related.)

   Grants awarded for the purpose of enhancing economic development and incorporating the private sector must require that the "person" (entity, organization) occupying space in the resulting facility pay a reasonable share of costs of the facility. Eligible costs for projects with this purpose include property acquisition, demolition of existing structures, site preparation, utilities, building foundations, walkways, open space, safety and security equipment and facilities (including lighting, surveillance and related intelligent transportation system applications), facilities that incorporate community services such as day care or health care, and a capital project for, and improving, equipment or a facility for an intermodal transfer or transportation mall. Eligible costs do not include construction of a commercial revenue-producing facility or a part of a public facility not related to transit.

5. Projects that meet special needs of the elderly and persons with disabilities.
6. Projects to support the development of corridors to support fixed guideway systems. Such projects may include protecting rights of way through acquisition, construction of dedicated bus and high-occupancy vehicle (hov) lanes, and park and ride lots. These projects may also include "nonvehicular" improvements that will increase transit use in the corridor. An example might be additional safety features that would encourage riders to use transit, walkways and pathways that make transit more readily available, and day care facilities that would improve the livability of a community and increase the benefits transit offers.

4. Livable Communities. FTA from time to time will establish areas of emphasis to which it will give priority. These emphasis areas are typically aimed at improving customer service, increasing transit capacity, or enhancing transit operations. For example, FTA has established the "livable communities initiative" to emphasize the FTA goal of strengthening the link between transit and communities. This initiative promotes customer-friendly, community-oriented, and well-designed transit facilities and services. Transit projects that support the concept of livable communities are expected to enhance personal mobility, increase transit patronage, or improve the quality of community life. Community-sensitive transit projects are ones that support mixed-use development or incorporate on-site services to help foster livable communities. It is important that the transit investments reinforce land use policies that encourage transit-oriented development. Another example of transit projects that enhance community livability are those that contain pedestrian-oriented physical improvements or enhance the safety or security of transit customers.

   Authority for livable communities projects, as for joint development projects, rests in 49 U.S.C. §§ 5302(a)((1)(G).

   See Appendix B for further discussion on joint development projects.

5. Capital Program Grants in Relation to Total FTA Grant Program. Capital Program grants represent about 18 percent of the number of grants awarded by FTA in a fiscal year. In a typical year, 190 Capital Program grants may be awarded out of a total of 1,100 FTA grants awarded. Capital Program funds represent approximately 40 percent of the total FTA annual budget.
6. Division of Capital Program Funds. TEA-21 requires Capital Program funds to be made available in the proportions shown below. Annual appropriations acts may alter slightly these percentages.
1. Bus and bus-related facilities - 20 percent
2. Modernization of fixed guideway systems - 40 percent
3. Construction of new fixed guideway systems and extensions - 40 percent
Of the amount available for the bus category, at least 5.5 percent must be made available for areas other than urbanized areas.

Up to 3/4 of 1 percent of the funds appropriated under these categories is set aside for FTA project oversight activities.

7. Announcement of Apportionments. By statute, FTA must apportion funds appropriated for the Urbanized Area Formula Program for any fiscal year no later than the10th day following the date on which the funds are appropriated or on October 1 of the fiscal year, whichever is later. Apportionments for fixed guideway modernization projects are included by the FTA in the Federal Register notice announcing the urbanized area formula apportionments.
8. Federal Share for a Project. The Federal share for any project to be assisted under the Capital Program is an amount equal to 80 percent of the net project cost, unless the grant applicant requests a lower Federal grant percentage. The net project cost is that portion of the cost of a project that FTA estimates cannot be reasonably financed from revenues. Local share is discussed in paragraph j below.

   There are four types of exceptions to the 80 percent Federal share for Capital Program projects. These exceptions are as follows:

1. As noted in the paragraph above, for reasons particular to the needs of a local area or to a state, a grant applicant may request a Federal share below 80 percent of the net project cost.
2. The Federal share is 90 percent of the net project cost of vehicle-related equipment acquired in order to be in compliance with the Americans with Disabilities Act of 1990 (ADA). (See paragraph j below.) .
3. The Federal share is 90 percent for vehicle-related equipment acquired to be in compliance with the Clean Air Act Amendments of 1990 (CAA Amendments). (See paragraph i below.)
4. The Federal share is 90 percent for capital projects used to provide access for bicycles to transit facilities, or to install racks or other equipment for transporting bicycles on transit vehicles.

9. Federal Share for Vehicle-related Equipment. Grant applicants proposing to purchase rolling stock may itemize discrete, vehicle-related equipment (such as lifts or particulate traps) to be purchased to be in compliance with the ADA or the CAA Amendments and the Federal share will be 90 percent of the cost of the vehicle-related equipment. Alternatively, for bus or van purchases, a grant applicant may request an 83 percent share of the total vehicle cost. The 83 percent is a blended figure representing 80 percent of the cost of the vehicle and 90 percent of the cost of the vehicle-related equipment to be acquired to be in compliance with the ADA or CAA Amendments. FTA considers vehicle-related equipment to be equipment on the vehicle.
10. Local Share for a Project. Net project cost and Federal share having been determined, the remainder of the net project cost must be provided, in cash, from sources other than Federal funds unless another Federal statute permits the use of specific Federal funds for local share. Any funds from public or private transit systems must be from undistributed cash surpluses, replacement or depreciation funds, or reserves available in cash, or new capital. The market value of real property integral to the project can be counted as a cash contribution toward local share, as can in-kind contributions. Detailed rules for eligibility, valuation, and accounting for the local matching share are described in section 18.24 of U.S. DOT regulations, "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments," 49 C.F.R. Part 18. This document is referred to as the "Common Rule."

1. Revenue Bond Proceeds as Local Share. For FY 1999 through 2003, TEA-21 authorized a grant applicant requesting assistance under the FTA Capital Program or the Urbanized Area Formula Program ( 49 U.S.C. Section 5307) to use the proceeds from the issuance of revenue bonds as the local share for a capital project, with prior FTA approval. Farebox receipts are one type of revenue that may be used to secure the bonds. Under this TEA-21 provision, using proceeds of the revenue bonds as local share will be approved only if the aggregate amount of financial support from the state and affected local governmental authorities in the urbanized area during the next three fiscal years is not less than the aggregate amount provided by the state and affected local governmental authorities in the urbanized area during the preceding three fiscal years (as is made evident in the State Transportation Improvement Program).
2. Credit for Toll Revenue Expenditures. TEA-21 made permanent earlier statutory provisions that permit a state to count as a credit toward a project's local share certain expenditures the state has made with toll revenues. The amount of credit toward local share to be earned by a state is based on revenues generated by toll authorities within the state that are used by the authorities to build, improve, or maintain highways, bridges, or tunnels that serve interstate commerce. The state has four fiscal years to use the credit. A grant applicant wishing to apply the provisions of 23 U.S.C. Section 120(j) should discuss with its state Department of Transportation the availability of toll credits for use as local share in matching FTA grants. The Federal Highway Administration (FHWA) oversees the determination of toll revenue credit within each state.
3. Deferral of Payment of Local Share. A grant applicant may request that the local share for a project be deferred until 100 percent of the Federal funds have been drawn down. A request for the deferral should accompany the grant application. Approval is contingent upon the deferral's resulting in benefits to transit and upon the grant applicant's demonstrating that the applicant has the financial capacity to complete the project. The deferred local share policy is not applicable to projects with Full Funding Grant Agreements. A grant applicant wishing to apply the Deferred Local Share initiative to a project should refer to 57 Fed. Reg., 30880, "Policy Statements on Local Share Issues," July 10, 1992.

