The California Institute for Federal Policy Research
1608 Rhode Island Ave, NW, Washington, D.C. 20036
voice: 202-546-3700   ransdell@calinst.org   http://www.calinst.org

Transit Provisions in  SAFETEA LU Conference Report - August 2005
for more information, visit http://www.calinst.org/transpo.htm

By a vote of 412 to 8, the House approved the highway conference report after averting a last minute snag over tangential language pertaining to a military base's closure in Montana.

The transit components of the bill are contained in the Public Transportation Act of 2005, which is folded into HR3's conference report. The conference report provides $45.3 billion in transit capital and formula grants over 5-years (FY2005-2009). Some key California related provisions are reported below:

Lake Tahoe Regional MPO
The Conference report retains House and Senate language authorizing the establishment of a Lake Tahoe region Metropolitan Planning Organization (MPO), to be formed by California and Nevada governors in conjunction with local and federal entities. In addition to funds from metropolitan planning sources, conference language authorizes, 1 percent of Title 23, section 202 funds to be allocated for implementing the Lake Tahoe region transportation planning process.

Metropolitan Planning Agencies
Conference language requires the Secretary to review and approve Transportation Improvement Plans (TIPs) every four years, starting in 2007. States are responsible for submitting transportation plans with the cooperation of MPOs that reflect transportation planning, environmental mitigation activities, and budgets. The bill requires the preparation of long range statewide plans consist of a minimum 20 year forecast of the state's intermodal transportation activities. Short term statewide transportation improvement programs (STIPs), are required every four years and cover four year terms in all parts of the state to reflect programming and expenditure priorities. STIPs are also to be drafted in consultation with MPOs and must be consistent with long range plans and state air quality implementation plans if projects identified are located in designated nonattainment air pollution areas.
The conference report assigns 82.72 percent of transportation planning funds for MPOs, and 17.28 percent for state planning and research activities. The bulk of formula apportionments to MPOs (80%) are based on the state's MPO population share, with each state being granted a 0.5 percent minimum guarantee, under HR 3. The conference report directs the states to divvy up these funds through a suballocation formula that takes into account urbanized area populations, implementation of cooperative processes, the input of MPOs, and the approval of the Secretary. The Secretary is granted the discretion to apportion the remaining 20 percent of MPO apportionments to states.
The bill provides $437 million for planning activities over 5 years.

Urbanized Area Formula (UAF) grants
Conferees agreed to provide $18.7 billion in UAF funds to the states. The UAF formula remains intact. California currently receives 17 percent of UAF grants. Under the conference bill, UAF's overall share of core transit formula grants would be reduced from 91.23 percent to 87.4 percent, lower than TEALU's proposed 89.5 percent level, but higher than the Senate's 86.8 percent ceiling.
Through TEA-21's lifetime, UAF grants were budgeted 48 percent of total transit assistance grants ($17.3 billion of $36 billion). Under SAFETEA-LU, UAF shares of the total transit budget would dip to 41.3 percent. This estimate does not take into consideration the establishment of new formula initiatives that will benefit urbanized populations at a higher rate than nonurbanized ones such as New Freedom, high growth/high density, and the Jobs Access and Reverse Commute (JARC) program.

Small Urbanized Area Transitions
The report allows for certain small urbanized areas that have grown larger than 200,000 persons in size after the 2000 census, to use urbanized area formula (UAF) grants for operating expenditures through 2007, although amounts eligible for operating expenses would be phased out in fiscal years (FYs) 2006 and 2007. Current law prohibits the use of UAF grants for operating expenditures in urbanized areas larger than 200,000 persons in size.

Clean Fuels
The report retains and restructures the Clean Fuels grant program that provides funds for the purchase or refitting of zero emission or clean energy buses in carbon monoxide and ozone nonattainment and maintenance areas. The grant existed under prior transportation law as a formula grant, however the conference report appears to have converted it into a discretionary program. HR 3 provides $238 million for the Clean Fuels program.

