House Releases Economic Recovery Proposal -- $9 Billion Included For Public Transportation -- $1.1 Billion For Intercity Rail -- Transit Operators And Businesses Must Prepare To Spend Funds Quickly

1/16/2009

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January 16, 2009

Yesterday, the Speaker of the House Nancy Pelosi (D-CA) and the U.S. House of Representatives Appropriations Committee released the chamber’s proposal for the long anticipated economic recovery legislation. The bill, entitled the “American Recovery and Reinvestment Bill of 2009,” seeks to create jobs and stimulate the economy by making immediate investments in the nation’s infrastructure and providing a series of tax cuts. Sponsors of the legislation have indicated that the package is the product of negotiations among the Appropriations Committee and several authorizing committees, including the Transportation & Infrastructure Committee, and the incoming Obama Administration. The measure is expected to begin moving in the House as early as Wednesday, January 21, with floor consideration possible by the end of the month. Upon passage in the House, this legislation must be approved by the U.S. Senate before it is cleared for the President’s signature. The economic recovery package includes $550 billion in new spending and $275 billion in tax cuts. The text of the proposed legislation can be found at the following link: http://appropriations.house.gov/pdf/RecoveryBill01-15-09.pdf

The legislation provides $40.1 billion for investments in surface transportation infrastructure, with $30 billion designated for highway spending and $10.1 billion directed to public transportation and intercity passenger rail. The public transportation and intercity passenger rail funds are distributed as follows:

Formula Programs

Transit Capital Assistance Grants: $6 billion is appropriated for the Transit Capital Assistance Program, with $5.4 billion distributed to urbanized areas under the Section 5307 Urbanized Area Formula Program and the remaining $600 million to rural areas under the Rural Area Formula Program (Section 5311).
Fixed Guideway Infrastructure Investment: $2 billion for rail modernization projects, distributed under the Fixed Guideway Modernization formula.

Under both of these programs, the FTA must apportion the funds within 7 days of the enactment of the bill. Grant recipients are required to spend no less than 50 percent of apportioned funds within 120 days of enactment. The remaining 50 percent must be spent within 2 years. These funds have a 100 percent federal share with no local match required.

APTA is in the process of developing estimates for specific amounts that states and urbanized areas can expect should the legislation pass with the amounts provided in this proposal. However, based on the amounts, properties should expect to receive an amount roughly equivalent to 140 percent of their FY 2008 allocation for urbanized and rural area formula grants, and 125 percent of their FY 2008 apportionment for Fixed Guideway Modernization funds.

New Starts Program

Capital Investment Grants: $1 billion is provided for New Starts projects. Funding is available for both New Starts and Small Starts projects. However, the legislation states that priority shall be given to projects that are currently in construction or are able to award contracts based on bids within 120 days of enactment. It is anticipated that these funds primarily will be distributed for projects with existing Full Funding Grant Agreements (FFGAs) with the FTA. No less than 50 percent of the funds must be spent within 120 days of enactment of the legislation. The remaining 50 percent of the funds must be obligated within 2 years. The federal share on New Starts projects funded by recovery funds will be based on federal match requirements contained in existing law, or within existing FFGAs.

Intercity Passenger Rail

Capital Assistance for Intercity Passenger Rail and Amtrak: $1.1 billion is provided for grants for the improvement of passenger rail infrastructure. $300 million is allocated for intercity passenger rail for repair, rehabilitation, upgrade or purchase of railroad assets and infrastructure. Priority must be given for projects that advance high speed rail and projects that can begin within 180 days of enactment. The remaining $800 million is directed to Amtrak for capital improvements.

According to a release by House Appropriations Committee Chairman David Obey (D-WI), the “American Recovery and Reinvestment Bill of 2009” will create and save more than 3 million jobs. In order to ensure high levels of accountability, a Recovery Act Accountability and Transparency Board will be established by this legislation to review how the recovery dollars are spent. Further, existing reporting requirements and other current accountability measures must be met for all projects receiving recovery money. The “American Recovery and Reinvestment Bill of 2009” will now be sent to the Appropriations Committee for a mark-up on Wednesday, January 21, 2009. House leadership plans to pass this legislation on the House floor by late January so that it can be sent to conference with the Senate and ultimately sent to the President prior to the President’s Day recess in mid-February.

More details will be forthcoming. If you have questions, please contact Homer Carlisle of APTA’s Government Affairs Department at (202) 496-4810 or email hcarlisle@apta.com.

TRANSIT INDUSTRY MUST PREPARE FOR RECOVERY FUNDS

In anticipation of passage of the economic recovery package, it is extremely important that all transit agencies and transit related businesses begin immediate preparations to spend funds within the timelines specified. Transportation & Infrastructure Committee Chairman James Oberstar (D-MN) has held several discussions with APTA's leadership to emphasize the importance of successfully expending recovery funds. We urge you to begin the grant application process with the FTA immediately in anticipation of receiving these funds. The bill does not currently waive existing grant requirements and the success with which transit agencies can obligate these funds and create new jobs will influence congressional funding decisions for public transportation in the upcoming authorization period.

All operators also should begin developing a plan immediately with their appropriate state and local governments, Metropolitan Planning Organizations and transit businesses that anticipate the influx of significant funds. The plan should identify projects that can be implemented quickly and actions that can be taken to speed the process prior to the availability of any funding, including coordinating with and seeking approval by transit agency policy boards to move forward with specific projects. Transit agencies should consider creating open-ended contracts (such as Job Order Contracts or Task Order Contracts) that can be used to place orders quickly once funding is made available or publishing necessary Requests for Proposals or Invitations for Bids now with the acknowledgement that the procurement is subject to the availability of economic recovery funds.

APTA is working closely with the Congress and the Department of Transportation to ensure that the funds can be made available to transit operators quickly. APTA is developing a list of recommendations for legislative solutions to expediting the grant approval process. If you have any suggestions for this list, please email them to Paul Dean of APTA's Government Affairs Department at pdean@apta.com.