The following Toll Credit Frequently Asked Questions (FAQs), issued on December 17, 2021, provide FHWA guidance on the Toll Credit Program under section 120(i) of title 23, United States Code (U.S.C.).
The contents of the FAQs (as distinct from existing statutes and regulations cited in the FAQs) do not have the force and effect of law. The FAQs are intended to provide clarity regarding existing requirements under the law, regulations, or agency policies. Compliance with the statutes and regulations cited in the FAQs is required.
Unless otherwise specified, the requirements applicable to these Frequently Asked Questions are found in section 120(i) of title 23, United States Code (U.S.C) and sections 200.302 and 200.306(b)(1) of part 2, Code of Federal Regulations (CFR).
A State may earn toll credits when a public, quasi-public, or private agency uses toll revenues to build, improve, or maintain highways, bridges, or tunnels (or, consistent with requirements in 23 U.S.C. 129(c), a ferry that serves as a link on a highway) that serve the public purpose of interstate commerce. To earn toll credits, the State must satisfy the maintenance of effort (MOE) requirement for the fiscal year under evaluation. The MOE test calculates the State’s non-Federal transportation capital expenditures during a 4-year period (with a two-year rule exception, discussed in question number 4, below).
Toll revenues may include toll receipts, concession sales, right-of-way lease revenues, or interest. Toll revenues may also include bond or loan proceeds supported by toll facility revenue. State grants, funds, or appropriations that are not secured by toll revenues (i.e., State Department of Transportation (SDOT) grants, State sales tax, State gas tax, or other State legislative funding) cannot be included when calculating the credit amount. Toll revenues must be verifiable through detailed accounting records or audited financial statements that indicate the origins of toll revenues and the timeframe in which these revenues were generated.
To qualify in the fiscal year being evaluated to earn toll credits, the State must meet the statutory MOE requirement for non-Federal transportation capital expenditures. The MOE is an evaluation of the State’s non-Federal transportation capital expenditures over a 4-year period. FHWA Divisions must ensure only valid non-Federal transportation capital expenditures are included in the MOE. Divisions must ensure the State evaluates its non-Federal transportation capital expenditures during a 12-month period, which can be either on a Federal or State fiscal year basis. When evaluating MOE some important factors to consider are: a) the State maintains consistent methods in determining non-Federal transportation capital expenditures, b) source of expenditure data is the same annually, and c) any changes in either a or b are discussed and agreed upon between FHWA and the State.
A simple example of the MOE calculation is as follows:
|
Calculation Period |
Total Non-Federal Transportation Capital Expenditures |
|---|---|
Year 1 |
$2,000,000 |
Year 2 |
$2,500,000 |
Year 3 |
$2,000,000 |
3 Year Average |
$2,166,667 |
Year 4 |
$2,500,000 |
Does the State qualify for toll credits? |
|
Yes |
|
Why? |
|
The amount of non-Federal transportation capital expenditures in year 4 exceeds the prior 3-year average. |
|
Section 120(i)(2)(B) of title 23, U.S.C., allows a two-year rule exception for MOE calculations. If 1 of the first 3 fiscal years of the 4-year evaluation period has non-Federal transportation capital expenditures that exceed 130 percent of the average level of such expenditures for any 2 of the 3 fiscal years, then that fiscal year may be excluded from the average. Non-Federal transportation capital expenditures in the fourth fiscal year, then, must be greater than or equal to the average of such expenditures for the other 2 fiscal years to qualify for toll credits.
