Peerpool Policy Changes; Revised SFY08 Funding Projections; Infrastructure Recommendations
Peerpool Policy Changes
On January 19th, OPT staff met with assembled transit managers to discuss possible changes to what has become known as the “Peerpool Policy.” That policy has generally required that each group of transit systems, commit at least 20% of their federal formula funding to capital improvements as a condition of being eligible to compete for federal discretionary capital funding made available through the state-wide earmarks. The peerpool terminology referred to the fact that Iowa’s transit systems had been divided into five groups based on how their federal formula funding was received, and that transit systems within each of these groups had been collectively responsible for programming 20% of the groups available federal formula funding to qualifying capital projects in order for any member of the group to access the state-wide funding. Over time, a number of issues had arisen over the administration of this arrangement, from transit systems, from FTA and from OPT staff.
The outcome of the session was to keep the principle that those wishing to access the state-wide discretionary capital funding would need to document that they are committing other available funding to help meet their capital needs, but to significantly change how that will work and to make the process more flexible so that administration burden can be reduced.
Highlights of the new policy are as follows:
The requirement to spend other funds on capital in order to compete for state-wide capital funding will now be apply at the individual transit system level instead of a the peergroup level.
The requirement is that the transit system spends an amount equivalent to 20% of their federal formula funding allocation on qualifying capital projects. The capital project can be funded either with the federal formula funding (5307, 5310, or 5311--plus the required match) or 100% local funding equaling the 20% along with the appropriate match amount, or some combination of the two. The advantage with using local funding may be to reduce the procedural requirements involved in federally funded procurements, as well as the paper work involved. (Capital projects funded under other federal transit programs or under the state’s Public Transit Infrastructure Grant program will not count.)
Qualifying projects will be the same as used under the peerpool process for the past several years. Up to half of the requirement may be met through purchase of spare parts for revenue vehicles that individually exceed ½ of 1% of the average value of the revenue vehicles in the fleet.* All other projects must meet the traditional capital definitions including purchase of vehicles or equipment or construction of facilities, but excluding non-transit costs of intermodal projects as well such recent additions to FTA’s capital definitions as Preventive Maintenance, Associated Capital Maintenance Items, Bus Overhaul, Cost of Contracted Service, and Mobility Management, etc.
Each transit system will need to report their capital spending at the end of each year, using the format specified by OPT. (Basically listing each capital purchase or construction project along with date, vendor name, cost and either the actual federal participation or the amount of federal participation that it would have been eligible if federal funds had been used.) Projects will need to be described sufficiently to allow verification that they qualify.
Because capital spending by an individual transit system may vary significantly from year to year, eligibility to compete for state-wide capital will be based on comparing the total eligible federal participation in qualifying capital projects to the 20% of the system’s federal formula allocations over the prior three years.
In most cases where local funds are being used for capital projects other than purchases of new revenue vehicles or facility construction, the projects would not be considered to be of regional significance and would therefore not be required to be programmed in the approved TIP, unless local areas choose to establish a higher standard..
This policy is effective with the 20% of formula funds from the federal FY07 allocation, which Congress has not yet appropriated. Because of this there will be no automatic set-aside of peerpool funds from the formula allocations to be made to 5307 governor’s apportionment systems for use in FY07/FY08 or from formula funds allocated to small urban and regional systems for FY08. (See revised projections for small urban and regional systems below.)
Calculate the price threshold for parts to qualify as Associated Capital Maintenance Items is fairly simple, using the initial purchase price of each vehicle, the expected useful life and the expected residual value when disposed at the end of that life. Curt Miller has provided an example spreadsheet he has used to calculate this for Sioux City’s transit fleet. Note that the fleet can be segmented for these calculations, so you can treat heavy-duty buses differently from light-duty buses if this works best for you.
Prior Years’ Funds
Since the meeting on the 19th, we’ve been asked if the same flexibility to allow spending of local funds instead of federal formula funds can apply to prior year peerpool funds that a system may either not yet have programmed or obligated into a grant or which are already in a grant but that the system would prefer not to expend on the originally programmed project. We have agreed that this will be allowed for any of the suballocated funds (but not for vehicle replacements awarded based on PTMS points), so long as the transit system signs a specific agreement to spend the equivalent local dollars on qualifying projects. Note that the agreements will specify the amount of funds involved and that expenditures to meet these commitments must be met before anything counts toward the requirements related to the FFY08 funding and beyond. A draft of a Memorandum of Agreement is attached—note that determination of the dollar amounts involved will require communication with OPT staff.
Revised 5311/5310 Estimates for SFY08
As noted above, we have recalculated our estimates of the total federal formula funding that will be allocated to each small urban and regional system for the coming state fiscal year, based on no initial set-aside for peerpool capital projects. Basically each allocation has increased by 25%. As has always been the case with formula funds, these dollars may be used for any eligible operating or capital expense in support of the transit program. Also included with the new allocation estimates, is an identification of the 20% target for capital expenditures in order to access future statewide capital resources per the policy presented above. (Capital expenditures can be either out of the federal formula funds or out of local dollars, but must be at a level so that the potential federal participation would exceed the 20% target amount.)
You will probably want to review your proposed program in your FY08 TIP. Note that locally funded minor capital projects do not need to be programmed in the TIP.
1st Round of Infrastructure Grants Recommended to Commission
On Monday, staff presented a recommended program of projects for the initial year of Public Transit Infrastructure Grants. Coming up with a recommended program was difficult with only $2.2 million available and a little over $5.6 million requested from 11 applications. The decisions were guided based on the criteria established in the administrative rules and on additional input on program priorities received from the advisory committee. The recommendation provides for full funding of three applications and funds specific elements of five other applications. Three applications are recommended to receive no funding. The proposed program of projects will use $2,074,587 of the $2.2 million available. The remaining $125,417 will be rolled forward and programmed along with the next $2.2 million in FY08 funding based on applications to be received May 1. A copy of the PowerPoint presentation to the Commission is attached. The Commission will take action on the recommendation at their March meeting.