Actual Cost Agreements

Agreements are approved on an estimated cost basis that will be adjusted to reflect the actual cost of the adjustment at the time of billing and be verified by audit. If any costs are incurred for a reimbursable utility adjustment before an approved agreement, TxDOT will not reimburse the utility for those costs.

Federal Utility Procedure (FUP)
All utility adjustments are eligible for reimbursement by State law for Interstate projects. Districts will ensure that appropriate funds are programmed in the STIP for maintenance operations. The necessity for, and justification of, interstate adjustments depends on whether the existing facilities need to be adjusted to accommodate the highway and are in the best interests of the public. The ROW Division has been empowered by the FHWA to act in its capacity and must be consulted concerning all proposed adjustments on interstate highways. The approval authority of the agreement assembly lies with the District. The agreement assembly must contain the following:

a fully executed Standard Utility Agreement,

detailed plans of the adjustment,

a correlating estimate of costs,

betterment ratio calculation, if applicable,

accrued depreciation and/ or salvage credits, if applicable,

statements of who will accomplish the work,

bid proposals if necessary,

forms detailing property rights to be maintained or abandoned,

method of accounting procedure to be used,

proof of signature authority to execute by utility, if applicable,

supporting documentation and statements, and

proof of Buy America compliance

To verify that the adjustment is necessary, justified, feasible, economical, and UAR-compliant, utility plans will be reviewed by the District. Plans shall include existing and proposed Right of Way and Utilities, main lane stationing, easements etc.

A utility may estimate the cost of work to be performed by contract forces without securing bids. However, the utility must include a reasonable basis for estimating the contract work. The plans and estimates should also reflect the necessity for the adjustment.

State Utility Procedure (SUP)
Utility adjustments on Federal-aid (non-interstate), Off-System, State, and FM highway projects require a determination of eligibility. The justification for cost participation depends on whether the existing facilities have real or compensable property rights, in addition to the need to be adjusted to accommodate the highway, and are in the best interests of the public. The ROW Division has been empowered by the FHWA and State to approve all such adjustments and can be consulted before approval. The Districts have been empowered by ROW Division to approve the estimate, plans, and general agreements. The agreement assembly must contain the same information required for the Federal Utility Procedure above, plus the following:

proof of property and/or compensable rights on the correct forms,

an agreement to contribute funds has been executed with the LPA, and

a determination of percentage of eligibility

To verify that the adjustment is necessary, justified, feasible, economical, and UAR compliant, utility plans will be reviewed by the District.

Local Utility Procedure (LUP)
On local public agency (LPA) projects with TxDOT cost participation, a written agreement between TxDOT and the utility is not required. TxDOT does not require the LPA to execute a formal contract with the utility, but it is recommended. The responsibility for approval of payments rests with the ROW Division. Before any payments to the LPA can be made, an audit will be made to a make a determination of upper limit. The LPA must furnish the same information as required for an agreement under the State Utility Procedure above. Upon project release by the ROW Division, the LPA can initiate the utility adjustment. Negotiation, communication, and coordination of work with the utility, relative to accommodation and/or reimbursement, are the LPA’s responsibilities.

To verify that the adjustment is necessary, justified, feasible, economical, and UAR compliant, utility plans will be reviewed by the District. For adjustments that are less than fully eligible for State cost participation, the plans must clearly show the explanations and calculations used in deriving the eligibility percentage.

Section 1: Overview