Flexible match allows a wide variety of public and private contributions to be counted toward the non-Federal match for Federal-aid projects. Flexibility in matching Federal-aid highway funding with the typical 20 percent local share exists primarily through two means:
Although moneys from other federal agencies generally cannot be used to pay for the local portion of a Federal-aid project, some flexibility exists in several instances.
Third party donations allow states to apply the value of third party-donated funds, land, material, or services toward their nonfederal share of project costs.
This flexible match provision increases a state's ability to fund its transportation programs by:
Third parties include private companies, organizations, individuals, and since SAFETEA-LU, local governments. Federal and state government agencies are excluded by this definition. The flexibility to apply the value of third party donations to nonfederal highway project shares has existed since the 1995 NHS Act, which amended 23 U.S.C. 323 Donations and Credits.
Further opportunities for state and local governments to leverage transportation investment exist through prudent and timely acquisition and management of real property. 23 U.S.C. 108 Advance Acquisition of Real Property permits states to receive credit toward a non-Federal match when State or locally owned lands are incorporated into a Federal project. This provision substantially expands the prior law enacted by the NHS Act already permitting matching credit for private property donations, and it provides more flexible ways for state and local governments to preserve corridors. 23 U.S.C. 156 Proceeds from the Sale or Lease of Real Property allows State and local governments to retain income from the sale, use, or lease of property previously acquired with Federal funds, if the income is used for Title 23 eligible projects. These provisions introduced by TEA-21 give state and local governments more flexibility in acquiring and managing real property in support of transportation systems.
The process for third party donations includes the following steps:
The following examples illustrate how third party donations are considered when calculating Federal and state shares of total project costs. The donated item must qualify as a participating cost meeting eligibility standards and within the scope of the project. The common rule (49 CFR 18) requires a donation to be made during the period of the grant (between authorization and final voucher). Donations made prior to authorization should be treated as a cost incurred prior to authorization under 23 CFR 1.9(b).
When calculating the pro rata share of projects costs, the donation should be treated the same as a costs incurred. The value of the donation is added to the total project costs and the appropriate pro rata calculation made. However, in the case of a large donation, the amount of Federal funds obligated cannot exceed actual project costs.
Example 1:
| Actual cash outlay for project costs incurred: | $2,000,000 |
Value of donations; include real property, funds, materials, services, buildings/equipment |
$300,000 |
| Total project value | $2,300,000 |
| Federal pro rata share of total project value = 80% (80% of $2,300,000) | $1,840,000 |
| State share of total project value = 20% (20% of $2,300,000) | $460,000 |
| Total project value | $2,300,000 |
| State share of total project value | $460,000 |
| Value of donations | ($300,000) |
| Actual cash outlay by State for project | $160,000 |
Example 2: If the value of the donation is $650,000, then the Federal share is limited to the amount of actual cash outlay for the project calculated as follows:
| Actual cash outlay for project cost incurred | $2,000,000 |
| Value of donations (includes real property, funds, materials, and services) | $650,000 |
| Total value of project | $2,650,000 |
| Federal pro rata share of total value of project = 80% (80% of $2,650,000) | $2,120,000 |
| The Federal obligation amount is limited to the actual cash outlay | $2,000,000 |
Example 3: Cash Donation
| Total project costs | $5,000,000 |
| Cash donation | $1,000,000 |
| Cash donation | $4,000,000 |
| Federal pro rata share of revised total project costs = 80% (80% of $4,000,000) | $3,200,000 |
| State share of revised total project costs = 20% (20% of $4,000,000) | $800,000 |
It should be noted (as shown in Example 1 above) that the value of the donations must be added to the total project value when computing the Federal and state shares. In Example 1, the Federal and state shares were computed from the total project value of $2,300,000, which included $300,000 in donations. The shares were not computed solely on the basis on the project's cash outlay of $2,000,000.