11. Alternative Financing. Grant applicants--especially applicants wishing to undertake major projects--are encouraged to explore alternative and innovative methods of financing transit projects. Alternative financing can involve combining multiple, nontraditional sources of funding--Federal, state, local, and private--in support of transit capital and operating needs. Some approaches grant applicants might investigate include leasing arrangements, joint development, state economic development or revolving loan funds, exchanges of real property, and in-kind contributions. For projects exceeding $100 million in cost, grantees may wish to consider a loan or loan guarantee, as provided under the Transportation Infrastructure Financing and Innovation Act (TIFIA), Section 1501 of TEA-21. Such loans or loan guarantees would be repaid with local dedicated funds or user fees.
12. Annual Certification Process. Before FTA may award a Federal grant, the grant applicant must provide to FTA all certifications and assurances required of the applicant--or in regard to the applicant's project--by Federal laws and regulations. The certifications and assurances are consolidated by FTA each Federal fiscal year into a single document that provides the text of the certifications and assurances to be used in connection with all Federal assistance programs administered by FTA during that fiscal year. The certifications and assurances are normally published on the same date that FTA announces the formula apportionments for the Urbanized Area Formula Program and Capital Program formula apportionments in the Federal Register. By statute, FTA must announce the formula apportionments on October 1 or within 10 days of enactment of the DOT Appropriations Act, whichever is later.

1. Timing. The certifications and assurances must be attested to annually by a grant applicant or by any current grant recipient with an active project within 90 days from the date of their publication in the Federal Register or with the grant applicant's first grant application in the Federal fiscal year, whichever comes first.
2. Action Required. The authorized representative of the grant applicant and the grantee's attorney must make the requisite certifications by:
1. attesting to the certifications and assurances electronically with a personal identification number (PIN); and
2. selecting electronically each assurance or certification category that will apply to the applicant's grants for the fiscal year; or
3. selecting instead a "Select all" field that signifies the grant applicant will comply with all categories of certifications and assurances as they may apply to the various applications to be submitted during the year.

If a grant applicant is not able to submit the certifications electronically, the applicant should obtain a copy of the Federal Register Notice containing the current fiscal year's certifications and use the form contained in that Federal Register to submit the actual certifications. The Signature Page shown in the current Federal fiscal year's compilation in the Federal Register must be used.

3. Requirement for Current Affirmation. FTA requires a current attorney's affirmation of the grant applicant's legal authority to certify compliance with that fiscal year's FTA funding assistance. The attorney's affirmation from previous years is not acceptable.

   The certifications and assurances the grant applicant attests to will remain valid for one year or until FTA publishes the next version.

4. Sample Certifications and Assurances in Appendix C. For convenience of the reader, a fair representation of the text of the Fiscal Year 1998 certifications and assurances is provided as a reference in Appendix C of the circular. The specific text of particular certifications may change and new certifications may be added as a result of TEA-21 or other Federal laws, but many of the FY 1999 certifications and assurances will remain substantially as set forth in Appendix C. When a Capital Program grant application requires information that can be derived from a certification or assurance, the reader will be directed to the appropriate paragraphs of Appendix C.

5. ELECTRONIC AWARD AND MANAGEMENT SYSTEM . FTA is implementing a series of automation improvements in the grant making and management process that are designed to improve customer service and efficiency of program delivery. Steps have been taken to provide a streamlined electronic interface between grantees and FTA that allows completely electronic application submission, review, approval, and management of all grants. Grantees may inquire about the status of grants, file their required quarterly financial status and narrative progress reports, and, as noted in the paragraphs above, make annual certifications and assurances through the system. The Department of Labor (DOL), also participating in the program, receives requests electronically for Transit Employee Protective Certification of projects.

Chapter II: How to use this Circular

1. PURPOSE. The purpose of this circular is to assist grant applicants in preparing a complete application for a Capital Program grant authorized by 49 U.S.C. § 5309 and administered by the Federal Transit Administration (FTA). The circular is addressed, in particular, to applicants that have never before applied for an FTA grant under the Capital Program. Separate chapters provide descriptions of each of the three categories of the Capital Program--bus and bus-related facilities, fixed guideway modernization, and new starts--and discuss the grant application requirements associated with each category. An experienced grant applicant already familiar with the statutory and regulatory requirements of the Capital Program category for which the applicant is applying may wish to turn directly to Chapter VII, "Grant Application Contents," and Chapter IX, "Examples," and use these chapters as its guides to a complete Capital Program grant application.
2. CONTENTS. Chapters III, IV, and V, respectively, describe the requirements that must be met in any bus, fixed guideway modernization, or new start project application. For example, in Chapter III statutory and regulatory requirements specific to bus and bus-related projects are described. Similarly, Chapter IV focuses on grant applications for fixed guideway modernization projects. Chapter V summarizes the steps in new start projects and identifies statutory and regulatory requirements peculiar to new starts.

   Chapter VI describes in some detail the requirements common to every Capital Program application; these requirements must be met by all applicants for Capital Program funds. Requirements peculiar only to one category of the Capital Program, or peculiar by degree or threshold to only one category of the Capital Program, are addressed in the chapter on the individual category.

   Chapter VII discusses the contents of a grant application and provides a checklist a grant applicant may use in determining the appropriate information to provide in connection with its application.

   Chapter VIII contains instructions for preparing a proposed project budget.

   Chapter IX contains examples a grant applicant may use as a guide in complying with the grant application requirements. The examples are presented in alphabetical order by title.

   Chapter X lists addresses and telephone numbers of the 10 FTA Regional Offices and the four FTA metropolitan offices and identifies the states each Regional Office serves.

3. APPENDICES. Appendix A discusses the planning requirements of 49 U.S.C. §§ 5303 - 5306 and joint FHWA/FTA planning regulations as they affect the award of Capital Program grants. Appendix B describes the characteristics and requirements of joint development projects, projects that are physically or functionally related to the transit project and that enhance the effectiveness of the transit project. Appendix C describes the annual certification and assurance process introduced by FTA in Fiscal Year 1995 and contains a fair representation of the text of certifications and assurances for all FTA grant programs for Fiscal Year 1998.
4. INDEX. An index to topics in the circular and their location forms the final pages.
5. ELECTRONIC GRANT APPLICATION. Beginning with Fiscal Year 1999, FTA will receive all grant applications for the Capital Program by electronic submission, except under rare circumstances that might prevent electronic submission. The newly designed FTA electronic award and management system is a point-and-click system that contains "smart" selection options designed to streamline the grant application and management process. The system is compatible with the year 2000 and beyond ("Y2K-compliant").

   In order to submit a grant application electronically, a grant applicant must request a grant number from FTA and provide the information requested by the electronic program. The Regional Office will forward the grant application electronically to the Department of Labor for certification of transit employee protective arrangements. (See Chapter VI, paragraph 12, concerning Labor Standards.) If a grant applicant is not able to submit the grant application electronically, then the applicant must submit an original and two copies to the geographically appropriate FTA Regional Office.

6. NOTES TO READER. Before reading the circular, first-time grant applicants are encouraged to turn to Chapter X, "Regional Offices," select the FTA regional office responsible for the applicant's locality, and telephone that office to discuss the kind of project planned. Nothing can substitute for discussion with FTA field staff as a way to learn quickly the critical path in the grant application process. That done, the grant applicant can return to the circular for, it is hoped, a more meaningful read.

   The statements included in the circular reflect typical project situations. Space does not permit FTA's addressing each circumstance meriting an exception to FTA standard practices. Hence, instructions given and policy statements appearing in the circular are not intended to be read as inflexible FTA mandates. They are, instead, set forth as guidelines FTA generally applies to typical projects.

   To the extent permitted by law, the Federal Transit Administrator reserves the right to waive any provision of this circular.

   While the major purpose of the circular is to describe the current grant application requirements for Capital Program assistance, because laws and regulations may change these requirements, the grant applicant is encouraged to discuss the requirements with FTA Regional Office staff, to determine whether any additional requirements must be met or changes have been introduced since publication of the circular.

