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Income Earned Under the National Scenic Byways Program

Income may be generated from the sale of products, royalties and license fees for copyrighted or patented items, fees for services provided to others, rental of property, etc. Applicants are encouraged to document income in the event audits or future use requires identification of fund sources.

When deciding whether to sell the products, please keep in mind that the public already has paid for the products in part through the Federal gas taxes they pay. Federal gas taxes are the primary source of revenue for the National Scenic Byways Program and other Federal transportation programs. Yet, we encourage byways to become self-sustaining, so we understand the need for latitude in tapping multiple funding sources.

There are two government-wide "common rules" that cover administration of grants that affect how recipients (States and Indian tribal governments) and subrecipients (local sponsors) of Federal-aid funds treat income associated with federally funded activities. The US DOT's versions of these rules are: 49 CFR part 18, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments; and 49 CFR part 19, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Non profit Organizations. The complete regulations can be found at http://www.fhwa.dot.gov/hep/guidance/.

Check with your State Byway Coordinator, Indian Tribe Byway Coordinator or FHWA Division Office: Applicants considering the option of product sales are encouraged to contact their State byway coordinator, Indian tribe byway coordinator or FHWA division office byway contact first. Decisions should not be made until you determine what additional requirements might affect income earned under a byways grant (State level) or subgrant (local level) within your State.

Definition of Program Income: Program income includes revenue from grant-supported activities, such as, but not limited to, fees for services performed, the use or rental of real or personal property acquired under Federally funded projects, or the sale of commodities or items produced under a grant/subgrant while the project is open (e.g., earned during the grant period).

Income from royalties and copyright fees is not considered to be program income unless such revenues are specifically identified in the grant/subgrant agreement.

Any net proceeds (income received less the cost to generate the income) from program income, must be deducted from the recipient's or subgrant recipient's expenditures before billing for the Federal share of the net expenditures. However, with prior FHWA approval, program income may be used to meet non-Federal matching funds requirement or for additional grant activities.

Documentation of Program Income: Generally, records related to program income must be retained for a period of three years after submission of the last financial report of the grant/subgrant.

Income after the Project is Closed Out: Income earned after a grant or project is closed out is not considered program income. There generally are no restrictions or offsets for income generated after a grant or project period has ended.

Authority for States to Impose Additional Requirements on Income Earned by Governmental Subgrantees: If funds are subgranted to a local or Indian Tribal government by a State agency, the State agency needs to notify the local government of the State's requirements for disposition of income earned as a result of subgrant supported activities. As specified in section 37 of 49 CFR part 18, States must follow state law and procedures when awarding and administering subgrants (whether on a cost reimbursement or fixed amount basis) of financial assistance to local governments (as defined in 49 CFR 18.3). In such cases, the State agency may impose provisions that are different from or in addition to those in 49 CFR part 18 on the treatment of income earned by the local government subrecipient, including restrictions on the use of income generated after grant or project period has ended. Appropriate restrictions or uses of such income could include continuing performance of similar program activities or providing the matching share for future federal grants.

Updated: 09/03/2013
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