IV. Administrative Matters

While this Guide is concerned primarily with the programmatic aspects of the Federal-aid highway right-of-way program, it is important also to understand the administrative framework in which the program operates.

Direct Federal Acquisition vs. Federal Assistance

There are two ways in which real property is acquired using Federal funds. The first is direct Federal acquisition. For direct Federal acquisition, an agency of the Federal Government buys the property directly from an owner and the United States of America becomes the title holder. The second method involves what is called Federal-aid or federally assisted acquisition. Under this method, non-Federal units of government (e.g., States, counties, cities, and others) and sometimes private entities, purchase real property as part of a project receiving Federal funds. This guide is concerned with the second method, Federal-aid. Under the Federal-aid highway program, FHWA expects the State to be responsible for the proper acquisition of real property even when it passes funds through to agencies at the local government level.

Cost-Sharing/Credits

Federal-aid highway projects, like most Federal assistance, typically require that the agency receiving funding (the assistance recipient) contribute a portion of the cost of the project, known as the non-Federal share. The majority of such funding comes from State or local funds provided by State or local legislatures for this purpose. However, an assistance recipient may be able to reduce the amount of funds it needs to provide by obtaining credits which count toward its required share. Credits may be obtained in several different ways.

Donations. When a private party wishes to donate all or a portion of his or her property, he or she must be fully informed of the right to receive just compensation for the property. If he or she decides to donate the property to a project, the assistance recipient (your agency) may receive credit toward its cost share for the fair market value of the donation, determined in accordance with applicable Federal regulations (see Chapter V, Valuation) and its own agency policy. In addition, recent changes in Federal highway legislation permit credits for the value of State or local government-owned land which is incorporated into a project. The determination of credits can be complicated and we encourage you to contact your STD for information and assistance.

Donations made by a Federal government agency are not eligible for use as matching share credit. In addition, the credit received by a State cannot exceed the State's matching share for the project to which the donation is applied.

A donation may be made at any time during a project's development. However, a donation made prior to the approval of an environmental document under the National Environmental Policy Act of 1969 (NEPA) may not influence the environmental assessment of a project, including decisions on the need to construct the project or the selection of specific locations. Consequently, all alternatives to a proposed alignment must be studied and considered pursuant to NEPA. Any property acquired by donation shall be re-vested in the grantor if the final alignment does not require the property.

Disposition of Certain Revenues

When States or local governments sell, lease or rent real property previously acquired with Federal funds, income is generated. The income derived from these activities may be retained (rather than returned to FHWA) if it is used to fund projects eligible under Title 23 U.S.C. Highways. Thus, such income may be spent on eligible activities occurring under a different project from the one which originally provided the funds. You should contact your STD for further information and assistance. Additional information regarding these issues can be found in Chapter VIII, Property Management.

FHWA Contracting Requirements

Federal financial assistance carries requirements as well as opportunities. Negotiations and relocation contacts with property owners must be conducted by qualified agency personnel; however, if your agency does not have personnel who are knowledgeable or experienced in these requirements, you can utilize consultants. Contracting for such consultants, whether they deal with appraisal, acquisition, or relocation, must follow approved State or local (with State approval) procurement procedures. [These requirements are applicable only when Federal funds are used in the acquisition cost of the right-of-way.] We strongly encourage local government agencies with limited prior experience in contracting for right-of-way services to contact their STD for more detailed information on these requirements.

This chapter has discussed issues which relate to the administration of your agency's real estate acquisition program. In the remaining chapters, we focus on elements relating to the acquisition of real property including valuation, acquisition, relocation assistance and property management.