   Moreover, the reader is cautioned that in the majority of instances the circular highlights only the salient points of laws and regulations that apply to Capital Program grant applications, seldom the details or the subtleties. Therefore, whenever a question about a requirement arises, or whenever a grant applicant needs clarification about a particular statute, regulation, or directive, in addition to discussing the requirement with the appropriate Regional Office, the grant applicant is urged to review the document itself.

Chapter III: Buses and Related Acquisitions

1. INTRODUCTION. There are approximately 50,000 transit buses in service on U.S. streets today purchased through funds administered by the Federal Transit Administration (FTA). In an average year more than 4,000 buses are purchased by FTA grantees; while most buses are bought with funds under the FTA Urbanized Area Formula Program, approximately 20 percent are acquired through the bus category of the Capital Program. As used in this chapter, the term "bus category" refers to that part of the Capital Program that provides Federal assistance to buy, lease, replace, or rehabilitate buses and related equipment and to construct bus-related facilities. In a typical year, approximately half of bus category funds are spent for construction or rehabilitation of facilities and half for acquisition of vehicles.
2. COMPETITION FOR FUNDS. Demand for assistance to undertake worthy transit projects always exceeds the amount of Federal funds available for those projects. Grant applicants are encouraged to investigate funding assistance in other FTA programs and in programs outside of FTA to support transit needs. Some possibilities for supplementing or complementing the FTA capital program are described in the paragraphs below.

1. Flexible Funds. Grant applicants are reminded to explore the availability of "flexible funds" delivered through the Federal-aid highway program. Flexible funding programs are reauthorized by the Transportation Equity Act for the 21st Century (TEA-21) and may be used for either transit or highway projects. These programs include the Surface Transportation Program (STP), the Donor State Bonus, Interstate Maintenance, Bridge Replacement and Rehabilitation, National Highway System, Substitute Highway, and the Congestion Mitigation and Air Quality Improvement (CMAQ) programs. Although these Federal Highway Administration (FHWA) programs have intermodal flexibility, it is important to note that there are both programmatic and distributive limitations to the use of at least some portions of some funds. Nevertheless, Capital Program applicants are encouraged to investigate possibilities in these other programs. Over the 6-year life of the ISTEA authorization, nearly $80 billion in FTA and FHWA program funding had the flexibility to be used either for transit or highway purposes, and approximately $3.5 billion was transferred. More information about these programs can be found in the pamphlet, "Flexible Funding Opportunities for Transportation Investments," which can be obtained from FTA Regional Offices.
2. Clean Fuels Formula Program. The Clean Fuels Formula Program was authorized by TEA-21 to support the purchase or lease of clean fuel buses and facilities and the improvement of existing facilities to accommodate clean fuel buses. Eligible grant recipients are transit operators that are public bodies providing transit service in either urbanized or non-urbanized non-attainment or maintenance areas as defined by the Clean Air Act.

   Clean fuel buses include those powered by compressed natural gas, liquefied natural gas, biodiesel fuels, batteries, alchohol-based fuels, hybrid electric, fuel cell and certain clean diesel, and other low or zero emissions technology, and which the Environmental Protection Agency (EPA) has certified sufficiently reduce harmful emissions.

   This is a formula program. However, the formula is applied on the basis of the grant applications submitted. Grant applications must be submitted by January 1 of each fiscal year. By February 1 of each year, FTA must apportion funds to the grant applicants. Two thirds of the funds available are to be apportioned in urbanized areas with populations of a million and over, and one third is to be apportioned to grantees in areas with populations less than a million. Formula weighting factors, distinguished between the one-million-and-over and under-a-million populations, include the proportion of the grant applicant's bus fleet to the total number of vehicles of all grant applicants in the population division, severity of non-attainment for the area in which the project is located, and proportion of bus passenger miles of the total bus passenger miles of all grant applicants in the population division. There are limitations within the program on amounts that may be awarded for single grants and for some types of projects.

   This program begins with FY 1999 and is authorized at $200 million per year for the remaining five years of TEA-21. Funds are available to a project for the year of appropriation, plus one. FTA will develop regulations for the program's administration.

3. Job Access and Reverse Commute Program. This program is to develop additional transportation services needed to connect welfare recipients and other people with low income to jobs and related support services. The program is authorized in Section 3037 of TEA-21. TEA-21 authorizes $150 million annually, beginning with FY 1999. A Job Access project is a project designed to transport welfare recipients and other eligible individuals with low income to and from jobs and activities related to their employment. A Reverse Commute project is a project related to the development of transportation services designed to transport residents from urban areas, urbanized areas, and nonurbanized areas to opportunities for employment in suburbs. Reverse commute projects are not tied to the income of the commuter. Up to $10 million a year is authorized for Reverse Commute projects.

   The program has a 50 percent Federal share. There will be a competitive grant selection process. The portion of the total project cost that is not funded by the Job Access and Reverse Commute Program may be derived from amounts appropriated or made available to another department or agency of the Federal Government (not the Department of Transportation), if the funds are eligible to be expended for transportation. The requirements of the Urbanized Area Formula Program as well as all planning requirements under Sections 5303 through 5306 apply to the grants awarded for the Job Access and Reverse Commute Program. Grants under this TEA-21 provision may not be used for planning or coordination activities. FTA will issue implementing guidance and application instructions.

4. Over-the-Road Bus Accessibility Program. TEA-21 established the Rural Transportation Accessibility Incentive Program, hereinafter referred to as the Over-the-Road Bus Accessibility Program. This program is designed to assist operators of over-the-road buses to finance the incremental capital and training costs of complying with the Department of Transportation's anticipated final rule regarding accessibility of over-the-road buses required by the Americans with Disabilities Act. The Federal share of these projects is 50 percent of the project cost.

   Beginning in FY 1999, funding will be available for operators of over-the-road buses in intercity fixed route service, starting with $2 million in FY 1999 and increasing to $5.25 million in FY 2003. In addition, beginning in FY 2000, an additional $6.8 million will be available for FY 2000 through FY 2003 for operators of other over-the-road bus service, including local commuter service and charter or tour service. Total funding authorized through FY 2003 is $17,500,000 for fixed route over-the-road bus operators and $6,800,000 for operators of other over-the road bus services. A national solicitation for applications will be conducted, and grant recipients will be selected on a competitive basis. FTA will issue implementing guidance.

5. Transportation and Community and System Preservation Pilot Program. TEA-21 established an initiative in the Highway program "to investigate and address the relationships between transportation and community and system preservation and identify private sector-based initiatives." Funds are available for obligation for any project eligible for funding under title 23 U.S.C., the highway program, or under chapter 53 of title 49 U.S.C., the transit program. Eligible recipients are state agencies, units of local government including public transit agencies, and metropolitan planning organizations.

   The purposes of this new program are to improve the efficiency of the transportation system; reduce transportation's impacts on the environment; reduce the need for costly future investments in public infrastructure; provide efficient access to jobs, services, and centers of trade; and examine development patterns and identify strategies to encourage private sector development patterns that achieve the first four purposes. The initiative includes a research program to investigate these relationships; funds for states, MPO's, and local governments to create strategies to integrate transportation and community and system preservation plans and practices; and funds to address transportation efficiency and community and system preservation. Types of projects listed as eligible for funding include "corridor preservation activities...necessary to implement transit-oriented development plans."

   TEA-21 authorizes an apportionment from the Highway Trust Fund of $20 million for FY 1999 and $25 million for each of fiscal years 2000 through 2003. The Federal Highway Administration issued implementing guidelines in the Federal Register on September 16, 1998 (63 Fed Reg. 49632 et seq. ) (1998).