Capital Investment Grants
Conferees established a separate designation for New Starts capital projects costing more than $75 million ("major" New Starts) in federal funds and less than $250 million in total obligations. Major projects that have received a medium, medium high or high evaluation from FTA and are authorized for final design and construction qualify for federal commitments outlined in full funding grant agreement (FFGA) documents, under HR 3. Direct and indirect costs weighed against project benefits and other criteria must be considered, as well as sufficient local financing sources, before FTA ratings may be assigned. Dedicated right of way bus corridors qualify as New Starts projects under the conference report. Conference language exempts the San Francisco Muni 3rd Street and the Santa Clara VTA Silicon Valley Rapid Transit Corridor projects from requiring a medium rating in their cost-effectiveness rating to qualify for federal funds.
Small New Starts project sponsors are required to enter into construction grant agreements rather than FFGAs, and may do so upon receiving a medium, medium high or high evaluation rating. HR 3 supplies a total of $8 billion for New Starts and Major New Starts projects.
The report provides $1.44 billion for New Starts projects in 2005, $1.2 billion for the Fixed Guideway Modernization formula program, and $670 million for bus and bus related equipment and facilities expenses. Of Fixed Guideway Modernization grants, $10.4 million is set aside for Alaska and Hawaii ferry expenses. A bus set aside of $10 million in FYs 2006-2009 will provide support for other ferry systems, of which the San Francisco Water Transit Authority will receive $2.5 million annually. Conference language requires a minimum 5.5 percent of bus funds be directed to non-urbanized areas.

Elderly and Persons with Disabilities Grants
California currently receives about 11 percent of EPD grants. The conference report gives the Secretary the authority to establish a new formula for apportioning grants to assist the elderly and persons with disabilities with their transportation needs, so long as it considers the prevalence of target populations. Under the conference agreement, EPD funds will grow to $584 million, over 5 years.

New Freedom Program
Conferees opted to incorporate a President Bush plan by establishing a $340 million New Freedom Initiative, a separate program that provides services to persons with disabilities beyond the Americans with Disabilities Act of 1990. The New Freedom formula apportions funds to a state using disabled persons population counts. The largest portion of funds (80%) that are apportioned by the formula are based on disabled populations within the state's urbanized areas, while the remaining 20 percent are targeted to non-urbanized disabled populations.

Non-Urbanized Area Formula (NAF) grants
The formula for this program currently apportions funds to states based on their national share of the population living in non-urbanized areas. California's rural population lies at about 4.3 percent. Both House and Senate transit proposals promised to hike NAF spending considerably. The conference measure increases NAF's share of the transit core formula split from 6.37 percent under prior law to 9.15 percent and almost doubles NAF grants from $239 million in FY 2003 to $465 million in FY 2009. The NAF share of the overall transit budget would grow from 3.3 percent under TEA-21 to 4.3 percent under SAFETEA-LU.
Starting in FY2006, Indian tribes will be granted a set aside from NAF. The Indian tribe takedown starts at $8 million and will grow to $15 million by FY2009. The conference report retains House language that would apportion 20 percent of remaining NAF funds on the basis of a state's non-urban land mass. This is a wash for California since the state's non-urban land area matches its share of non urban population.

Jobs Access and Reverse Commute (JARC) Program
This program assists eligible low income commuters with their transportation expenses and subsidizes the transportation costs of individuals commuting from urban to suburban areas for work. The conference report retains a House plan that would convert JARC into a formula program. The formula would apportion 80 percent of funds according to the low income (at or below 150% of the poverty line) and welfare population shares of urbanized areas within states, with the remaining 20 percent apportioned using the state's share of same populations residing in non urbanized areas. California has historically received less than 8 percent of JARC funds, however, under the conference report plan, the state's share could jump to over 17 percent of total funds, which amount to $726.5 million over 5 years..

Small Transit Intensive Urbanized Area Program
The conference report accedes to a House proposal that is designed to reward high performing transit intensive small urbanized areas with transit systems that exceed industry averages in 6 measurements. Funds for this program are to be drawn from the UAF account.

Growing States/High Density States Formula Factors
The conference report contains a new program, conceived in the Senate, that is unhelpful to California. The high growth/high density formula program apportions $1.7 billion to states to supplement UAF and NAF grants, half on the basis of projected population growth and half based on population density. California's population growth rate exceeds the nation's, and the state qualifies for 13.5 percent of the high growth segment of funds. California's overall share of program grants is diluted considerably when considering how remaining funds are apportioned under the new proposal. High density language qualifies only select states with population densities of above 370 persons per square mile for funds. California's 270 persons per square mile population density means that the state falls short of qualifying and gains $0 from the high density portion. Many members of California's congressional delegation endorsed a letter objecting to the inclusion of this program in a final bill, since the state would gain less than 7 percent of funds under the formula in its current form.

Click here to return to the California Institute home page.  Or click here to e-mail.