Sub-allocating FTA Section 5307 Funding Among Multiple Recipients in Metropolitan Areas (2014)

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8 (1) planning, engineering, and technical studies; (2) training fellowships for personnel in the mass transportation field; and (3) research on the problems of mass transportation and training of personnel for research and employment in trans- portation systems. Department of Transportation Act of 1966 U.S.DOT was created with the enactment of the Department of Transportation Act of 1966 (DOT Act). The new depart- ment was established to coordinate and effectively manage transportation programs, provide leadership in the resolution of transportation problems, and develop national transporta- tion policies and programs. However, the DOT Act did not clarify the division of responsibility for urban mass transpor- tation between the newly created U.S.DOT and the Depart- ment of Housing and Urban Development (HUD), where mass transportation programs were housed. Consequently, state and local governments that were developing compre- hensive transportation plans had to coordinate with two sep- arate federal agencies, U.S.DOT and HUD. To streamline services and programs, President Johnson transferred most of HUD’s mass transportation capacity to U.S.DOT, effec- tive July 1, 1968. Responsibility for these programs was given to the newly established Urban Mass Transportation Administration. Urban Mass Transportation Assistance Act of 1970 The Urban Mass Transportation Assistance Act of 1970 (UMTAA) authorized the first long-term commitment of federal funds for public mass transportation. UMTAA autho- rized a federal expenditure of $10 billion over a 12-year period “to permit confident and continuing local planning, and greater flexibility in program administration.” UMTAA authorized the Secretary of Transportation to make direct grants or loans to assist states and local public bodies and agencies in financing the acquisition, construction, recon- struction, and improvement of facilities and equipment for use in public mass transportation service in urban areas. UMTAA authorized $3.1 billion for grants to state and local governments to meet up to two-thirds of the net cost of construction and improvement of mass transportation sys- tems and authorized aggregate totals of $80 million in FY 1971, $310 million in FY 1972, $710 million in FY 1973, $1.26 billion in FY 1974, $1.86 billion in FY 1975, and Literature and documentation found on the FTA website and from its regional offices, along with data from the U.S. Census and APTA, provided the most useful information for this study effort and were the primary sources used for this report. The literature searches in TRID did not provide much information. FTA URBANIZED AREA (SECTION 5307) FORMULA HISTORY Since its inception in 1974 as Section 5 of the Urban Mass Transportation Act of 1964 as amended the FTA Section 5307 Formula Program has grown in size and complexity. The fol- lowing is a summary of the Federal Act activities leading up to and including MAP-21. Over the years, the Section 5307 Formula Program has been used primarily to finance the acquisition of transit facilities and equipment and, in some cases, the funds are used to provide operating assistance to public transportation operators. Urban Mass Transportation Act of 1964 The Urban Mass Transportation Act of 1964 (The Act) was signed into law by President Lyndon Johnson as part of the Great Society programs. The Act authorized $375 million in capital assistance to be provided for the three-year period, fiscal year (FY) 1965 through FY 1967, in support of public transportation activities, and $50 million was authorized to extend the low-interest loan program created in the Housing Act of 1961. The Act authorized grants and loans to assist states and local public bodies and agencies in financing public mass transportation capital projects that specifically included “the acquisition, construction, reconstruction, and improve- ment of facilities and equipment for use in mass transporta- tion service in urban areas and in coordinating such service with highway and other transportation in such areas.” Urban Mass Transportation Act of 1966 Congress passed the Urban Mass Transportation Act of 1966, which authorized annual appropriations of $150 mil- lion through 1969 for matching grants and loans to enable states and localities to construct and improve public mass transportation facilities. The bill also expanded the Urban Mass Transportation Act of 1964 by authorizing use of two- thirds of the federal matching share for three new purposes: chapter two FTA SECTION 5307 FORMULA PROGRAM AND GROWTH OF UZAS