3. COMBINING APPLICATIONS. Grant applicants are encouraged to look into advantages that may be gained by joining with other grant applicants and applying together for a single Capital Program grant. In a bus acquisition grant, for example, there may be economies of scale resulting from the preparation of one grant application, development of one specification, preparation of supporting materials for public hearings, and the hiring of fewer vehicle inspectors. Moreover, it may be possible to obtain a lower price.
4. LENGTH OF TIME FUNDS ARE AVAILABLE. Since Fiscal Year 1993, FTA has had a long-standing general provision in the DOT Appropriations Act that allows funds appropriated for the Capital Program for bus and bus related purchases to be available for three years. Thus, for example, funds appropriated in FY 1998 for bus and bus-related purchases that have not been obligated by FTA to a grantee by September 30, 2000, will no longer be available after that date and will be made available for other discretionary projects. Similarly, funds appropriated in FY 1999 for bus and bus-related purchases that have not been obligated by FTA to a grantee by September 30, 2001, will also be made available for other discretionary projects after that date. This three-year availability is specified each year in the DOT Appropriations Act.
5. ELIGIBLE PROJECTS. Examples of projects eligible for bus category funding are the acquisition of buses for fleet and service expansion; bus maintenance and administrative facilities; transfer facilities, bus malls, transportation centers, intermodal terminals, and park-and-ride stations; acquisition of replacement vehicles; bus rebuild; bus preventive maintenance; passenger amenities such as passenger shelters and bus stop signs; and accessory and miscellaneous equipment such as mobile radio units, supervisory vehicles, fareboxes, computers, and shop and garage equipment. Costs incurred in arranging innovative financing for eligible projects are also reimbursable under the bus category. (See Chapter I, paragraph 4(c)(2)(d), concerning innovative financing.)
6. ENVIRONMENTAL CONSIDERATIONS. Chapter VI, paragraph 7, describes FTA's environmental protection procedures and the related Capital Program application requirements. The discussion here provides supplementary information specific to bus category acquisitions.
1. Categorical Exclusions. Many projects and activities assisted with bus category funds normally do not involve significant environmental impacts. The joint FHWA/FTA environmental regulations use the term "categorical exclusions" to describe those projects that are categorically excluded from the requirement to prepare an environmental document (environmental assessment or environmental impact statement). In accordance with the regulations, bus and bus-related projects that are predetermined to be categorical exclusions include:
1. the acquisition of buses to replace old buses;
2. the acquisition of buses for minor fleet expansions where use of these buses can be accommodated by existing facilities;
3. bus rehabilitation;
4. alterations to buses or facilities to make them accessible for the elderly and persons with disabilities;
5. purchase and installation of bus operating or maintenance equipment to be located within an existing facility, with no significant impacts off the project site;
6. installation of fencing, signs, pavement markings, small passenger shelters, and traffic signals where no substantial land acquisition or traffic disruption will occur; and
7. construction of pedestrian and bicycle lanes, paths, and facilities.
2. Projects That May Have an Environmental Impact. A second group of bus category projects involve more construction and greater potential for off-site impacts. Examples are new construction or expansion of bus terminals and transfer facilities, bus storage and maintenance garages, office facilities, and transit centers with park-and-ride facilities. For these projects, the grant applicant must prepare environmental documentation with appropriate technical analysis to support a categorical exclusion, if appropriate, or a finding of no significant impact (FONSI), depending on the scope and magnitude of the probable environmental impacts.

   Experience has shown that many construction projects can be built and operated without causing significant impacts if they are carefully sited in areas with compatible, non-residential land use where the primary access roads are adequate to handle the additional bus traffic. FTA may approve the designation of these construction projects as categorical exclusions if the grant applicant provides documentation which clearly demonstrates that the conditions stated above are met and that no significant adverse effects will result. Grant applicants should refer to the list of categorical exclusions requiring FTA approval contained in the joint FHWA/FTA environmental regulations.

   For any project not meeting the conditions for a categorical exclusion, the grant applicant must prepare an Environmental Assessment (EA) which documents the impacts of the proposed project and considers alternatives to the proposed site or design. An EA is subject to public comment.

   If significant environmental impacts are identified for a bus category project, an Environmental Impact Statement (EIS) will be required. For example, the new construction or extension of a separate roadway for buses or high-occupancy vehicles which is not located within an existing highway right-of-way normally requires an EIS.

   Federal regulations place limitations on project development while the NEPA process is being conducted. Grant applicants should refer to Chapter VI, paragraph 7 in which the limitations are discussed.

3. Clean Air Act Compliance. In nonattainment and maintenance areas, federally assisted transportation projects must comply with the conformity requirements of the Clean Air Act Amendments of 1990. In order to receive Federal funding, transportation plans, programs, and projects must be found to conform to applicable state implementation plans (SIPs) for air quality. The proposed bus improvement must be included in a current long-range plan and transportation improvement program (TIP), which have been determined to conform to the SIP.

In general, any project expected to have a quantifiable effect on regionwide, transportation-related emissions in an air quality nonattainment area must be included in the regional emissions analysis required for the area's transportation plan and TIP. In addition, some large bus projects (e.g., new intermodal terminals) must be analyzed for their potential localized impact on air quality. This is normally accomplished as part of the environmental analysis undertaken to comply with the National Environmental Policy Act (NEPA). The FTA Regional Office can provide guidance on how to analyze the localized air quality impacts of various bus projects.

Many bus category projects are exempted from the conformity requirements because they are presumed to have a negligible effect on regional and localized air quality. The grant applicant should refer to the Environmental Protection Agency (EPA) regulations governing the conformity process, for a complete list of exempt projects. There may be cases in which a normally exempt transit project will require an air quality analysis and a conformity determination; hence, the grant applicant should review the proposed project with the FTA Regional Office to decide whether an exemption is appropriate. FTA's exemption determination is usually made in consultation with the agencies responsible for the area's air quality attainment plan.

7. LEAD TIME NEEDED FOR PURCHASING NEW BUSES. One cannot estimate with accuracy or confidence the lead time necessary between the moment new buses appear needed and the day they are placed on the street in transit service. Conditions vary. Manufacturing times may change with demand for buses and with the specification developed. Bus testing may be required. Mileposts to be taken into account that involve the FTA are as follows: The project must first be a product of the planning process and be included in the metropolitan transportation improvement program (TIP) and/or the statewide transportation improvement program ( STIP). (A summary of the requirements that must be met in the metropolitan and statewide planning process is given in Appendix A.) The STIP must be approved both by the FTA and the FHWA before FTA can approve a grant application. A reasonable estimate for time required for FTA and FHWA to approve a STIP is 45 calendar days.

   One state's experience with lead time in a bus procurement project follows: In October the state determined that it would apply to FTA for a grant for $13 million for vehicles for 15 localities. The state planned to submit a statewide application with the 15 localities as subrecipients. Taking into account the upcoming holiday season, the time the localities would need to collect their portions of the information for the application, and the time the state would require to compile the information, the state decided to submit its statewide application for vehicles on April 1, which the state did. Between April and June, the subrecipients developed their vehicle specifications and requested bids. FTA announced approval of the application on June 30. Following FTA approval, approximately 4 to 6 weeks were needed for contracts to be executed with manufacturers. Manufacturers delivered vehicles 8 to 12 months later, depending on the vehicle. Total time elapsed before buses were in service was 18 to 22 months.

8. REQUIREMENTS RELATED TO BUS PURCHASES. Grant application requirements that apply only to bus and bus facilities projects of the Capital Program appear in this chapter. Requirements common to all Capital Program applications appear in Chapter VI.

1. Requirements Related to Local Bus Fleets. FTA has established several policies that are meant to ensure that buses purchased or leased with Federal funds are maintained and remain in transit use for a minimum normal service life and to ensure that the buses acquired are necessary for regularly scheduled transit revenue service (i.e., to meet peak service requirements with a reasonable allowance for spares).

