All projects proposed to use federal funding must be listed in or amended into the current approved State Transportation Improvement Program (STIP) in the correct fiscal year. Amendments are done by the Mn/DOT District Office that the project is in. Projects which are in more than one district or statewide are listed in District C of the STIP. Projects listed in the STIP are those which are reasonably expected to occur within the timeline listed. The STIP is required to be financially constrained, meaning that the total cost of the projects listed should not exceed the amount of funding reasonably anticipated. All local federally funded projects must also be in Mn/DOT’s Program and Project Management System (PPMS). This is handled in the d istrict p lanning unit. It is important to know what type of federal funding will be used on the project as certain pots of money have slightly different rules and conditions. In general, funds from the FHWA cannot be used as a local match to other FHWA federal funds. The local match (if required) and any cost overruns is the responsibility of the local agency that is proposing the project. While the legal term for the f ederal aid highway program is a grant program, no cash is actually disbursed at the time of project authorization. Federal aid construction projects are authorized, funds are obligated, and then the FHWA makes payments to the Mn/DOT for actual costs as they are incurred.

These are funds apportioned to each state by formulas established in federal law. In recent years this total amount has been highly variable. By federal law the funds are to be allocated into specific categories. At least 10 percent is to be spent for enhancement activities. The provision requiring 10 percent be spent on safety programs was repealed and safety programs are now under the Highway Safety Program.

1. Surface Transportation Program Funds (STP)
   The bulk of federal funding is in this category. It is governed by 23 USC 104(b)(3). After estimating the total amount of federal funds that will be received Mn/DOT, the Office of Investment Management (OIM) subdivides the amount to a target for each Area Transportation Partnership (ATP) to use to program projects in their geographic area.
2. Enhancement Funds (TEA)
   At least ten percent of the total amount of STP funds allocated to each state is to be spent on enhancement projects. To be considered enhancement projects, the projects must fit into one of the twelve eligible defined enhancement categories. General rules for use of federal funds for enhancement projects are the same as for regular STP funds.
3. Highway Safety Improvement Program (HSIP)
   This is a new core program in SAFETEA-LU. The intent is to achieve a significant reduction in traffic fatalities and serious injuries on all public roads in the United States. Each state is required to have a Strategic Highway Safety Plan (SHSP), Mn/DOT’s plan is called the Comprehensive Highway Safety Plan. It outlines strategies to improve safety on all types of roadways in Minnesota. The a mount of funds per state will be based on the funding formula listed in the guidance, however, each state will receive at least one half of one percent of the funds apportioned for HSIP.
4. Bridge Funds (BR and BH) (see section II.A)
5. Congestion Mitigation Air Quality (CMAQ) was established to fund programs and projects which reduce air pollution, mitigate congestion and improve air quality. In Minnesota, the only areas eligible to receive CMAQ funds are the Twin Cities and Duluth. Much of the solicitation for projects is handled through Metropolitan Council project solicitations.
6. Railway-Highway Crossing program is also known as Minnesota Rail Safety Program. Projects are programmed in conjunction with the Mn/DOT Office of Freight, Railroads and Waterways and the local Area Transportation Partnership. Plans and environmental documents for projects proposed by local agencies are handled through the state aid project processing process.
7. Others not generally used by local agencies
• National Highway System (NHS) includes the Interstate Highway System as well as other roads important to the nation's economy, defense, and mobility. The NHS was developed by the Department of Transportation (DOT) in cooperation with the states, local officials, and metropolitan planning organizations (MPOs). There are only a couple segments of the National Highway System in Minnesota that are owned by local agencies as shown on the Minnesota Map. Local routes however intersect the NHS and when improvements to those routes impact the NHS, a higher level of oversight is required by the FHWA. NHS roadways are governed by 23 USC 104(b)(1)
• Interstate Maintenance (IMD) program provides funding for resurfacing, restoration, rehabilitation and reconstruction (4R) on the Interstate System. Projects selected for funding under this program are funded at a 90 percent Federal share except projects for added lanes, other than high occupancy vehicle lanes and auxiliary lanes, which are funded at 80 percent. They are governed by 23 USC 104(b)(4). These programs are almost always handled by Mn/DOT due to the impact on the Interstate system.
• Ferry Boat Discretionary (FBD) program provides funding for ferry facilities (either vehicular or passenger) that are on a non Interstate public road and are publicly owned, publicly operated, or majority publicly owned providing substantial public benefits. Projects selected for funding under this program are funded at an 80 percent f ederal share, but have had very limited use in Minnesota.

Designated funds are funds provided for projects which are specifically designated in federal legislation.