9 $3.1 billion thereafter. UMTAA also authorized the Secre- tary to make grants and loans for public mass transportation services specifically in order to meet the special needs of elderly and persons with disabilities. National Mass Transportation Assistance Act of 1974 The National Mass Transportation Assistance Act of 1974 authorized $11.8 billion over a six-year period for capital and operating costs. The passage of the Act was a milestone in public transportation history because it was the first time that federal funds had been authorized for public mass trans- portation operating subsidies. It authorized $4 billion to be allocated to UZAs by a formula based on population and population density. The funds could be used for either capital projects or operating assistance with a 50% federal matching share. It also authorized $7.8 billion for capital assistance at the discretion of the Secretary of Transportation. Up to $500 million of the capital fund was reserved for rural areas. Funds used for capital projects were to have an 80% federal matching share. It also added a provision requiring public transportation systems to charge elderly and persons with disabilities half-fares during off-peak hours. Federal Public Transportation Assistance Act of 1978 The Federal Public Transportation Assistance Act of 1978, Title III of the Surface Transportation Assistance Act, was the first federal act to combine highways, public transportation, and highway safety authorization into one piece of legisla- tion. The Act authorized $15.6 billion in aid for mass trans- portation over five years and established both discretionary and formula grant programs. It authorized $7.48 billion for discretionary grants. The legislation required that at least $350 million of the total program funds be spent on recon- struction and improvement of existing public transporta- tion systems. It also expanded the formula grant program established in the National Mass Transportation Act of 1974 by increasing authorizations under the existing formula. In addition, the Act created a “second tier” formula program for the nation’s largest cities, where funds for construction and operating assistance were to be split so that 85% went to UZAs of more than 750,000 in population and the remaining 15% to smaller areas. It also authorized a formula program for the purchase of buses and bus facilities using the exist- ing formula for two years, and for commuter rail and fixed guideway systems using three factors—fixed guideway route miles, commuter rail route miles, and commuter rail train miles. In addition, the Act created a small formula grant pro- gram for non-UZAs for capital and operating assistance. It also authorized local officials, through MPOs, to carry out the urbanized planning process. It further established fund- ing for Transportation Research Centers, Intercity Bus, and a Buy America provision. Federal Public Transportation Act of 1982 President Ronald Reagan attempted to eliminate operating subsidies because of the rapid payout of operating funds as opposed to funds for capital projects that are spent at a slower pace. The Federal Public Transportation Act of 1982 included funds for operating assistance, although the sub- sidies were capped at 80% of the previous apportionment, depending on the size of the population served by the proj- ect. In addition, the Act only authorized operating assis- tance to come from the General Fund, not the Mass Transit Account of the Highway Trust Fund. The Act authorized $16.5 billion for mass transportation through 1986. To fund repairs to deteriorating roads and transportation systems, the gasoline tax was increased for the first time since 1959. The five cent tax was expected to raise revenues of $5.5 bil- lion annually. The most notable provision of the Act for public transit was that one cent of the increased gas tax was earmarked for mass transportation; the first substantial diversion of the Highway Trust Fund for public transporta- tion purposes. Although public transportation was provided with a new and dedicated source of funds, this Act cut fed- eral public transportation aid by 20%. It altered the grant program allocation formula to include population data as well as public transportation service data such as bus reve- nue vehicle-miles, bus passenger-miles, bus operating costs, fixed guideway vehicle revenue-miles, and fixed guideway route miles. Federal Mass Transportation Act of 1987 The Federal Mass Transportation Act of 1987, Title III of the Surface Transportation and Uniform Relocation Assis- tance Act of 1987 (FMTA), authorized $17.8 billion for federal mass transportation assistance for FY 1987 through FY 1991. The Act codified a process for evaluating projects seeking funds for new or expanded rail systems, or “new starts.” It also created a new Rural Transit Assistance Pro- gram to provide funds and support services for non-UZAs. The Act authorized discretionary spending of $6.25 bil- lion through Fiscal Year 1991, funded from the Mass Tran- sit Account of the Highway Trust Fund. Of that amount, 40% was allocated for “new starts” and extensions, 40% for rail modernization projects, 10% for bus needs, and 10% for allocation at the discretion of the Secretary of Transportation. Federal Transit Act Amendments of 1991 The Federal Transit Act Amendments of 1991, Title II of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), authorized $31.5 billion for mass transportation over six years, resulting in the largest funding increase since the federal government first created funding programs for public transportation in 1964. Of this amount, $18.2 billion