1. Service Life Policy. Service life of rolling stock begins on the date the vehicle is placed in revenue service and continues until it is removed from service. Minimum normal service lives for buses and vans are given in the paragraphs below.
   1. Large, heavy-duty transit buses (approximately 35'-40', and articulated buses): at least 12 years of service or an accumulation of at least 500,000 miles.
   2. Medium-size, heavy-duty transit buses (approximately 30'): 10 years or 350,000 miles.
   3. Medium-size, medium-duty transit buses (approximately 30'): 7 years or 200,000 miles.
   4. Medium-size, light-duty transit buses (approximately 25- 35'): 5 years or 150,000 miles.
   5. Other light-duty vehicles such as small buses and regular and specialized vans: 4 years or 100,000 miles.

It is recommended that grant applicants specify the expected service life category in requests for bids when acquiring new vehicles.

FTA calculates the value of vehicles prior to the end of their minimum normal service life on the basis of a formula using straight-line depreciation as described in paragraph (2)(b) below. Removal of an FTA- funded vehicle from revenue service before the end of its minimum normal service life, for any reason, leaves the grantee liable to FTA for the Federal share of the vehicle's remaining value. Consistent with this policy, the suggested vehicle service life standards stated above in years refer to time in normal service, not time spent stockpiled or otherwise unavailable for regular transit duty.

2. Replacement Policies.
1. Replacement at End of Minimum Normal Service Life. Vehicles proposed to be replaced must have achieved at least the minimum normal service life. For purposes of bus replacement grant applications, the age of the bus to be replaced is its years of service or mileage at the time the proposed new bus is introduced into service.
2. Early Disposition Policy. If a vehicle is replaced before it has achieved its minimum normal service life, the grantee has the option of returning to FTA an amount equal to the remaining Federal interest in the vehicle or applying the "Like-Kind Exchange" policy (discussed below) and placing an amount equal to the remaining Federal interest in the vehicle into a newly purchased vehicle.

   To determine the Federal interest in a federally funded vehicle during its minimum normal service life, a straight-line depreciation formula is used: for example, for a bus with a 12-year minimum normal service life, the bus's value decreases each year by 1/12 of its original purchase price. Similarly, the Federal interest in the bus decreases each year by 1/12 of the amount of the Federal grant that was awarded for its purchase.

3. Use of Like-Kind Exchange Policy. With prior FTA approval, a passenger vehicle may be traded-in or sold before the end of its minimum normal service life, if a grantee so chooses. Moreover, a grantee may elect to use the trade-in value or the sales proceeds from the vehicle to acquire a replacement vehicle of like kind. "Like-kind" means a bus for a bus with a similar service life and a rail vehicle for a rail vehicle. Under the Like-Kind Exchange policy, proceeds from the vehicle sales are not returned to the FTA; instead, all proceeds must be invested in acquisition of the like-kind replacement vehicles. If sales proceeds are less than the amount of the Federal interest in the vehicle to be replaced, the grantee is responsible for providing the difference, along with the grantee's local share of the cost of the replacement vehicle.

   Grant applicants interested in buying a replacement vehicle before the end of the minimum normal service life of the vehicle to be replaced should refer to the FTA Notice, "Change in Policy on Sale and Replacement of Transit Vehicles," published in the Federal Register on August 28, 1992. Also, in Chapter IX, "Examples," there is a sample calculation for the like-kind replacement of a heavy-duty bus, illustrating the selling of a bus at the bus's mid-life. The sample appears as "Like-kind".

3. Rebuilding Policies. Buses to be rebuilt should be at the end of the minimum normal service life, as previously described, and in need of major structural and/or mechanical rebuilding. The age of the bus to be rebuilt is its years of service at the time the rebuilding begins.

   Depending upon the extent of rebuilding planned, the project may be subject to Americans with Disabilities Act requirements. (See 49 C.F.R. Section 37.75 for remanufacture of non-rail vehicles.)

   Bus rebuilding work must be procured competitively from private-sector sources unless there are mitigating circumstances. In-house rebuilding must not interfere with normal maintenance activities.

4. Vehicle Overhauls. Rolling stock overhauls are an eligible capital expense. Because the category of "vehicle overhaul--20%" is an eligible capital cost under the category of preventive maintenance discussed in Chapter I, paragraph 4c(2)(a), FTA will eliminate the category "vehicle overhaul--20%" beginning with FY 2000 funds.
5. Spare Ratio Policies. Spare ratios will be taken into account in the review of projects proposed to replace, rebuild, or add vehicles. The basis for determining a reasonable spare bus ratio takes local circumstances into account. The number of spare buses in the active fleet for grantees operating 50 or more revenue vehicles should not exceed 20 percent of the number of vehicles operated in maximum service.

   For purposes of the spare ratio calculation, "vehicles operated in maximum service" is defined as the total number of revenue vehicles operated to meet the annual maximum service requirement. This is the revenue vehicle count during the peak season of the year, on the week and day that maximum service is provided. It excludes atypical days and one-time special events. Scheduled standby vehicles are permitted to be included as "vehicles operated in maximum service."

   Spare ratio is defined as the number of spare vehicles divided by the vehicles required for annual maximum service. Spare ratio is usually expressed as a percentage, e.g., 100 vehicles required and 20 spare vehicles is a 20 percent spare ratio.

   For each grant application to acquire buses, a grant applicant must address the subjects of current spare ratio, the spare ratio anticipated at the time the new vehicles are introduced into service, disposition of vehicles to be replaced, and the applicant's conformance with the FTA spare ratio guideline. An applicant is required to notify FTA if the spare ratio computation on which the grant application is based is significantly altered prior to the grant award. "FLEET" and "FLEET REPLACEMENT" examples in Chapter IX provide assistance in addressing spare ratio for a grant applicant requesting funds to purchase buses.

6. Contingency Fleet. Buses may be placed in an inactive contingency fleet --stockpiled -- in preparation for emergencies. No bus may be stockpiled before that vehicle has reached the end of its minimum normal service life. Buses held in a contingency fleet must be properly stored, maintained, and documented in a contingency plan, updated as necessary, to support the continuation of a contingency fleet. A contingency plan is not an application requirement, although FTA may request information about the contingency fleet during application review. Contingency plans are subject to review during triennial reviews required for the Urbanized Area Formula Program. (See chapter VI, paragraph 4a for information about triennial reviews.) Any rolling stock not supported by a contingency plan will be considered part of the active fleet. Since vehicles in the contingency fleet are not part of the active fleet, they do not count in the calculation of spare ratio.
2. Requirements Related to Purchase of New Buses.
1. Fleet and Service Expansion. Grant applicants seeking assistance to undertake fleet and service expansion should describe new markets they intend to serve. Vehicle needs, fleet size, projected ridership, operating costs, revenues, and spare ratio should be addressed. A fleet management plan in which future needs, projected ridership, and spare ratio are discussed must be available upon request by FTA. The source of some of this information may be documentation developed during the metropolitan and statewide planning processes, in which case summary information and precise reference to the earlier material will be acceptable.

   Local criteria should be used in the identification of feasible opportunities for route extensions and new routes. These criteria are often based on demographic measures and are used to identify geographic locations that have transit potential. Care should be taken to explore all areas within the region. Areas that are currently served by transit should also be considered, since they may have potential for different types of service.

   Candidate areas should be subjected to a more detailed analysis. Included in that analysis should be some established service design standards (for example, a minimum of 60-minute headways for all routes, or a 12-hour service day) which suggest the type and level of service that should be provided. Depending upon the degree of expansion, the grant applicant may wish to make available a map indicating the fleet and service expansion locations. Representative fleet status and fleet replacement exhibits that may assist the grant applicant in addressing expansion appear in Chapter IX.

