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Section 5: Construction Funding Identification

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Overview

This section discusses activities involved in identifying potential construction funding sources including state, federal, and outside sources. Outside sources could include local governmental entities, other public agencies, and private sources.

This section includes the following tasks. The tasks are listed in approximate chronological order but may be performed concurrently in some cases.

1600. Identify potential design/construction funding

1610. Prepare and execute advance funding agreements

1620. Obtain DEVELOP authority

1630. Obtain CONSTRUCT authority

1640. Place project in Transportation Improvement Program (TIP)

1650. Develop Statewide Transportation Improvement Program (STIP)

1670. Place project in one-year letting schedule

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1600: Identify potential design/construction funding

Description. The Unified Transportation Program (UTP) includes all multimodal projects for which the Texas Transportation Commission has authorized planning, development and construction activities during a ten-year period. Several categories of funds have been established to reflect the transportation programs (see the Transportation Programming and Scheduling Manual) outlined by federal and state legislation and commission policy.

The Commission authorizes projects in the UTP in two major documents - the Statewide Preservation Program (SPP) and the Statewide Mobility Program (SMP). Projects are authorized in the following ways:

  • Individual projects included in certain categories of work. These projects are usually mobility projects that take significant time to develop, such as added capacity and new construction projects, and structures replacement and rehabilitation. These projects are reviewed and re-authorized annually.
  • Activities that reflect the Commission's intentions to address a specific improvement such as rehabilitation or preventive maintenance. The program amounts for a particular program may be allocated to the districts by a formula - with eligible projects developed by the district on an as-needed basis within their allocation or bank balance.
  • Other programs such as safety, transit, or railroad signals. The program amounts are allocated by the appropriate division and approved by the Commission.
  • The Commission may also authorize a project with a project specific minute order. (See 1235: Obtain project specific minute order, if required).

Outside entities, including local governmental entities, other federal or state agencies, or private entities, may be required to participate in project development by providing funding. If the project is located in an economically disadvantaged county, the county may request a reduction in their required participation amount. For more information, refer to the TxDOT Transportation Planning Manual.

If a local government is unable to pay their required participation, they may request a loan from the State Infrastructure Bank (SIB) to finance their participation. For more information, contact the Finance Division.

Pertinent project types. All projects.

Responsible party. Director of Transportation Planning and Development

Sub-tasks.

  • Enter project data into Design and Construction Information System (DCIS) using a 900 series job number. WARNING: A 900 series number means the project is not authorized for project development. After the Commission authorizes the project, TPP assigns a valid CSJ number. Once an advance funding agreement (see 1610: Prepare and execute advance funding agreement) is executed and a copy furnished to TPP, the project will be “opened” for charges to accrue.
  • Check the FIMS project set up to be sure the project data in FIMS is correct.

Authority Requirements.

Resource Material. TxDOT Transportation Programming and Scheduling Manual.

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1610: Prepare and execute advance funding agreements

Description. Advance funding agreements (AFAs) are used when other entities participate in funding project development. Funding may be directed toward preliminary engineering, construction, right of way, utility relocation costs, maintenance or any other project expense. Generally, agreements should only be executed with governmental entities except for certain work with utilities and railroads. TxDOT uses two payment methods: actual cost and fixed price as described in 43 TAC §15.52.

Many local governments have signed the department’s Master Advanced Funding Agreement (MAFA). This agreement contains all the standard clauses found in an AFA. Once a MAFA is signed, a Local Project Advance Funding Agreement (LPAFA) is used. The LPAFA is much shorter than a regular AFA.

NOTE: The term “escrow agreements” is no longer used because “escrow” implies a third party holding funds.

Actual cost AFA. The actual cost advance funding agreement is the most common of the AFAs. The fund amount is determined by a cost estimate. The actual cost AFA specifies the percentage of costs each entity will provide or the amount of money the State will contribute. TxDOT allows for either a single payment or incremental payments. The district must have TxDOT administration approval to use incremental payments. The AFA provides that the local government is responsible for any amount that will exceed the AFA’s estimate. Any overpayment by the outside entity, after all cost and claims are paid, is returned to the entity or funds may be applied by the State to the local government’s contractual obligations to the State under another AFA. If the scope of work, involving the outside entity, changes after the execution of the original AFA, the AFA must be amended.

Fixed price AFA. Funds provided by the outside entity may also come in the form of a fixed sum. A fixed price AFA may be used if advance approval is obtained from the administration. The funds to be provided by the outside entity are fixed based on the engineer’s estimate. Unlike actual cost AFAs, payment of additional funds or reimbursement of funds upon project completion is not applicable, except that the department pays for overruns and refunds underruns for the AFAs for Bridge Replacement or Rehabilitation Projects Off the State System.

The AFA must be executed and the funds must be provided to TxDOT before the required services are performed unless incremental payments are approved. Districts are responsible for negotiations and development of the AFA. The Contract Services Section of TxDOT’s General Services Division(GSD-CSS) has developed contract forms and procedures associated with developing and processing AFAs.