10 The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) authorized $53.6 billion in public transportation funding for FY 2005 through FY 2009 and was a 46% increase over TEA-21 funding levels. It also replaced the term “mass transporta- tion” with “public transportation.” SAFETEA-LU created two new discretionary programs: Alternative Transporta- tion in Parks and Public Lands and the Alternative Analysis Program. SAFETEA-LU significantly increased funding for the rural transit formula program. It also created a new formula tier that was based on land area to address the needs of low-density states. Native-American tribes were added as eligible recipients and a portion of funding was set aside each year for these tribes. The Clean Fuels Grant Pro- gram switched from a formula program to a discretionary program. SAFETEA-LU authorized $22.7 billion for Capi- tal Investment projects, which include New Starts, Fixed Guideway Modernization, and the Bus and Bus Facility program. SAFETEA-LU authorized $28.4 billion for formula programs and created the New Freedom Program for which it authorized $339 million over six years. This pro- gram provided formula funding for new transportation ser- vices and public transportation alternatives beyond those required by the Americans with Disabilities Act (ADA) to assist persons with disabilities. SAFETEA-LU switched the Job Access and Reverse Commute (JARC) program from a competitive discretionary grants program to a for- mula program. As shown in Table 2 (adapted from Table 8 of APTA Primer on Transit Funding, FY 2004 through FY 2012), under SAFETEA-LU several factors were used to calculate appor- tionments of FTA Section 5307 funds within UZAs. MAP-21, Moving Ahead for Progress in the 21st Century MAP-21, the Moving Ahead for Progress in the 21st Century Act (P.L. 112-141), was signed into law by President Barack Obama on July 6, 2012. MAP-21 authorized $21.3 billion for public transportation programs for FY 2013 and 2014. MAP-21 added another change to the formula; specifi- cally, that 3.07% of Section 5307 funds available for appor- tionment are allocated on the basis of low-income persons residing in UZAs, with 25% of these funds allocated to areas below 200,000 in population and 75% allocated to areas with 200,000 and more in population. MAP-21 also added a nationwide exemption allowing public transportation opera- tors that operate fewer than 100 buses in peak service to use the formula funds for operating assistance. came from the Mass Transit Account of the Highway Trust Fund, and the remaining $13.3 billion came from the Gen- eral Fund. ISTEA also changed the name of the Urban Mass Transportation Administration to FTA to reflect the broader mandate of the agency. ISTEA authorized $12.4 billion over six years for discretionary grants. The funds were divided as follows: 40% for “new starts,” 40% for rail and fixed guideway modernization, and 20% for buses and bus facil- ities. To make funding more predictable, authorizations for rail modernization were allocated by formula rather than on a discretionary basis as in the prior Federal Mass Trans- portation Act of 1987. ISTEA authorized $17.4 billion over six years for formula grant programs; of that amount, $16.2 billion was authorized for capital and operating assis- tance and $941.7 million for rural transit programs, an increase of 2.6%. ISTEA retained federal operating assis- tance for all mass transportation systems and retained the matching ratio for operating assistance of 50% of net operating costs. ISTEA established a Transit Cooperative Research Program, modeled after the National Cooperative Highway Research Program, to conduct problem solving for public transportation operators. MPOs were given a more significant role in the planning process. Each MPO was required to develop and periodically update a long-range plan taking into account project finances, land use, air qual- ity, traffic congestion, and other related factors. MPOs were also required to develop Transportation Improvement Pro- grams that contained a prioritized list of projects. ISTEA permitted the use of certain toll revenue expenditures as a credit toward the non-federal matching share of programs authorized by ISTEA. Federal Transit Act of 1998 The Federal Transit Act of 1998, Title II of the Transporta- tion Equity Act for the 21st Century (TEA-21), increased funding levels by 70% from ISTEA. TEA-21 authorized $41 billion for public transportation programs for FY 1998 through FY 2003, with $29.34 billion coming from the Mass Transit Account of the Highway Trust Fund and $11.65 billion authorized from the General Fund. Two new programs were created, the Clean Fuels Formula Grant program and the Job Access and Reverse Commute (JARC) program. TEA-21 eliminated operating assistance for urban areas with populations of 200,000 and more, but allowed urban formula and fixed guideway funds to be used to support pre- ventive maintenance. TEA-21 authorized $19.97 billion for formula grants, $2 billion for the Clean Fuels Grant Program, $18.03 billion for the Urbanized Area Formula Grant Pro- gram (Section 5307), $24.3 million for the Rural Transporta- tion Accessibility Incentive Program, and $1.18 billion for the formula grant program for other than UZAs for FY 1998 to FY 2003. TEA-21 codified provisions for using toll credits in 23 U.S.C. 120(j).