2. Eligibility of Components for Funding. Normally, vehicle components are considered routine purchases and should be acquired using funds under the Urbanized Area Formula Program. Where it is cost-effective to the grant applicant, and the grant applicant can so demonstrate, a reasonable but limited number of spares of major components may be purchased along with the vehicles under the capital program. This policy applies when vehicles are being procured for new transit systems, or for extensions and expansions of existing systems and operations so that the vehicle fleet size is greater than it previously was. It may also be applied to the purchase of replacement vehicles if cost-effectiveness is shown.
3. Pre-Award and Post-Delivery Review of Buses. FTA requires that grantees purchasing revenue passenger rolling stock undertake reviews of the rolling stock before award of the bid, during manufacture, and following vehicle delivery. Grant applicants seeking to acquire rolling stock must certify that they will comply with Pre-Award and Post-Delivery Review requirements. The certification language appears as Category V in Appendix C.

   The requirement to undertake the pre-award and post-delivery reviews arises from 49 U.S.C. Section 5323(m) and is specified in FTA regulations at 49 C.F.R. Part 663. The reviews are intended to improve compliance with Buy America requirements, the grantee's bid specifications, and federal motor vehicle safety standards. FTA has tried to carry out the intent of the law in a way that builds on current practices by many grantees and that improves the monitoring of compliance in the least burdensome manner. Reviews may be conducted by the grantee's staff or by a contractor for the grantee. The regulations require a resident inspector who is not an agent or an employee of the manufacturer to review specification compliance for the grantee at the manufacturing site, unless the procurement is for 10 or fewer buses or for an unlimited number of unmodified vans. The grantee must keep on file, and make available to FTA upon request, written reports resulting from the reviews.

   When a state undertakes a consolidated state procurement on behalf of several subrecipients of FTA funds, the requirement for a resident inspector at the manufacturing site depends upon the number of buses in a subrecipient's order. That is, for example, although a state may order 30 vehicles, if no subrecipient expects to receive more than 10 of the vehicles, the state is not required to place an inspector on site. if more than 10 vehicles are ordered for a subrecipient, an on-site inspector is required, and may be provided by either the state or the subrecipient. in addition, if the on-site inspector is used on one subrecipient's order, then this meets the on-site inspection requirement for the state procurement even though there are other subrecipient orders of more than 10 vehicles.

   In carrying out the reviews, it may be useful to obtain a copy of the manual, "Pre-Award and Post-Delivery Reviews for Bus Vehicles," from the FTA Regional Offices (listed in Chapter X). Also, for buses that have been tested at the Altoona Bus Testing Center, it may be useful to obtain a copy of the test report. That address is provided in the discussion on bus testing below.

4. Bus Testing. Any new model bus, as well as models with significant changes, must be tested at the FTA-sponsored test facility in Altoona, Pennsylvania, before Federal funds may be expended to purchase them. This bus testing requirement applies to modified vans used in transit service as well as buses. The requirement applies also to new bus and van models using alternative fuels such as methanol, ethanol, and compressed natural gas.

   FTA does not require a vehicle manufacturer to test its model before bidding. However, grant applicants acquiring any new bus model or any bus model with a major change in configuration or components must certify that the model will have been tested and the grant applicant will have received a copy of the test report prepared on the bus model before the final acceptance of the first vehicle. Category VI in Appendix C presents standard language for the certification.

   FTA regulations, "Bus Testing," define a new model bus as one not used in mass transportation service in the United States before October 1, 1988, or one used in such service but which, after September 30, 1988, is being produced with a major change in configuration or components. A "major change in configuration" is defined as a change which may have a significant impact on vehicle handling and stability or structural integrity. A significant impact is an effect that could result in an unsafe vehicle characteristic, such as a dangerous operating condition or failure of a structural element. A "major change in components" is defined as a change in one or more of the vehicle's major components such as the engine, transmission, suspension, axle, or steering.

   Partial testing is allowed for vehicle models that previously have been fully tested but are being produced with significant changes. Only those tests that affect specific components or parts of the vehicle and that may produce significantly different data from previous tests must be performed.

   Vehicles are tested for maintainability, reliability, safety, performance, structural integrity, fuel economy, and noise. FTA and the manufacturer together pay the bus-testing fees.

   Bus testing is not required for unmodified mass-produced vans. Unmodified mass-produced vans are vehicles manufactured as complete, fully assembled vehicles as provided by the original equipment manufacturer (OEM). This category includes vans with raised roofs, or wheelchair lifts, or ramps that are installed by the OEM or by someone other than the OEM, provided that the installation of these components is completed in strict conformance with the OEM modification guidelines.

   Reports on new model buses or buses with significant changes can be obtained from the Altoona Bus Testing Center, 6th Avenue and 45th Street, Altoona, Pennsylvania, 16602. The telephone number is (814) 949-7944.

5. Buy America. Discussed in Chapter VI because it is a requirement common to all FTA grantees, the Buy America provision nevertheless is called to the attention of grant applicants applying for a grant for buses or related acquisitions. See Chapter VI, paragraph 15, "Buy America."
3. Requirements Related to Buses in Service.
1. Commercial Driver's License. All drivers of vehicles designed to transport more than 15 people (including the driver) must have a commercial driver's license. Mechanics who drive the vehicles also must have a commercial driver's license. The requirement derives from FHWA regulations, "Commercial Driver's License Standards; Requirements and Penalties" putting into effect various commercial motor vehicle safety acts.
2. Charter Operations. Charter service provided by federally assisted transit operators is limited by 49 U.S.C. § 5323(d). These limitations are specified in FTA regulations, "Charter Service," 49 C.F.R. Part 604. Each grant applicant for FTA bus category assistance is required to enter into an agreement with FTA that the grant applicant will not engage in charter service unless permitted by FTA charter service regulations. That agreement is included in FTA's annual certifications and assurances. Category VII in Appendix C provides the language of the charter bus agreement.

   FTA's charter service regulations prohibit FTA recipients from providing any charter service using FTA-funded equipment or facilities if there is at least one private charter operator willing and able to provide the charter service that the FTA recipient proposes to provide. The charter service regulations apply to bus or van service provided by direct recipients, subrecipients, or third party contractors that provide bus or van service financed with FTA funds. Before a transit operator may provide charter service using bus or van equipment or facilities financed by FTA, the operator must publish a notice at least annually and determine whether there are any private operators that do not receive FTA assistance willing and able to provide the service. A state either may conduct this process for itself and its subrecipients or may delegate these public notice responsibilities to its subrecipients, as long as adequate public notice is given. In addition, a state or a direct recipient of FTA funds that intends to make FTA funds available to another transit operator must obtain and retain in its records a certification of compliance with the charter service regulations from that operator.

   The charter service regulations provide eight exceptions to the general prohibition on providing charter service. One exception permits FTA recipients in nonurbanized areas to petition FTA for an exception if the charter service that would be provided by willing and able private charter operators would result in a hardship to the customer because the available operators impose minimum trip durations pursuant to a state regulation and the desired trip length is shorter than the mandatory trip length, or because the private charter operator is located too far from the origin of charter service. The charter service regulations specify the process for requesting an exception; if granted, an exception is effective for no more than 12 months and sometimes may be restricted to the particular trip.

   In certain circumstances transit service may appear to be charter service. For example, service provided under contract to a social service agency will generally be transit service, not charter service, if the FTA recipient controls the service, the service is open-door, and the FTA recipient is able to secure service on the vehicle for its passengers, in addition to passengers who are clients of the social service agency. Guidance on distinguishing prohibited charter service from permissible service may be found in the preamble to the original charter service regulation; the FTA notice setting forth charter service questions and answers; and the preamble to the amendment to the charter service regulations. The latest guidance supersedes earlier conflicting guidance.

3. School Bus Operations. School bus service that may be provided by a federally funded transit operator is limited by 49 U.S.C. § 5323(f). These limitations, as well as four exemptions to these limitations, are specified in FTA regulations, "School Bus Operations."

   Each grant applicant for FTA bus category assistance is required to enter into an agreement with FTA that the grant applicant will not engage in school bus operations exclusively for the transportation of students and school personnel, in competition with private school bus operators, in accordance with Federal regulations. That agreement is included in FTA's annual certifications and assurances. Category VIII in Appendix C provides language for the school bus agreement.