Accurate estimates are essential for preparing AFAs. Local governments may not be able to afford the project at letting if an inaccurate, low estimate was used to determine participation amounts.

Pertinent Project Types. Projects containing outside funding participation.

Responsible Party. Director of Transportation Planning and Development.

Sub-tasks.

AFA for Standard Transportation projects. The following related tasks should be performed for “standard” AFA projects (on-system projects that are voluntarily (no local match required) funded by others):

  • Refer to the AFA chapter in TxDOT’s Contract Management Manual for standard projects.
  • Prepare the agreement using the AFA Manual.
  • Send the AFA to the local entity for execution.
  • The district engineer executes the AFA (if the district has accepted delegated responsibility).
  • District sends a copy to the General Services Division’s Contract Services Section.
  • Complete remaining sub-tasks listed below.

Other projects. For all other projects with legally required matching participation (i.e. required to match state and/or federal funds).

  • Prepare a draft AFA.
  • Send the AFA to the GSD-CSS for review and revision as needed.
  • Send the revised AFA to the local entity for execution.
  • Send the AFA (with partial execution - by local entity) to GSD-CSS or proper signatory (i.e. off-system bridge AFAs to BRG).
  • Proper signatory executes the AFA for TxDOT.
  • Proper signatory sends an original counterpart of the fully executed AFA to the district for return to the local government.
  • Complete remaining sub-tasks listed below.

Remaining sub-tasks.

  • Complete DCIS, CMCS, CIS, or FIMS input screens and reports relating to AFAs per GSD-CSS requirements.
  • Track and collect funds on the date and in the amount described in the executed AFA.
  • Send the first notice of financial clearance certification (status of funding collection) to the Contract Processing Unit of CST at least 30 days before bid opening. Use the form found on the GSD-CSS Intranet page under “ Standard Contracts.” Refer to Chapter 7, Section 10, of the Conract Managment Manual for more information.
  • Send the second notice of financial clearance certification after bid opening but before Commission award of the project.

Helpful Suggestions.

  • Start the AFA process as early as possible. The district should contact the outside entity as soon as it appears an AFA is required.
  • The estimate should be accurate to allow the outside entity opportunity to budget for the project. This will help ensure that funds will be available when they are required.
  • Entities may need additional time to schedule meetings (i.e. city council) necessary to accept AFA provisions and to transfer funds.
  • GSD-CSS and the administering divisions are available to assist districts.
  • The district is responsible for ensuring that all provisions of any agreement executed by the district engineer comply with all applicable laws, policies, and procedures.

Critical Sequencing. Execute AFAs at the beginning of project development to ensure that the responsibilities of each party are agreed to before incurring preliminary design costs.

Authority Requirements.

  • 43 TAC §§ 15.50 - 15.56
  • TxDOT memo; 9/11/98 “Agreements with Private Entities”; from Charles W. Heald, Executive Director; to District Engineer

Resource Material.

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1620: Obtain DEVELOP authority

Description. DEVELOP authority permits the preparation of plans, specifications, and estimates (PS&Es), and right of way acquisition. With DEVELOP authorization, project plans should be substantially complete (i.e., geometric, structural, hydraulic, and pavement design approved by the various divisions, and a substantial amount of required right of way should be acquired. Refer to the TxDOT Transportation Programming and Scheduling Manual for more information.

Pertinent Project Types. Projects with PLAN authority.

Helpful suggestions.

Responsible Party. Transportation Planning and Programming Division in coordination with District Director of Transportation Planning and Development.

  • The district programming and scheduling manager should update DCIS to show current cost estimates.
  • In some categories, projects are ranked by cost effectiveness and costs compared to other projects. Cost effectiveness ranking is important for advancing a project to CONSTRUCT authority. (See 1630: Obtain CONSTRUCT authority).
  • As right of way is acquired, a project's cost effectiveness ranking improves.

Resource Material.

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1630: Obtain CONSTRUCT authority

Description. All phases of work are permitted for projects with CONSTRUCT authorization. Generally, projects with CONSTRUCT authority are the highest ranked projects that have proposed letting dates within the next four years, including the current year.

Pertinent Project Types. Projects with DEVELOP authority in project-specific programs and all allocation program projects.

Responsible Party. Transportation Planning and Programming Division (TPP)

Sub-tasks.

  • TPP tracks the project status from DEVELOP to CONSTRUCT authority.
  • District updates DCIS with construction and ROW cost estimates. Cost estimates affect the project's cost effectiveness, which in turn affects the project's ranking and prioritizing by TPP.
  • TPP obtains Commission authorization for CONSTRUCT authority projects annually.

Helpful Suggestions. Projects are ranked by cost effectiveness and costs compared to other projects. As right of way is acquired, a project’s cost effectiveness ranking improves.

Authority Requirements. TxDOT Transportation Programming and Scheduling Manual

Resource Material. The most current TxDOT Unified Transportation Program

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1640: Place project in Transportation Improvement Program (TIP)

Description. The Transportation Improvement Program (TIP) is a central component of the transportation planning process. In areas with a Metropolitan Planning Organization (MPO), the TIP is developed by the MPO in cooperation with the state and local transit agencies. The TIP for rural areas is developed by the local TxDOT district in cooperation with local government entities. The TIP is a list of priority projects to be funded within a four-year period.

