When a local government or reservoir agency is responsible for providing financial assistance for a highway improvement project, the department and the local government or reservoir agency shall enter into an agreement before any work is performed. The agreement will include, but not be limited to, the following provisions of this section.

1. (1) Right of entry. If the local government or reservoir agency is the owner of the project site, it shall permit the department or its authorized representative access to occupy the site to perform all activities required to execute the work.
2. (2) Right of way and/or utility relocation/adjustments. The local government will provide all necessary right of way and utility relocation/adjustments, whether publicly or privately owned, in accordance with §15.55 of this title (relating to Construction Cost Participation). When specified, the reservoir agency will provide all necessary right of way and utility/relocation adjustments, whether publicly or privately owned. Existing utilities will be relocated and/or adjusted with respect to location and type of installation in accordance with the requirements of the department as specified in §21.21 of this title (relating to State Participation in Relocation, Adjustment, and/or Removal) and §21.31 et seq. of this title (relating to Utility Accommodation).

3. (3) Funding arrangement. The agreement will specify the type of funding share arrangement agreed upon by the department and the local government. The funding share arrangement shall include any adjustments required by §15.55 of this title (relating to Construction Cost Participation). The funding arrangement agreed upon by the department and the reservoir agency will be as specified under §15.54(f) of this title (relating to Construction).

   1. (A) Standard. The local government is responsible for all, or a specified percentage as shown in Appendix A of §15.55 of this title (relating to Construction Cost Participation), of the direct costs incurred by the department for preliminary engineering, construction engineering, construction, and right of way as well as the cost for any work included which is ineligible for federal or state participation. When specified, the reservoir agency is responsible for all of the direct costs incurred by the department for preliminary engineering, construction engineering, construction, and right of way as well as the direct cost for any work included which is ineligible for federal or state participation.

   2. (B) Alternate. A fixed price funding arrangement may be used if requested by the local government and approved by the executive director, deputy executive director, or assistant executive director of the department.

      1. (i) Definition. Under this arrangement, a local government is responsible for a firm fixed price which is a lump sum price not subject to adjustment except:

         1. (I) in the event of changed site conditions;
         2. (II) if work requested by the local government is ineligible for federal participation; or
         3. (III) as mutually agreed upon by the department and a local government.

      2. (ii) Conditions. The department may enter into a firm fixed price agreement only:

         1. (I) for projects that include state participation, as shown in Appendix A of §15.55 of this title (relating to Construction Cost Participation);
         2. (II) if incremental payments are not requested; and
         3. (III) if the fixed price is based on the estimated cost for the work for which the funds are received.

      3. (iii) Approval. In approving a request for an alternate funding arrangement, the executive director, deputy executive director, or assistant executive director of the department will consider:

         1. (I) requests by the local government to include work which is ineligible for federal or state participation;
         2. (II) need for expeditious project completion;
         3. (III) type of work proposed and the ability to accurately estimate its cost; and
         4. (IV) any other considerations relating to the benefit of the state, the traveling public, and the operations of the department.
4. (4) Interest. The department will not pay interest on funds provided by the local government or the reservoir agency. Funds provided by the local government or the reservoir agency will be deposited into, and retained in, the state treasury.
5. (5) Amendments. In the case of significantly changed site conditions or other mutually agreed upon changes in the scope of work authorized in the agreement, the department and the local government or reservoir agency will amend the funding agreement, setting forth the reason for the change and establishing the revised participation to be provided by the local government or reservoir agency.

6. (6) Payment provision. The agreement will establish the conditions for payment by the local government or reservoir agency, including, but not limited to, the method of payment and the time of payment.

   1. (A) Standard. Following execution of the agreement, the local government or reservoir agency will pay, as a minimum, its funding share for the estimated cost of preliminary engineering for the project. Prior to the department's scheduled date for contract letting, the local government or reservoir agency will remit to the department an amount equal to the remainder of the local government's or reservoir agency's funding share for the project.

      1. (i) When the standard funding arrangement is used, if it is found that the amount received is insufficient to pay the local government's or reservoir agency's funding share, then the department shall notify the local government or reservoir agency which shall transmit the required amount to the department. After the project is completed the final cost will be determined by the department, based on its standard accounting procedures, and any excess funds paid by the local government or reservoir agency shall be returned.
      2. (ii) When a fixed price funding arrangement is used, the lump sum price is not subject to adjustment except as provided for in paragraph (3)(B) of this section (relating to Agreements).

   2. (B) Alternate. Incremental payments may be made if requested by the local government and approved by the executive director, deputy executive director, or assistant executive director of the department. If it is found that the amount received is insufficient to pay the local government's funding share, then the department shall notify the local government which shall transmit the required amount to the department. After the project is completed, the final cost will be determined by the department based on its standard accounting procedures, and any excess funds paid by the local government shall be returned.

      1. (i) Conditions. The department may approve incremental payments only if:

         1. (I) the incremental payments sought are based on the estimated cost for the work for which the funds are received; and
         2. (II) the local government does not have a delinquent obligation to the department, as defined in §5.10 of this title (relating to Collection of Debts).

      2. (ii) Approval. In approving a request for incremental payments, the executive director, deputy executive director, or assistant executive director of the department will consider:

         1. (I) ability of the local government to pay its funding share prior to the department's scheduled date for contract letting, such ability to be based upon population level, bonded indebtedness, tax base, and tax rate;
         2. (II) past payment performance;
         3. (III) need for expeditious project completion;
         4. (IV) whether the project is located in a local government that consists of all or a portion of an economically disadvantaged county; and
         5. (V) any other considerations relating to the benefit of the state, the traveling public, and the operations of the department.
7. (7) Termination. If the local government or reservoir agency withdraws from the project after the agreement is executed, it shall be responsible for all direct and indirect project costs incurred by the department for the items of work in which the local government or reservoir agency is participating.
8. (8) Responsibilities of the parties. The agreement shall identify the responsibilities of each party, including, but not limited to, preparing or providing construction plans, advertising for bids, awarding a construction contract, and construction supervision. The local government or reservoir agency must acknowledge that while not an agent, servant, nor employee of the state, it is responsible for its own acts and deeds and for those of its agents or employees during the performance of the work authorized in the contract.

Source Note:The provisions of this §15.52 adopted to be effective September 26, 1996, 21 TexReg 8957; amended to be effective September 23, 1997, 22 TexReg 9260; amended to be effective January 1, 1998, 22 TexReg 12090; amended to be effective November 22, 1998, 23 TexReg 11661.