   The school bus prohibition does not apply to a category of service FTA has designated "tripper service." Under FTA school bus regulations, tripper service means regularly scheduled transit service that is open to the public and that is designed or modified to accommodate the needs of school students and personnel, using various fare collection and subsidy systems. Buses used in tripper service must be clearly marked as open to the public and may stop only at regular service stops. All routes of the tripper buses must be within the operator's regular route service as shown in the operator's published route schedules.

4. Requirements Related to Accessory and Miscellaneous Equipment. This category includes such items as mobile radio units, bus stop signs, supervisory vehicles, fareboxes, computers, and shop and garage equipment. The rationale or need for requesting them should be made apparent in the grant application.

9. REQUIREMENTS RELATED TO BUS FACILITIES.

1. General Philosophy. FTA assists in building two categories of bus facilities:
1. facilities that support transit operations, such as maintenance garages and administrative buildings, and
2. facilities that provide passenger amenities and extend into the urban environment, such as bus terminals, stations, shelters, and park-and-ride lots.

FTA supports projects that are transit-related; an applicant will need to justify costs that are only indirectly related to transit. FTA participates in those portions of a project most physically and functionally connected to transit. Generally speaking, FTA does not participate in costs outside the "transit footprint" of a development project. (See Appendix B for amplification concerning joint development projects.)

With regard to intermodal facilities, FTA will participate on a pro rata basis, based on the public transit use or portion of the project. FTA assistance for parking is generally limited to parking for transit passengers or ride- sharing. FTA funds may not be used to support parking for shoppers or sports events unrelated to transit usage. To ensure that Federal funds appropriated for transit purposes are used as Congress intended, FTA may require a grantee to reserve FTA-assisted parking areas for transit users. Incidental use of parking areas, however, may be acceptable; an example of acceptable incidental use would be weekend use by shoppers of a parking area normally restricted for transit users during the week.

2. Examples. FTA's approach to the review of bus-related transit facility projects is reflected in the following examples:
1. If a project is designed to improve the mixed land use and pedestrian access in the immediate vicinity of a transit bus station, the project may be eligible for Capital Program funding. The grant applicant should explain how the project helps to maintain or increase transit use. Transit use may result from maintaining the viability of the area immediately around the station for businesses and residences, or may result from increasing the mix of activities so that automobile use is less necessary and walk trips are feasible for more activities. Examples of such projects are day care facilities, retail businesses, and banking outlets.
2. If a grant applicant plans to build a facility in conjunction with an intercity bus company, a taxi operation, or with other organizations within the public sector, the grant applicant is expected to apportion the costs for the project among those transit-related portions of the project and those that are not transit-related.
3. If a grant applicant should desire to build an exclusive busway on an urban street, the grant application must clearly separate project costs related to transit from project costs unrelated to transit.
4. Eligible costs do not include construction of commercial revenue- producing facilities, whether the facilities would be publicly or privately owned; nor do eligible costs include portions of public or private facilities not related to transit.
5. While FTA permits a grantee to lease portions of an FTA-funded facility to others, FTA expects the grantee to limit that leasing to insignificant amounts of space or to space shared with the lessee. Acceptable examples of leasing include leasing part of a bus facility's lobby for use as a small concession stand, or as an Amtrak ticketing area. In addition, if a grantee is unready to use a portion of its facility, the grantee may lease that portion to another concern for a temporary period until the grantee is ready to use the leased portion.
3. Facility Size. FTA's general policy is to provide assistance for facilities that are adequate for the grant applicant's present needs and that will meet in a realistic way needs of the future. Thus, for a transit agency that at the present time operates 20 vehicles, a request for a bus maintenance garage that will accommodate 20 vehicles and have space for a 10 to 25 percent growth would be considered an acceptable grant request. For the same transit agency, a grant request for a garage for 40 vehicles would not be acceptable, unless the transit agency was absolutely committed to expanding its fleet to 40 vehicles. However, the purchase of enough land for the future expansion of the fleet and the garage may be justifiable.
4. Project Staging. When applying for a grant to build a facility, a grant applicant must be able to fully describe the project and estimate the cost of the facility. Often the best method for proceeding is first to request funds for facility design and engineering and, where allowable under FTA's environmental requirements, for acquisition of real estate, and later to apply for a grant amendment for construction funds when the cost of construction can be accurately estimated.
5. Planning Justifications. There must be a planning basis for every project or for every group of projects. Planning studies at varying levels of detail should be undertaken in support of projects to acquire, install, or construct major transit facilities. In the grant application, a grant applicant may choose to cite in reference and summarize pertinent parts of documents in which results of project studies were reported (for example, transportation plans, unified planning work programs, and management systems). FTA may request copies of studies or summaries of study results upon reviewing a grant application. The paragraphs that follow provide guidance.
1. Passenger Amenities.
1. Passenger Shelters--Passenger shelters proposed at load and transfer points, park-and-ride stations, employment concentrations, and housing concentrations for the elderly and persons with disabilities are eligible for FTA assistance. A program for bus shelters should be developed for the existing and proposed network based on the operator's shelter criteria, and, in the case of significant increases, should be described in the grant application. A map indicating the transit network and shelter location should be developed and be available.
2. Transfer Facility or Transportation Center--The basis for a new transfer facility or transportation center should be documented in a planning study. Elements would include a determination of transit demand and other use, an evaluation of existing transfer facilities or sites to satisfy existing and future transit needs, evaluation and selection of sites if a new facility is warranted, preliminary concept design and cost estimate of the transit transfer facility, development of a staging and financing plan, and environmental documentation for the new facility.
3. Park-and-ride Facilities--The basis for a new park-and-ride lot should be documented in a planning study. Generally, activities would include an evaluation of demand and service needs, evaluation of sites to satisfy existing and future transit needs, preliminary concept design of the park-and-ride lots, development of a staging and financing plan, and environmental documentation for the new facility.
2. Maintenance and Administrative Facilities. The basis for new maintenance and administrative facilities or major expansions or renovations of existing facilities should be documented in a planning study. Activities would include an evaluation of the condition and adequacy of the existing facility, development of site evaluation criteria, identification and evaluation of alternative sites based upon site evaluation and design requirements, final site selection and preliminary concept building design, environmental documentation, and the development of a staging and financing plan.

10. EXPECTED TIMEFRAME FOR A BUS FACILITIES PROJECT. We offer the following timeline for an FTA-assisted bus facilities project, after discussions with several FTA Regional Offices. If one assumes, for the example, that the project is to construct a bus maintenance facility and that a preferred site has been selected by the grant applicant, then the following timeline that FTA has observed may be helpful:

EXHIBIT III-1

Some factors that might expedite or delay the project include availability of local share, environmental requirements, site selection (sometimes a major delay), design review process, various construction permits, construction problems, labor relations, and local politics.

Grant applicants applying to FTA for financial assistance for any one of these phases should also include in their calculations the FTA grant application review period.

Chapter IV: Fixed Guideway Modernization

1. INTRODUCTION AND BACKGROUND. Chapter IV discusses those aspects of the Capital Program that pertain specifically to fixed guideway modernization and identifies the application requirements particular to fixed guideway modernization projects. The grant applicant is directed also to Chapter VI, in which are identified the requirements common to all Capital Program applications. Funding for fixed guideway modernization is allocated by Congress in 49 U.S.C. §5309(m)(1)(A) and apportioned in 49 U.S.C. § 5337.