1. High Priority Projects (HPP) program provides designated funding for specific projects identified in SAFETEA-LU. A total of 5,091 projects nationwide are identified, each with a specified amount of funding over the 5 years of SAFETEA-LU. In Minnesota, there were approximately 125 projects which received designated funding. Many of these projects intended for local agencies. FHWA guidance allows for HPP funding to be used only for the activities listed in the language of the bill or clarified by conference committee or additional legislation. The amount of funding listed in the bill is slightly misleading as the legislation allows for the release of on 20% of the funds each year of the bill and does not include reductions in this amount  constraints do not allow Mn/DOT to make these funds whole as they have in years past.
2. Transportation Community Systems Planning (TCSP) program provides funding for a comprehensive initiative including planning grants, implementation grants, and research to investigate and address the relationships between transportation, community, and system preservation and to identify private sector-based initiatives. States, metropolitan planning organizations, local governments and tribal governments are eligible for TCSP Program discretionary grants to plan and implement strategies which improve the efficiency of the transportation system, reduce environmental impacts of transportation, reduce the need for costly future public infrastructure investments, ensure efficient access to jobs, services and centers of trade, and examine development patterns and identify strategies to encourage private sector development patterns which achieve these goals. The Federal Highway Administration has not solicited applications in FY 2005 for the TCSP Program. The Congressional Conference Report accompanying the FY 2005 Omnibus Appropriations Act designated $25 million for 39 TCSP Program projects. The TCSP Program has solicited only those applications for projects specified by Congress in the Conference Reports accompanying the Omnibus Appropriations Act.
   
   At times projects are designated in the annual federal appropriations bill. These projects are specifically mentioned in the legislation facilitating the spending for each federal fiscal year. These projects are subject to basically the same rules as the HPP funds, except as noted in the specific legislation. Sometimes these funds need to be authorized in the same federal fiscal year as they are appropriated.
3. Highways for Life is a new discretionary program that provides funding to demonstrate and promote state of the art technologies, elevated performance standards, and new business practices in the highway construction process that result in improved safety, faster construction, reduced congestion from construction, and improved quality and user satisfaction. For the period 2005 – 2009, at least 1 project in each State shall be approved for program participation, if possible. In FFY 2007 the Trunk Highway 36 at McKnight Road was chosen as a recipient of the funding.
4. Projects of National and Regional Significance (PNRS)
   Minnesota project designate for this type of funding is “Union Depot Multimodal Transit Facility.”
5. National Corridor Infrastructure Improvement (NCI)
   Minnesota project designate for this type of funding is “The Falls to the Falls Corridor.”

1. Emergency Relief (ER) Congress authorized in Title 23, United States Code, Section 125, a special program from the Highway Trust Fund for the repair or reconstruction of federal aid highways and roads on Federal lands which have suffered serious damage as a result of (1) natural disasters or (2) catastrophic failures from an external cause. This program, commonly referred to as the emergency relief or ER program, supplements the commitment of resources by States, their political subdivisions, or other Federal agencies to help pay for unusually heavy expenses resulting from extraordinary conditions. The applicability of the ER program to a natural disaster is based on the extent and intensity of the disaster. Damage to highways must be severe, occur over a wide area, and result in unusually high expenses to the highway agency. Applicability of ER to a catastrophic failure due to an external cause is based on the criteria that the failure was not the result of an inherent flaw in the facility but was sudden, caused a disastrous impact on transportation services, and resulted in unusually high expenses to the highway agency. Specific rules and procedures are covered in the Emergency Relief Manual. Damages which are covered by Federal Emergency Management Agency (FEMA) funds are not eligible for reimbursement with ER funds.
2. Federal Emergency Management Agency (FEMA) program is handled through the National Department of Homeland Security. FEMA Funding is not handled by SALT.
3. Comprehensive Highway Safety Plan (CHSP) Central Safety Fund was established by the Minnesota Department of Transportation, Office of Traffic, Security and Operations and the Minnesota Department of Public Safety (DPS), Office of Traffic Safety in 2005 to provide funding for safety projects that focus on County and District-wide deployment of low cost, systematic improvements at the state, county, and local level. This program was established in recognition that historically over 70% of fatal crashes occur on rural roads and 45% of fatal crashes occur on local (county, township, and city) roadways. It is anticipated that this program will continue into subsequent years.  When funding becomes available it is used as reimbursable grants to assist counties in conducting road safety audits and for paying the costs of constructing safety projects or funding activities to reduce the number of fatal and severe crashes on local roads. Local labor, materials and equipment may be included as part of the project cost, but are not reimbursable. The Mn/DOT Office of Traffic, Security and Operations partners with SALT to solicit Counties through an application process for projects and activities eligible for funding under this program.
   
