Our August 7, 1998 memorandum provided implementing guidance for the Toll Credit Program under TEA-21, as codified in Section 120(j) of Title 23. Included in that guidance was a prohibition on the retroactive application of toll credits. Inquiries from several States have questioned that policy. We have subsequently reviewed the statutes, and concur that there is no legal prohibition to the retroactive application of toll credits.
Therefore, we are supplementing our August 7, 1998 implementing guidance, and amending our guidance regarding the retroactive application of toll credits. Toll credits can now be applied at any time during the development and implementation of the project, including after execution of the initial project agreement. The project agreement or modification should indicate what the Federal share is and that toll credits are being used in lieu of all or part of the required State match, resulting in up to 100 percent Federal funds being used on the project. Do not use the term "effective Federal share," as it has no meaning. Although up to 100 percent of the funding for a project might be from Federal funds because of the toll credits, the Federal share established in the law does not change.
If you have any questions, please contact Mr. Bing Wong of my staff at 202 366-4651.