1. Definition of Fixed Guideway. "Fixed guideway" refers to any transit service that uses exclusive or controlled rights-of-way or rails, entirely or in part. The term includes heavy rail, commuter rail, light rail, trolleybus, aerial tramway, inclined plane, cable car, automated guideway transit, ferryboats, that portion of motor bus service operated on exclusive or controlled rights-of-way, and high-occupancy-vehicle (HOV) lanes.
2. Apportionments Schedule. FTA publishes the fiscal year's apportionments for fixed guideway modernization every year in the Federal Register, at the same time it publishes the apportionments of urbanized area formula program funds. FTA apportions the urbanized area formula funds within 10 days of the enactment of the annual Department of Transportation Appropriations Act or on October 1, whichever is later.
3. Length of Time Funds are Available. Fixed guideway modernization funds are available to the grantee during the fiscal year in which they are apportioned plus three additional years. Any of the apportioned funds remaining unobligated to a grantee after that period will revert to FTA and will be added to the amount available for apportionment to fixed guideway modernization projects in the next fiscal year.

2. ELIGIBLE PROJECTS. Capital projects to modernize or improve fixed guideway systems are eligible for funding. Projects include, but are not limited to, the purchase and rehabilitation of rolling stock (including railcars, locomotives, work trains, and ferryboats), track, line equipment, and structures, signals and communications, power equipment and substations, passenger stations and terminals, security equipment and systems, maintenance facilities and equipment, operational support equipment (including computer hardware and software), and system extensions. Preventive maintenance, described in chapter I, paragraph 4c(2), is also an eligible cost.
3. ELIGIBLE RECIPIENTS. The Transportation Equity Act for the 21st Century (TEA-21) modified the formula for allocating the fixed guideway modernization funds. The new formula contains seven tiers rather than four. The allocation of funding under the first four tiers has been modified slightly and, through fiscal year 2003, will be based on data used to apportion the funding in fiscal year 1997. Apportionments in the three new tiers will be apportioned based on the latest available route miles and revenue vehicle miles on segments at least seven years old as reported to the National Transit Database, rather than on route miles and revenue vehicle miles on entire systems which are seven years old. Each year, the new fixed guideway modernization formula will allocate funds by seven tiers as follows:

1. Tier 1. The first $497,700,000 will be apportioned to the following urbanized areas: Baltimore $8,372,000; Boston $38,948,000; Chicago/Northwestern Indiana $78,169,000; Cleveland $9,509,500; New Orleans $1,730,588; New York $176,034,461; Northeastern New Jersey $50,604,653; Philadelphia/Southern New Jersey $58,924,764; Pittsburgh $13,662,463; San Francisco $33,989,571; Southwestern Connecticut $27,755,000.
2. Tier 2. The next $70,000,000 will be apportioned as follows: Tier 2A: 50 percent to areas identified in Tier 1; and Tier 2B: 50 percent to other urbanized areas with fixed guideway in operation at least seven years. The apportionments for both Tiers 2A and 2B will be based on the Urbanized Area Formula Program fixed guideway tier formula factors that were used to apportion funds for fixed guideway modernization in fiscal year 1997.
3. Tier 3. The next $5,700,000 will be apportioned to the following urbanized areas as follows: Pittsburgh, 61.76 percent; Cleveland, 10.73 percent; New Orleans, 5.79 percent; the remaining 21.72 percent will be apportioned to areas in Tier 2B on the basis of the fixed guideway tier formula factors used in fiscal year 1997.
4. Tier 4. The next $186,600,000 will be apportioned to all eligible areas on the basis of the fixed guideway tier formula factors used in fiscal year 1997.
5. Tier 5. The next $70,000,000 will be apportioned as follows: 65 percent to the 11 areas specified in Tier I, and 35 percent to all other urbanized areas using the most current Urbanized Area Formula Program fixed guideway tier formula factors. Any segment that is less than seven years old has been deleted from this data base.
6. Tier 6. The next $50,000,000 will be apportioned as follows: 60 percent to the 11 areas specified in Tier I, and 30 percent to the other urbanized areas with fixed guideway system segments in revenue service for at least seven years. Allocations will be based on the latest available route miles and revenue vehicle miles for fixed guideway segments at least seven years old as reported to the National Transit Database.
7. Tier 7. Any remaining amounts will be apportioned as follows: 50 percent to the 11 urbanized areas specified in Tier I, and 50 percent to the other urbanized areas with fixed guideway system segments in revenue service for at least 7 years. Allocations will be based on the latest available route miles and revenue vehicle miles for fixed guideway segments at least seven years old as reported to the National Transit Database.

4. SET-ASIDE FOR PROJECT MANAGEMENT OVERSIGHT. FTA is authorized to set aside 3/4 of 1 percent of the Capital Program funds to contract for the oversight of major capital projects and to conduct safety, procurement, management, and financial compliance reviews and audits. FTA sets aside the funds for these purposes before apportionment of the fixed guideway modernization funds.
5. RELATIONSHIP TO URBANIZED AREA FORMULA FUNDING. Fixed guideway modernization projects may also employ urbanized area formula program funding authorized by 49 U.S.C. § 5307. When a project uses both capital program funding and urbanized area formula program funding, it may be efficient to submit the grant applications at the same time. The grant applicant should discuss the best approach with the FTA Regional Office.
6. REQUIREMENTS OF FIXED GUIDEWAY MODERNIZATION PROJECTS.

1. Inclusion in the TIP and STIP. Just as capital projects in the urbanized area formula program and bus and new start projects in the capital program authorized by 49 U.S.C. § 5309 must be included in an urbanized area's transportation improvement program (TIP) and in the state transportation improvement program (STIP), so must fixed guideway modernization projects be in a TIP approved by the MPO and in a STIP approved by FTA and FHWA. A discussion of the metropolitan and statewide planning process required by 49 U.S.C. §§ 5303 - 5306 appears in Appendix A.
2. Environmental Considerations. Chapter VI, paragraph 7 describes FTA's environmental protection procedures and the related Capital Program application requirements. The discussion here provides supplementary information specific to fixed guideway modernization .

1. Categorical Exclusions. Most projects and activities in support of fixed guideway modernization normally do not involve significant environmental impacts. The joint FHWA/FTA environmental regulations use the term "categorical exclusion" (CE) to describe a project that is categorically excluded from the requirement to prepare an environmental assessment (EA) or an environmental impact statement (EIS). The following fixed guideway modernization projects are normally determined to be CEs:
1. the purchase of vehicles to replace old vehicles;
2. the purchase of vehicles for fleet expansions where maintenance, storage, and use of the new vehicles will be accommodated in existing facilities;
3. rehabilitation of vehicles;
4. alterations to vehicles or facilities to make them accessible for the elderly and persons with disabilities;
5. installation or replacement of bicycle securement devices, racks, bicycle lockers, and other improvements in bicycle access to transit, on vehicles or in facilities;
6. track and railbed maintenance and improvements within the existing right-of-way, including traction power, communications, and signal systems;
7. purchase and installation of operating or maintenance equipment to be located within an existing facility with no significant impacts off-site;
8. installation of fencing, signs, pavement markings, small passenger shelters, and traffic signals where no substantial land acquisition or traffic disruption will occur; and
9. construction of pedestrian and bicycle lanes, paths, and facilities at stations, terminals, or other locations.
2. Other Possible Categorical Exclusions. Even though the following fixed guideway modernization projects involve more construction and greater potential for off-site impacts, these projects may still qualify for CEs:
1. rehabilitation or reconstruction of existing rail and bus buildings and ancillary facilities;
2. bridge rehabilitation, reconstruction, or replacement;
3. construction of park-and-ride facilities associated with existing fixed guideways;
4. construction of grade separation to replace existing at-grade street crossings;
5. modernization of a busway, transitway, or transit mall by resurfacing, restoration, rehabilitation or reconstruction;
6. traffic safety or operational improvement to a busway, transitway, or transit mall.

Experience has shown that many of these construction projects can be built and operated without having significant environmental impacts if they are carefully designed and located. FTA may approve the designation of these projects as CEs if the grant applicant provides documentation clearly demonstrating that no significant adverse environmental effects will result. In some cases, FTA will be able to approve a CE based only on the grant applicant's detailed project description showing that no significant environmental impacts