A new TIP must be developed, updated and approved at least every four years. Revisions to a currently approved TIP can be made on a quarterly basis. As part of the cooperative planning process, districts participate with their other MPO partners in developing and approving the TIP. All TIPs must be financially constrained and are merged into the Statewide Transportation Improvement Program (see 1650: Program (STIP) Develop Statewide Transportation Improvement). Generally, a project's letting year is established as part of placing it in the TIP

Pertinent Project Types.

  • Federal regulations require that projects proposing to use FHWA or FTA funds are shown in the TIP before project approval.
  • Projects that will not use FHWA or FTA funds, but that will require approval by these agencies (such as new access to an interstate) should also be in the TIP.
  • In non-attainment areas, all regionally significant projects, regardless of funding (federal, state or local), must be in the TIP.
  • In all areas, locally funded, regionally significant projects let in the previous fiscal year, should be listed in the Annual Project List provided to the FHWA/FTA at the end of the fiscal year for every year in the TIP/STIP.

Responsible Party. Director of Transportation Planning and Development

Helpful Suggestions.

  • The TIP must be consistent with expected funding levels (i.e., it must be fiscally constrained).
  • Before approval, there must be an opportunity for public comment.
  • In non-attainment areas, the TIP and Metropolitan Transportation Plan (MTP) must be found to conform with the Statewide Implementation Plan (see 1420: Determine if Statewide Implementation Plan requirements apply) by the MPO and US DOT (FHWA and FTA). The projects in the TIP must contribute to a reduction in emissions. A list of non-attainment areas is in the TxDOT Environmental Manual Chapter 2, Section 5.

Critical Sequencing.

  • All projects listed in the STIP must be included in a TIP and MTP (MTP only where applicable).
  • Projects must be in the STIP before federal reimbursement of work will be authorized.

Resource Material. TxDOT Transportation Programming and Scheduling Manual

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1650: Develop Statewide Transportation Improvement Program (STIP)

Description. The State must develop a Statewide Transportation Improvement Program (STIP) for all areas of the state. The STIP is a compilation of Transportation Improvement Programs (see 1640: Place project in Transportation Improvement Programs (TIP)) and projects selected by districts. For non-attainment areas, the MPO must prove conformity with the Statewide Implementation Plan (see 1420: Determine if Statewide Implementation Plan requirements apply) before the TIP can be included in the STIP. As with each TIP, the STIP is financially constrained.

The Transportation Planning and Programming Division (TPP) compiles the STIP which is then approved by the Texas Transportation Commission acting for the governor. The Commission forwards the STIP to the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA) for review and approval. All federal-aid projects must be included in the STIP before a FHWA Federal Project Authorization & Agreement (FPAA) can be issued to obligate federal funds.

Pertinent Project Types.

  • Federally funded projects - using federal funds in any portion of project development.
  • Projects that will not use FHWA or FTA funds, but that will require approval by these agencies (such as new access to an interstate) should be shown in the STIP.
  • State funded projects - inclusion required by TxDOT to show financial constraint.
  • Regionally significant projects.
  • Transit projects.
  • Multimodal projects.
  • Aviation projects (optional).

Responsible Party. Transportation Planning and Programming Division

Helpful Suggestions.

  • The STIP must be consistent with expected funding levels.
  • Before STIP approval, there must be reasonable opportunity for public comment.

Critical Sequencing.

  • Federally funded projects must be included in the STIP before issuance of a FPAA.
  • A FPAA to obligate federal funds must be obtained before incurring reimbursable project costs.

Resource Material.

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1670: Place project in one-year letting schedule

Description. On an annual basis, the Letting Management Section of the Finance Division requests that districts formulate a three year letting schedule to meet specific letting volumes provided for each District. This involves updating various fields in DCIS in accordance with specific instructions provided by the Letting Management Section. The “let schedule year” fields on the Project Identification Screen (P1) are opened, or ‘unlocked’, for changes during a six-week period for districts to enter let years for their projects. Other fields requested to be updated, including the “present district estimated let date” are open for changes throughout the year.

From DCIS data in the “let schedule year” and the “present district estimated let date” fields, the Letting Management Section forms a 1-year letting schedule. Letting Management reviews the schedule on a statewide basis to ensure funding goals are met. The schedule is also reviewed for completeness, funding eligibility, federal oversight, etc. and any necessary changes are coordinated with the district. The schedule is then submitted to the administration for their approval. The one-year letting schedule is a planning document and is subject to change. The schedule is posted on the Internet and hard copies are available to the public through the General Services Division.

From DCIS data, the Finance Division tracks letting volumes by district and by funding category. This information is sent to the Texas Transportation Commission monthly and summarized in a quarterly report (with cumulative results) to districts.

Pertinent Project Types. All projects.

Responsible Party. Director of Transportation Planning and Development

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