The passage of the Transportation Equity Act for the 21st Century (TEA-21) in 1998 represents unprecedented opportunity for communities that are seeking to build or expand their transit systems. This opportunity will be realized through significantly increased overall spending on surface transportation, the retention of the ability of communities to "flex" highway dollars for transit projects, the creation of new programs and by program changes that allow local communities to raise capital through the use of innovative financing. Most importantly, Congress established "guaranteed" funding for surface transportation projects, which ensures a minimum funding level each fiscal year until TEA-21 expires on September 30, 2003.
TEA-21 authorized $217 billion in overall surface transportation spending, which represents an increase of 40% over the funding authorized in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). Included in the $217 billion is a total of $36 billion of "guaranteed" monies and $5 billion in "non-guaranteed" monies for transit. The reference to "guaranteed" monies refers to actions taken by Congress to ensure that gasoline tax revenues held in the Highway Trust Fund and the Mass Transit Account would be spent on surface transportation projects, rather than be allowed to accumulate for deficit-reduction purposes. As a result, while Congress could provide less than the "guaranteed" levels in the annual appropriations bill, this provides no help since these monies could be used for no other purpose. To date, Congress has provided the "guaranteed" funding levels in Fiscal Years 1998, 1999, 2000 and 2001.
TEA-21 retains the "flex" provisions of ISTEA, which permits local communities to utilize monies directed by formula to the National Highway System (NHS), the Surface Transportation Program (STP) and the Congestion Mitigation and Air Quality program (CMAQ) for eligible transit purposes. The eligibility for transit projects in each program varies, with CMAQ and STP program funds proving to be the monies most readily flexed by communities since the programs were first established in ISTEA.
A large portion of the STP and CMAQ program monies are directed specifically to the local communities to be allocated by the Metropolitan Planning Organization (MPO) through the short-and long-range Transportation Improvement Program (TIP). The MPOs develop both three- year and 20-year plans that must be amended at least once every two years. The TIPs must be fiscally constrained, which limits transit and highway projects included in the TIP to those that the state and local governments reasonably can fund within the planning period. Highway or transit dollars cannot be committed to a project unless they are included by the MPO into the TIP on an annual basis. The local TIP projects must then be included in the statewide TIP that is also developed on annual basis. Funding flexed for transit projects by the MPOs nationwide reached nearly $1 billion in FY 1999.
Congress also created several new programs that are available for communities seeking transit-related funding. The Transportation Community and System Preservation Pilot Program (TCSP) was established by Congress to improve the efficiency of the transportation system; to reduce the impacts of transportation on the environment; to provide efficient access to jobs, services and centers of trade; and to examine development patterns and identify strategies to encourage private sector development patterns which achieve these goals. The TCSP was intended to be a discretionary grant program that would be authorized at $25 million per year in FY 1999 through FY 2003. However, each Congress has chosen to "earmark" a significant portion of these monies during the annual appropriations process.
A second new program is the Access to Jobs Program, which is intended to increase transportation options for low-income workers and provide access to jobs in the nation's suburban communities. A total of $750 million was authorized over the life of TEA-21 for this program. Five general types of projects are eligible:
- promotion of transit use by workers with non-traditional schedules
- promotion of transit vouchers for welfare recipients and low-income workers
- promotion of the use of employer-provided transportation, such as transit passes
- financing the capital expense and operating costs of equipment, facilities and associated capital maintenance items related to providing access to jobs
- reverse commute projects
Congress also earmarks substantial portions of this program each year through the annual appropriations process.
The most significant changes in the transit program were made in the new starts rail construction program. Projects authorized by Congress grew from eight in 1987, 35 in ISTEA to approximately 200 in TEA-21. The level of interest in building new or expanding existing rail projects is phenomenal. Funding for new starts also grew substantially in TEA-21 and for the balance of the authorization will grow from $1,058.4 million in FY 2001, to $1.136.4 million in FY 2002 to $1,214.4 million in FY 2003. Congress earmarks each dollar spent through this program each year.
Despite this growth, demand for new starts project funding is straining the program. In response, Congress adopted two provisions to manage the program. First, a more stringent process for reviewing projects was established, which requires the Federal Transit Administration (FTA) to recommend a project for advancement from alternatives analysis (AA) to preliminary engineering/environmental impact statement (PE/EIS) work and from PE/EIS to final design and construction. A project must receive a "Recommended" or "Highly Recommended" rating from FTA to advance. A second step was to limit funding for projects in the AA and PE/EIS phases to no more than eight percent of the total available in the new starts program. The balance is left for projects in final design and construction.
Other significant changes include modifications to the "joint development" authority, which now make all transit monies eligible for funding for these projects and by allowing transit properties to retain all lease revenues derived from development on property acquired with federal funds, rather than returning these funds to the federal government. Moreover, these funds can be used for any "mass transportation purpose," which allows the funds to be used for capital projects or associated capital maintenance. This greater flexibility provides another potential revenue source for communities seeking to construct a rail project.
Otherwise, the basic transit program remained very much intact in TEA-21. Congress made no changes in the transit formula programs and only a modest change in the formula for the Rail Modernization program. Nonetheless, overall funding for transit rose to unprecedented levels and the most immediate result of that increased investment has been a ridership increase of 4.5 percent in 1999 resulting in ridership exceeding 9 billion passengers for the first time since the 1960s.
A Congressional earmark refers to actions taken by members of Congress or Senators working with members of the House and Senate Appropriations Committee to secure specific levels of funding for specific projects. The earmarks are then included in either the legislation or the committee report that accompanies the legislation. Earmarks only appear in the bill if there is a specific member of Congress that is advocating on behalf of that project. Thus, the cooperation and support of local member(s) of Congress or Senator(s) is essential to securing an earmark.
Holland & Knight LLP is well-versed in both the Congressional authorization and appropriations processes. We currently represent a number of communities and transit properties seeking earmarks for transit projects through the new starts and bus-related facilities programs and transit-related projects through the TCSP and Access to Jobs programs. Members of the firm have previously served as staff on the Senate Appropriations Committee or on the staff of members of the House Appropriations Committee. We understand the process to secure earmarks and have an excellent track record of success on behalf of our clients in obtaining monies for transit projects.
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