   The criteria for selecting projects are:
• the project must be completed and reimbursement applied for by date established each time funding becomes available
• the project must qualify as a safety project under the Comprehensive Highway Safety Plan (CHSP), and
• Counties must agree to hold a meeting involving safety partners and other community leaders such as school representatives, township officials, law enforcement and emergency responders to explain the CHSP and Towards Zero Death (TZD) goals and objectives. The goal of the community safety meeting is to develop a local safety coalition that will be instrumental in developing future strategies encompassing engineering, enforcement, education, and emergency services.
• Maximum grant amounts are established with each solicitation. These funds are considered federal funds and the federal process must be followed for project approval.
4. Transportation Revolving Loan Fund (TRLF) was established a State Infrastructure Bank (SIB) program in 1995 through the National Highway System Designation Act. A SIB is a state or multi-state fund that can be used by eligible borrowers to finance eligible transportation projects. Minnesota's SIB, known as the Transportation Revolving Loan Fund (TRLF), was established in 1997. The TRLF operates much like a commercial bank providing low interest loans to cities, counties, and other governmental entities for eligible transportation projects. When the loans are repaid, the funds are returned to the TRLF and used to finance additional transportation projects. Because the funds were initially Title 23 federal funds, the rules for use of these funds remains the same as regular Title 23 funds. Eligible projects are selected and jointly administered by the Minnesota Department of Transportation and the Minnesota Public Facilities Authority. Minnesota Statutes, section 446A.085, authorizes the Minnesota Public Facilities Authority to manage and administer the fund and establishes the transportation committee of the Minnesota Public Facilities Authority to review and approve financial assistance to projects certified by the Commissioner of Transportation. Parts 7380.0705 to 7380.0775 provide for the authority's administration of its duties under Minnesota Statutes, section 446A.085. Minnesota Rule Parts 8805.0050 outlines Mn/DOT’s responsibilities.
5. Recreational Trails Program (RTP) is an assistance program of the Department of Transportation's Federal Highway Administration (FHWA). Federal transportation funds benefit recreation by making funds available to the States to develop and maintain recreational trails and trail-related facilities for both nonmotorized and motorized recreational trail uses. The RTP funds come from the Federal Highway Trust Fund, and represent a portion of the motor fuel excise tax collected from nonhighway recreational fuel use: fuel used for off-highway recreation by snowmobiles, all-terrain vehicles, off-highway motorcycles, and off-highway light trucks. The RTP funds are distributed to the States by legislative formula: half of the funds are distributed equally among all States, and half are distributed in proportion to the estimated amount of nonhighway recreational fuel use in each State. In Minnesota these funds are administered through the Department of Natural Resources. RTP funds may be used to match other Federal program funds for purposes that would be eligible under the Recreational Trails Program.

1. In general, Federal Title 23 funds cannot be used to match other Federal Title 23 funds. There are some specific exceptions, but they are very limited. In general other types of federal funds can be used to match Title 23 funds, but the legality of such a match should be confirmed before the project is very far along in the development process.
2. A soft match may be used for the local share of a project when the project is using certain types of federal funds. Most commonly these types of federal funding are Enhancement funds or High Priority funds. Soft matches must be approved by the FHWA and the ATP prior to authorization of the project. It is best to address any proposed soft match in the funding section of the project memorandum this generally allows time for FHWA approval of the proposed match prior to authorization.
   
   Soft matches may be provided by private donors or local governments. Soft matches are not currently allowed by State agencies under federal law. See 23 U.S.C. 133(e)(5)(C) and 23 U.S.C. 323. for laws which define soft match.
• The following items can be used as a soft match:
• Donated funds are treated at cash value.
• Donated materials are treated at fair market value.
• Donated services are treated at fair market value as determined by the Minnesota Labor Department.
  Using donated services by volunteers in not recommended. It is extremely time consuming to keep track of volunteer hours worked and it is also very difficult to determine a value of services provided by volunteers who may or may not be experienced in performing the proposed work.
• Donated land or right of way is appraised at fair market value.
• Calculating soft match.
  The value credited for the soft match can be up to the amount of the local share of the project.

	No Soft Match	Partial Soft Match	Full Soft Match
Estimated Project Cost	$100,000.00	$  90,000.00	$ 80,000.00
Soft Match	$           0.00	$  10,000.00	$ 20,000.00
Total Project Cost	$100,000.00	$100,000.00	$100,000.00
Federal Funds	$  80,000.00	$  80,000.00	$ 80,000.00
Local Match Cash	$ 20,000.00	$ 10,000.00 #	$     0.00 #

# Cash match only does not include soft match amount

It is important that the amount and types of soft match to be allowed on a project be approved by the FHWA prior to authorization of the project or the soft match may not be eligible to count toward the match. Soft match items donated prior to authorization and approval may not be credited to the project. Work with the DSAE, and SALT federal aid section to determine eligibility while developing the project.

3. State funds (DNR, Mn/DOT, or other state agency funds) and State bonding, as well as, city or county State Aid funds can be used to match federal funds. In cases where an item is not eligible for federal funds the local agency will need to supply other funds to pay for that specific portion of the project. These funds must be eligible for the type of reimbursement they are being applied to.