Planning 101

How the federal government helps to build and expand transit

Projects to build or expand transit are referred to as capital projects, as opposed to the day-to-day operating expenses. These projects can include acquiring land; building maintenance facilities and stations; and buying new or replacement buses or railcars. Public agencies of all sorts are tasked with keeping their operating and capital budgets strictly separate, and the two can be administered by entirely distinct offices.

Ever since President Lyndon Johnson created what we now know as the Federal Transit Administration (FTA) in 1964, transit agencies nationwide rely on its support to advance their various capital programs and projects. For more about the limited federal support for operations, read our other explainer.

DIRECT PROGRAMS

FTA support is provided directly to transit agencies through two categories. One, there are formula programs that are doled out annually according to a formula that considers things like population and the amount of transit service. Two, there are competitive programs that require agencies to submit applications to FTA for the funding.

Formula programs

Urbanized Area Formula Grant Program (49 USC 5307)
The largest portion of the FTA’s grantmaking authority, the Urbanized Area Formula Grant Program ($33.5 billion over five years) provides direct, annual funding on a formula basis to large transit agencies that serve over 200,000 people. In larger cities or metro areas, this represents the bulk of the federal money that the local transit agency receives each typical year.

Formula Grants for Rural Areas (49 USC 5311)
This program ($4.6 billion over five years) provides annual capital, planning, and operating assistance on a formula basis to states and federally recognized Indian tribes to support public transportation in rural areas with populations less than 50,000. It also provides funding for state and national training and technical assistance through the Rural Transportation Assistance Program. States and Indian tribes then determine how to distribute that funding to the transit agencies that provide the service.

Grants for Buses and Bus Facilities Formula Program / Rural Allocation (49 USC 5339(a))
This program ($3.2 billion over five years) funds the purchase, replacement, or rehabilitation of buses, bus equipment, and maintenance facilities. Bus operators (transit agencies) or state funders of transit agencies are both eligible. The amount of funding that agencies receive is based upon a combination of buses an agency owns/operates and the amount of bus service hours (the time a bus is moving passengers) that those assets are delivering.

Paratransit Formula Grant Program (49 USC 5310)
This program ($1.9 billion over five years) provides annual funding to support the transit mobility of seniors and persons with mobility impairments. The program funds both capital and operations of paratransit services for mobility challenged individuals or the capital enhancement of fixed service transit that exceeds Americans with Disabilities guidelines. 60 percent of program funding goes to large urban areas (200k+ population), 20 percent goes to small urban areas (50k-200k), and 20 percent goes to rural areas.

State of Good Repair Grants (49 USC 5337(f))
FTA provides grants ($21.6 billion over five years) to state and local transit agencies to maintain public transportation systems in a state of good repair. If an agency serves a population of under 200,000 people, however, their grants will be subdivided to them by their state DOT. The IIJA added a new $300 million annual competitive grant program to fund rail vehicle replacement. That component considers the size, rolling stock age and condition, current State of Good Repair Grants funding, and replacement priority within the transit asset management plan of the applicant’s system.

Competitive grants

Local and Regional Infrastructure Project Assistance (RAISE) (49 USC 6702)
The RAISE program ($15 billion over five years) is one of the most flexible and popular programs. Any public agency may apply for any surface transportation project, including transit. USDOT uses a rigorous merit-based process to select projects with exceptional benefits in safety, environmental sustainability, quality of life, mobility and community connectivity, economic competitiveness and state of repair. Successful projects in this program demonstrate strong state/local support and funding (with the average state/local match around 50 percent).

Capital Investment Grants (CIG) Program (49 USC 5309; 49 USC 22902)
If there’s a major project to expand or build new heavy rail, commuter rail, light rail, streetcars, or bus rapid transit, the federal funding will mostly come from this flagship competitive funding program ($23 billion over five years). Unlike other competitive grant programs, the CIG program operates as a first-come, first-serve process to advance your transit capital project. There are three categories of projects: Larger projects fit into the categories of New Starts (mostly new lines or systems) or Core Capacity projects (designed to increase capacity on existing systems), which require both project development and engineering approval. For smaller transit capital projects, categorized by the FTA as Small Starts projects, the law requires completion of one project development phase, and projects are rated by the FTA along the way, which also guides distribution. Advocates can push for a smoother approval process. The criteria for grant approval are local capacity, the quality of the associated transportation improvement plan (TIP), and the progress made toward a state of good repair. While on paper the program is supposed to cover 80 percent of the cost, in reality, the match rates are closer to 50 percent. (In fact, FTA encourages agencies to request as low a share as possible.)

Rural Surface Transportation (RST) Program (23 USC 173)
Though this well-funded program ($3.3 billion over five years) is largely intended for roads in rural areas, transit projects are also an excellent fit for the RST program. This program funds mobility on demand, transit automation and mobility payment integration projects to improve access to healthcare, emergency care, and other essential services. Projects must be a form of transportation demand management to qualify and located on a highway (as defined in US code). Note that transit projects like bus rapid transit (BRT) and rail often meet all four of these requirements by their very nature, but applicants will need to be specific about how their particular project matches the criteria.

