Most Federally-funded transportation projects
require the recipient to apply some of their funds to match the Federal funds.
But during times when your agency’s funds are in short supply,
it may be difficult to find those matching dollars.
Rather than delay worthy projects,
in recent years some agencies have explored flexible alternatives to contribute their share.
Let’s look at some of the alternative sources of funding
that can be used to match Federal funds on a highway transportation project.
We will also look at options to adjust the matching share requirement
on each request for payment.
One allowable method for matching Federal funds
is to use in-kind contributions from qualified third parties.
As an example of how this method might be used on a project,
imagine that you are planning to add an exit ramp on an Interstate freeway
one that will provide access to a new business park.
As part of your matching funds, you use land contributed by an individual.
Such real property contributions—and even services, materials, equipment or facilities
can be counted toward your match contribution provided you give the contribution a fair market value
and diligently follow the conditions set out by the regulations.
When used to promote public-private partnerships,
the regulations allow contributions from individuals, organizations and other local agencies,
who are considered to be a third party to the Federal-aid agreement.
Under most conditions, a sub-grantee is not considered a third party
and cannot donate services, materials, equipment or facilities.
If the conditions are right,
there are a number of additional potential funding sources that can be used as your match.
But be certain to ask the right questions.
For example:
Does your project provide access to a scenic byway?
In some cases, funds from a Federal land use agency, such as the U.S. Forest Service,
may be used as your agency’s match.
Does your project provide access to Indian lands?
If so, funds from the Federal Lands Highway Program may be used.
Has your agency or State DOT funded 100% of the costs to refurbish one of its bridges?
If so, the majority of those costs may be counted as your match.
In addition to recognizing allowable sources of funding,
it’s also important to understand payment options.
The most common is “payment by payment,”
which offers consistent application of federal share of incurred costs
throughout the lifecycle of a project.
But flexible payment schedules, known as tapering, are also available under certain conditions.
This approach allows an agency to claim Federal reimbursement of up to 100 percent of incurred costs
on individual claims as long as the overall matching requirement is met.
Tapering is not available as an automatic option;
but your agency may be considered for it if you can demonstrate that tapering will
allow your project to be finished sooner,
allow you to lower the cost of your project,
provide for additional non-Federal funds to be leveraged for the project,
or accommodate the full utilization of in-kind contributions from third parties.
If your agency is able to maximize its dollars for the matching share of a federal-aid project
by using the alternative sources of funding and tapering options presented here,
you are expected to comply with all Federal requirements when accounting for project funds and costs.