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December 4, 2015
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Congress passes transportation reauthorization bill

On December 3, 2015, Congress passed the Fixing America's Surface Transportation (FAST) Act, a five-year (FY 2016-20), $280 billion transportation reauthorization bill. Both chambers passed the bill by wide margins: 359-65 in the U.S. House of Representatives and 83-16 in the U.S. Senate. The bill maintains current rates for the federal motor fuel tax and relies on substantial transfers from the General Fund to support additional spending. These transfers are offset with a number of non-transportation related sources. FAST includes modified provisions from the two reauthorization bills passed separately by the House and Senate earlier this year.

The bill creates two new freight programs, which are the first new significant federal highway programs since the early 1990s. The legislative text also includes over $10 billion to reauthorize Amtrak and $420 million for the U.S. DOT's pipeline administration, making FAST the first-ever comprehensive surface transportation bill.

FAST is also the first long-term federal transportation reauthorization in years, providing for modest growth over current spending levels, with an immediate increase in FY16 of about 5 percent for highway funds and 8 percent for transit funds, followed by annual increases of just over 2 percent through FY20. For Illinois, FAST is expected to provide a five-year total of approximately $7.5 billion in highway funds (an annual average of about $1.5 billion) and approximately $3 billion in transit funds (an annual average of about $600 million). Under FAST, the annual average highway and transit funding for Illinois is some 10 percent higher than FY15.

Freight

For the first time, FAST provides $10.7 billion over five years for freight improvements.  This funding level is in line with the region's request, consistent with national advocacy efforts, for a freight program funded at a level of at least $2 billion each year. FAST establishes two funding programs, one distributed to the states by formula and the other awarded to a wide array of applicants on a competitive basis. The bill establishes a national multimodal freight policy and includes provisions for multimodal freight planning at both the national and state levels.

The National Highway Freight Program (NHFP) would be funded at $6.3 billion over five years, with an annual average of about $1.25 billion dollars. These funds would be divided among the states according to the same formulas governing the overall highway apportionments. As a result, Illinois is expected to receive 3.6 percent of the freight formula funds, which translates to a five-year total of about $225 million, or about $45 million annually. NHFP funds can be used on a wide array of highway projects that improve freight movement, and for all phases of project development. Up to 10 percent of NHFP funds may be used for freight intermodal or freight rail projects each year.

The competitive Nationally Significant Freight and Highways Program (NSFHP) would be funded at $4.5 billion over five years, with an annual average of about $900 million. U.S. DOT would select projects for funding, with Congressional oversight. This program is designed to support larger, complex projects, with a minimum total project cost of $100 million and a minimum award size of $25 million. Ten percent of the NSFHP is set aside for smaller projects and 25 percent must be spent in rural areas. FAST provides for a wide range of eligible applicants to the NSFHP, including large metropolitan planning organizations like CMAP, and provides for up to $500 million over a five-year period to be awarded to multimodal freight projects.

In its planning and policy language, FAST expands upon MAP-21 to include a multimodal perspective. It requires U.S. DOT to establish a national multimodal freight plan and network, requires the development of state freight plans, and continues to encourage states to establish freight advisory committees. U.S. DOT's recently released draft National Freight Strategic Plan represents a starting point for many of these efforts.

FAST revises the MAP-21 National Freight Network into a larger National Highway Freight Network (NHFN). Like MAP-21, the larger NHFN will include a more focused Primary Highway Freight System (PHFS). Unlike MAP-21, FAST includes language to focus NHFP funds on the NHFN, and, for states with particularly high shares of the nation's total PHFS mileage, to focus those funds on the more limited PHFS. Further, FAST provides for large MPOs to designate new "critical urban freight corridors" as part of the PHFS.

Mass Transit

FAST maintains the traditional 80/20 split between highway and transit programs in the Highway Trust Fund. Among other provisions, FAST provides for a significant increase to the State of Good Repair formula program; this is a particularly beneficial provision for the region's transit agencies, which have received about 10 percent of the total funding available through the program. Further, FAST provides almost $200 million in dedicated funding for positive train control implementation in FY17 and reinstates the bus and bus facilities competitive grant program, at an annual level of about $300 million.

FAST continues to fund the Fixed Guideway Investment Grant program from the General Fund, making that program subject to annual appropriations, although it does authorize about a 20 percent increase in funds compared to FY15. The Fixed Guideway Investment grant program – better known for its component New Starts, Small Starts, and Core Capacity programs – is the federal government's primary program in support of major new transit projects across the country. The CTA's Red and Purple Modernization program was the first project in the nation approved for funding under the Core Capacity program after its creation in MAP-21.

FAST codifies existing practice by reducing the federal match for New Starts projects to 60 percent, and maintains the 80 percent federal match for Small Starts and Core Capacity projects. FAST did not include provisions in the House reauthorization bill that would have reduced the federal match to 50 percent and restricted the funding sources available to transit agencies to provide the local match.

Highways

FAST makes relatively few changes to federal highway programs. It renames the Surface Transportation Program (STP) to the "Surface Transportation Block Grant Program" and gradually increases the local suballocation from 50 percent to 55 percent by FY20. FAST moves the Transportation Alternatives Program (TAP) into STP and renames it the "STP Set-Aside." TAP would be funded at similar levels as MAP-21, initially at a flat rate of $835 million annually and subsequently increased to a flat rate of $850 million annually. The bill maintains the 50-percent local suballocation for TAP and allows large MPOs to flex half their TAP funds to other STP-eligible purposes. For the Congestion Mitigation and Air Quality Improvement (CMAQ) program, FAST expands project eligibility to include certain port-related freight projects and vehicle-to-infrastructure technology projects. It also expands flexibility for rural states in their use of CMAQ funds for meeting the set-aside requirement for fine particulate matter.

Innovative finance

FAST continues support for the Transportation Infrastructure Finance and Innovation Act (TIFIA) credit assistance program, although its funding is substantially less than what MAP-21 provided. FAST also makes various revisions to TIFIA, allowing other federal funds to be used for administrative and subsidy costs and permitting U.S. DOT to set aside a portion of TIFIA funding to cover fees for independent expert analysis. Further, FAST makes transit-oriented development (TOD) projects eligible for TIFIA assistance.

In its reauthorization of federal rail programs, FAST also makes revisions to the Railroad Rehabilitation and Improvement Financing (RRIF) credit assistance program. These changes aim to streamline the application process, allow greater flexibility in meeting the credit risk premium, and allow TOD revenues to serve as collateral for federal credit assistance. These reforms could benefit redevelopment efforts at Chicago Union Station.

Looking Ahead

FAST sets the tone for the next five years of the federal transportation program. With the exception of development of a sustainable source of revenue, FAST makes meaningful progress on the five transportation reauthorization principles approved by the CMAP Board in June 2014, particularly the establishment of a robust freight program. As the nation's premier freight hub, the Chicago region and Illinois stand to benefit from the increased emphasis on freight planning and the opportunity to invest in critical freight improvements. While their overall emphasis is on highway improvements, both freight programs allow a portion of funds to be used for multimodal projects -- including freight rail improvements -- and the overall federal and state planning framework is multimodal.

CMAP will continue to support its adopted reauthorization principles as FAST is implemented over the coming years, advocating for performance-based decision making and an active role for regions.


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