11 Growth of Section 5307 Funding Authorizations 1986–2014 From 1986 to 2014, FTA Section 5307 annual formula fund- ing authorizations have grown from $1,941.4 million to $4,901.4 million, an increase of more than 250%, as shown in Figure 1. The highest authorized level was in 2009, the result of the American Recovery and Reinvestment Act (ARRA). GROWTH OF URBANIZED AREAS RECEIVING FTA SECTION 5307 FUNDS According to the 2010 U.S. Census there are 497 UZAs in the United States. Currently, there are 179 UZAs that are apportioned Section 5307 funds, of which 137 are UZAs that have a population between 200,000 and 1 million, and 42 are UZAs that have a population of more than 1 million. Over the years, the number of UZAs that have a population of 200,000 and more has grown by 70%. In 1970, as shown in Table 3, there were a total of 105 UZAs that had popula- tions of 200,000 and more, of which 80 were UZAs with populations between 200,000 and 1 million, and 25 with populations of more than 1 million. By 2000, there were a total of 152 UZAs with a population of 200,000 or more, of which 114 were UZAs that had populations between 200,000 and 1 million, and 38 that had a population of more than 1 million. As shown in Figure 2, from 1970 to 2010 the number of UZAs that had a population of between 200,000 and 1 million increased by 71%, with a steady growth of five to six UZAs per decade between 1970 and 1990, and larger jumps of 23 UZAs per decade between 1990 and 2010. The number of UZAs that had a population of more than 1 million increased by 68% over the four decades, with a steady growth of four to five UZAs each decade. Between the 2000 and 2010 U.S. Census there was a 43% increase. Figure 3 shows all of the UZAs and urban clusters defined by the 2010 U.S. Bureau of the Census. UZA Category Tiers from Which Population Category Is Funded Factors Used in Calculation Over 1,000,000 in Population (1) 49 USC 5336(c)(1)(A): Bus Basic Funding, UZAs 1,000,000 or more population Population, population density, bus vehicle revenue-miles (4) 49 USC 5336(c)(2): Bus Incentive Funding, UZAs 200,000 or more in population Bus passenger-miles, bus operating expense (5) 49 USC 5336(b)(2)(A): Fixed-Guideway Basic Funding, UZAs 200,000 or more in population Fixed guideway vehicle revenue-miles, fixed guideway route-miles (6) 49 USC 5336(b)(2)(B): Fixed-Guideway Incentive Funding, UZAs 200,000 or more in population Fixed guideway passenger-miles, fixed guideway operating expense (8) 49 USC 5340: Growing States Program, all UZAs Projected future population (9) 49 USC 5340: High Density States Program, all UZAs in eligible states Population, land area, density constant 200,000–1,000,000 in Population (2) 49 USC 5336(c)(1)(B): Bus Basic Funding, UZAs 200,000 to 999,999 population Population, population density, bus vehicle revenue-miles 4) 49 USC 5336(c)(2): Bus Incentive Funding, UZAs 200,000 or more in population Bus passenger-miles, bus operating expense (5) 49 USC 5336(b)(2)(A): Fixed-Guideway Basic Funding, UZAs 200,000 or more in population Fixed guideway vehicle revenue-miles, fixed guideway route-miles (6) 49 USC 5336(b)(2)(B): Fixed-Guideway Incentive Funding, UZAs 200,000 or more in population Fixed guideway passenger-miles, fixed guideway operating expense (8) 49 USC 5340: Growing States Program, all UZAs Projected future population (9) 49 USC 5340: High Density States Program, all UZAs in eligible states Population, land area, density constant TABLE 2 SAFETEA-LU TIERS AND FACTORS USED TO CALCULATE SECTION 5307 APPORTIONMENTS

12 $0.0 $1,000.0 $2,000.0 $3,000.0 $4,000.0 $5,000.0 $6,000.0 $7,000.0 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 AR RA 20 10 20 11 20 12 20 13 20 14 FIGURE 1 Section 5307 funding authorizations 1986–2014 ($millions). Source: APTA Primer on Transit Funding FY 2013 through FY 2014, Table 3(b). UZA Categories by Population Year Percent Change 1990 to 2010 1970 1980 1990 2000 2010 Number of UZAs between 200,000 and 1 Million 80 85 91 114 137 71 Number of UZAs Over 1 Million 25 29 34 38 42 68 Total Number of UZAs 200,000 and More 105 114 125 152 179 70 TABLE 3 UZA GROWTH 1970–2010 0 20 40 60 80 100 120 140 160 180 200 1970 1980 1990 2000 2010 # of UZAs Census Years 200,000 to 1 Million Over 1 million Total over 199,999 FIGURE 2 UZA growth from 1970–2010.

13 FIGURE 3 2010 urbanized areas and urban clusters.