Grants for Buses and Bus Facilities / Rural Allocation (49 USC 5339(a))
This is the competitive component of the similarly named formula program above and abides by the same eligibility requirements ($1.97 billion over five years). Though these competitive grants existed prior to the IIJA, 15 percent of all funds are required to go to rural areas, so rural communities wanting to develop better bus capabilities can seek these grants more effectively than in the past.

All Stations Accessibility Program (IIJA Division J Section VIII)
This program ($1.75 billion over five years) is available for states and local government applicants to fund capital projects at legacy rail fixed guideway systems that improve station accessibility for persons with mobility challenges, such as installing an elevator in an old Metro station to provide access to those who cannot take the stairs.

Reconnecting Communities and Neighborhoods (RCN) program (23 USC 177) (Pub. L. 117-58 § 11509; Division J, title VIII)
RCN combines the Reconnecting Communities Pilot (RCP) Program with the Neighborhood Access and Equity (NAE) Program, making about $3 billion per year available for projects that holistically create mobility choices, reduce barriers to mobility, and mitigate damaging physical and environmental impacts to communities. States, MPOs, Tribal and local governments can apply for RCN funding for many types of connectivity projects, including transit capital projects that provide affordable access to essential destinations like jobs and services, and there is a priority for projects that benefit disadvantaged communities.

Loan programs

Transportation Infrastructure Finance & Innovation Act (TIFIA) (23 USC 601-610)
The TIFIA loan program provides credit assistance for projects of regional and national significance, including transit capital projects. Eligible applicants include state and local governments, transit agencies, railroad companies, special authorities, special districts, and private entities.

Railroad Rehabilitation and Innovation Financing (RRIF) Loans (49 USC Chapter 224)
The RRIF program, which is operated by the Build America Bureau, provides loans to states, local governments, interstate compacts, government backed entities, and railroad owners to finance railroad infrastructure (capital) projects. RRIF is often utilized by long-distance rail operators like freight companies and Amtrak, but is also frequently sought out by commuter rail transit operators, with recent loans going to Sound Transit and the Massachusetts Bay Transportation Authority (MBTA). The infrastructure law provided new eligibilities for the loan program.

INDIRECT PROGRAMS

There are other funding streams controlled by the state department of transportation or a metropolitan planning organization (MPO) that can be tapped to fund transit capital projects. But doing so can be an uphill battle—the decision to spend money from these programs on transit is up to state departments of transportation, which are often reluctant to do so.

State-administered formula programs

National Highway Performance Program (NHPP) (23 USC 119; 23 USC 217)
The NHPP represents ~59% of a state’s total funding apportionment from the Federal Highway Administration. But transit capital projects are eligible if they’re adjacent to or on a roadway corridor designated as part of the National Highway System (NHS), such as this new bus rapid transit (BRT) project in Albany, NY. Though the decision to spend NHPP dollars on transit is up to state departments of transportation, which are often reluctant to do so.

Formula Grants for Rural Areas + Indian Tribes and the Appalachian Region (49 USC 5311)
States receive capital, planning, and operating assistance to support public transportation in rural areas with populations of less than 50,000. The program also provides funding for state and national training and technical assistance through the Rural Transportation Assistance Program. In 2021, Congress funded these grants at $4.6 billion over 5 years to increase the program’s capacity and carved out 5 percent of the funds for Indian reservations and 3 percent for the Appalachian region.

Carbon Reduction Program (CRP) (23 USC 175)
The CRP sets aside 2.56 percent from each state’s total apportionment from the Federal Highway Administration to fund projects that reduce carbon emissions. States are required to distribute 65 percent of the program’s funds by population within the state and can spend the remaining 35 percent at its discretion. MPOs are responsible for administering program funds in areas over 200,000 in population. The CRP can fund any public transit capital project that can prove that it will reduce carbon emissions from the applicant’s transportation system.

MPO-administered formula programs

Congestion Mitigation and Air Quality (CMAQ) Program (23 USC 149; 23 USC 217)
This program supports an array of possible transportation projects or programs that reduce congestion and improve air quality. $2.5 billion is distributed per year on a formula basis to MPOs in states with EPA-identified regions of air quality nonattainment to improve air quality (and is jointly administered between the MPO and the state). Projects will need to be included in an MPO’s Transportation Improvement Plan (TIP) to be eligible for CMAQ funding. All transit capital projects are eligible uses of CMAQ funds. In states with no regions in nonattainment, CMAQ funds go to the state government to fund whichever projects it deems fit.

Surface Transportation Block Grants (STBG) (23 USC 133 (h); 23 USC 142 (a)(3))
This represents ~29% of a state’s total funding apportionment from the Federal Highway Administration. All transit capital projects are eligible projects for STBG funding (jointly administered between the MPO and the state). Congress also recently opened up the STBG for use in constructing BRT corridors. This can be used for traffic signaling and prioritization systems, redesigning intersections, on-street stations, fare collection systems, information and wayfinding systems, and depots.

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