A simple example of the two-year rule is as follows:
Calculation Period |
Total Non-Federal Transportation Capital Expenditures |
|---|---|
Year 1 |
$2,000,000 |
Year 2 |
$2,500,000 |
Year 3 |
$4,000,000 |
3 Year Average |
$2,833,333 |
Year 4 |
$2,500,000 |
Does the State qualify for toll credits? |
|
No |
|
Why? |
|
The amount of non-Federal transportation capital expenditures in year 4 is less than the prior 3-year average. |
|
Calculation Period |
Total Non-Federal Transportation Capital Expenditures |
|---|---|
Year 1 |
$2,000,000 |
Year 2 |
$2,500,000 |
2 Year Average |
$2,250,000 |
2 Year Average x 130% |
$2,925,000 |
Year 3 |
$4,000,000 |
Year 4 |
$2,500,000 |
Can the State use the 2-year rule and exclude year 3 from the MOE calculation? |
|
Yes |
|
Why? |
|
The year 3 expenditures were greater than 130% of the average expenditures for years 1 and 2. |
|
Does the State qualify for toll credits after applying the 2-year rule? |
|
Yes |
|
Why? |
|
The year 4 expenditures exceed the average of year 1 and 2. |
|
The supporting documentation may vary from State to State. However, FHWA Division offices must ensure that each State DOT has an established, written process by which it verifies and submits all related toll credit documentation. Documentation must be adequate to ensure requirements in 23 U.S.C. 120(i) are met.
Requests to earn toll credits based on expenditures made on or after the date of issuance of the revised guidance describing updated procedures, dated September 14, 2021 should base calculations and determinations of approval based on the updated procedures. The updated procedures do not require recalculation of previous MOE and toll credit calculations.
No. The toll credit amount earned will be equal to the amount of eligible capital expenditures paid for with toll revenues. However, pursuant to the Special Rule for Use of Federal Funds, if any Federal funds (other than Federal funds or other financial assistance, including Federal credit assistance, that must be repaid to the Federal government), were spent on the eligible capital transportation improvement project, the earned credit shall be reduced by a percentage equal to the percentage of the total cost of the eligible capital transportation improvement project that was derived from Federal funds. In making the above calculation, Federal funds or financial assistance that must be repaid to the Federal government, such as assistance provided under the Transportation Infrastructure Finance and Innovation Act (TIFIA) credit program, are not considered Federal funds.
A simple example of toll credits that could be earned by a State, based upon the Special Rule, is as follows:
Total Eligible Project Cost:$10,000,000
Federal-aid expended:$8,000,000
Toll Revenues expended:$2,000,000
Potential toll credits Earned: $2,000,000-(80% x $2,000,000)=$400,000.
Yes. The MOE calculation under 23 U.S.C. 120(i)(2)(B) evaluates non-Federal transportation capital expenditures. Therefore, the non-Federal share of Federal-aid projects—as well as any non-participating costs funded by toll revenues—can be included as non-Federal transportation capital expenditures in the MOE calculation.
Yes. To accrue toll credits, toll facility operators must collect or plan to collect tolls from the traveling public for the use of their facilities. If a toll authority spends bond or loan proceeds for initial construction of a toll facility, and that bond or loan is to be repaid with toll facility revenue from the facility being constructed, the State may apply for toll credits based on such expenditure, even though the toll facility is not yet open to the public.
Yes. Toll credits, also referred to as Transportation Development Credits (TDCs), can be applied towards the non-Federal share requirement on most projects eligible under chapter 53 of title 49, U.S.C., administered by FTA. Specific program requirements for any program funded under chapter 53 of title 49 must be met.
The State decides the amount of Federal share at the time of project authorization, up to the amount of Federal share allowed by law. Consistent with Federal requirements in 23 CFR 630.106(f), the non-Federal share that is established at the time of project authorization must be used throughout the life of the project, with certain exceptions. Toll credits may be applied after the initial project authorization towards the non-Federal share for costs for which the State has not received Federal reimbursement (formerly known as “retroactive use of toll credits”).
Any toll credit requests relying on toll revenues or capital expenditures greater than 5 years old should consult with the FHWA Division Office. The FHWA Division office will coordinate the request with the FHWA Office of Operations, who manages the toll credits program.
No. There is no statutory limitation on the period of availability of toll credits. Therefore, there is not a limitation on the amount of toll credits that can be carried as a balance. Approved toll credits that are unused become part of the cumulative balance.
