1. (a) Purpose. Transportation Code, Chapter 456 requires the commission to allocate, at the beginning of each fiscal biennium, certain appropriated amounts from the public transportation fund. This section sets out the policies, procedures, and requirements for that allocation.

2. (b) Formula allocation. At the beginning of each state fiscal biennium, an amount equal to the amount appropriated from all sources to the commission by the legislature for that biennium for public transportation, other than federal funds and amounts specifically appropriated for coordination, technical support, or other costs of administration, will be allocated to designated recipients. The commission will allocate those funds between small urban and rural providers, with 35% of the funding allocated to small urban providers and 65% of the funding allocated to rural providers.

   1. (1) Urban funds available under this section will be allocated to municipalities that are designated recipients or transit providers in urbanized areas that are not served by an authority and to designated recipients that received state transit funding during the fiscal biennium ending August 31, 1997, that are not served by an authority but are located in urbanized areas that include one or more authorities. Any local governmental entity having the power to operate or maintain a public transportation system, except an authority, may receive formula program funds. The commission will distribute the money in the following manner.

      1. (A) Eighty percent will be awarded giving consideration to population by using the latest census data available from, and as defined by, the U.S. Census Bureau for each urbanized area relative to the sum of all urbanized areas. Any urban provider whose urbanized area population is 200,000 or greater will have the population adjusted to reflect a population level of 199,999.

      2. (B) If the transit district is in good standing with the department and has no deficiencies and no findings of noncompliance, 20% will be awarded under clause (i) or (ii) of this subparagraph as follows.

         1. (i) The commission, using all or a portion of the funds, may award funding to address strategic priorities for the urbanized public transportation program. These amounts are not subject to the transition funding allocation process described in subsection (c) of this section in succeeding fiscal years, and will be awarded on a competitive basis unless they are needed to compensate for funding anomalies arising under this subsection.
         2. (ii) The commission will award the funding by giving equal consideration to local funds per operating expense, vehicle revenue miles per capita, and ridership per capita. Any urban provider whose urbanized area population is 200,000 or greater will have the aforementioned criteria adjusted on a pro rata basis to reflect a population level of 199,999. These criteria may be calculated using the subrecipient's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.

   2. (2) Rural funds available under this section will be allocated in nonurbanized areas. Any eligible recipient may receive formula program funds. Of the money allocated under this paragraph, the commission will distribute the money in the following manner.

      1. (A) Eighty percent will be awarded giving consideration to population weighted at 75% and on land area weighted at 25% by using the latest census data available from, and as defined by, the U.S. Census Bureau for each nonurbanized area relative to the sum of all nonurbanized areas.

      2. (B) If the transit district is in good standing with the department and has no deficiencies and no findings of noncompliance, 20% will be awarded under clause (i) or (ii) of this subparagraph as follows.

         1. (i) The commission, using all or a portion of the funds, may award funding to address strategic priorities for the nonurbanized public transportation program. These amounts are not subject to the transition funding allocation process described in subsection (c) of this section in succeeding fiscal years, and will be awarded on a competitive basis unless they are needed to compensate for funding anomalies arising under this subsection.
         2. (ii) The commission will award the funding by giving equal consideration to local funds per operating expense, operating expenses per mile and operating expense per passenger. These criteria may be calculated using the subrecipient's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.

   3. (3) Funds allocated under this section and any local funds may be used for any transit-related activity except that a designated recipient not included in a transit authority but located in an urbanized area that includes one or more transit authorities may only use funds to provide:

      1. (A) 65% of the local share requirement for federally financed projects for capital improvements;
      2. (B) 50% of the local share requirement for projects for operating expenses and administrative costs;
      3. (C) 50% of the total cost of a public transportation capital improvement, if the designated recipient certifies that federal money is unavailable for the proposed project and the commission finds that the proposed project is vitally important to the development of public transportation in the state; and
      4. (D) 65% of the local share requirement for federally financed planning activities.
3. (c) Transition. Each agency will have five years to transition to full formula allocation and during the five years after the first application of new census data from the United States Census Bureau, the allocations under subsection (b)(1) and (2) of this section will be adjusted to avoid extreme short-term disruptions in the continuity of funding. During this time no award to a transit district under this section will be less than 90% of the award to that transit district for the previous fiscal year, except that fiscal year 2004 will be used as the base year when calculating allocations for fiscal year 2006 allocation of funds, after which succeeding allocations will be based on previous fiscal years. All allocations under subsection (b)(1) and (2) of this section are subject to revision to comply with this standard. If available funding exceeds the allocations allocated in fiscal years 2004 and 2005, additional funding will be awarded by the commission on a pro rata basis, competitively, or a combination of both. Consideration for the award of these additional funds may include, but is not limited to, coordination and technical support activities, compensation for unforeseen funding anomalies, assistance with eliminating waste and ensuring efficiency, maximum coverage in the provision of public transportation services, and reductions in air pollution. These additional awards are not subject to the transition funding allocation process in succeeding fiscal years.
4. (d) Change in service area. If part of a transit district's service area is changed due to declaration by the United States Census Bureau, or if the service area is otherwise altered, the department and the subrecipient shall negotiate an appropriate adjustment in the funding awarded to that subrecipient for that funding year or any subsequent year, as appropriate. This negotiated adjustment is not subject to the minimum and maximum standards set forth in subsection (c) of this section.
5. (e) Unobligated funds. Any money under this section that the designated recipient has not applied for before the November commission meeting in the second year of a state fiscal biennium will be administered by the commission under the discretionary program described in §31.13 of this subchapter.
6. (f) Returned funds. Any money under this section that the designated recipient agrees to return to the department will be administered by the commission under the discretionary program described in §31.13 of this subchapter.
7. (g) Application. To receive funds allocated under this section, a designated recipient must first submit a completed application, in the form prescribed by the department, to the appropriate district. The application must include certification that the proposed public transportation project is consistent with continuing, cooperating, and comprehensive regional transportation planning implemented in accordance with 49 USC §5301 and §1602a. Federal approval of a proposed public transportation project will be accepted as a determination that all federal planning requirements have been met.
8. (h) Project evaluation. In evaluating a project under this section, the department will consider the need for fast, safe, efficient, and economical public transportation and the approval of the FTA, or its successor.

Source Note:The provisions of this §31.11 adopted to be effective November 23, 1989, 14 TexReg 5938; amended to be effective January 10, 1992, 17 TexReg 47; amended to be effective January 13, 1994, 19 TexReg 90; amended to be effective March 22, 1996, 21 TexReg 2096; amended to be effective March 26, 1998, 23 TexReg 3044; amended to be effective February 15, 2001, 26 TexReg 1365; amended to be effective April 17, 2003, 28 TexReg 3080; amended to be effective September 1, 2004, 29 TexReg 6734; amended to be effective June 20, 2005, 30 TexReg 3606.