Additional Information Regarding Funding Approvals

Commission Approval
A transportation project must be authorized in a minute order presented and heard at a meeting of the Texas Transportation Commission. If a project is included in the
Unified Transportation Program
(UTP), the minute order approving the UTP is the only Minute Order required. Projects funded with TxDOT district discretionary funds are also authorized under the UTP minute order. There are times when an individual, project-specific minute order is required.
LG Authority Approval
It is the responsibility of the LG to know the legal requirements governing its ability to contract with TxDOT. In general, LGs authorize the expenditure of funds through action of their governing body or board that authorizes the LG to enter into a contract with TxDOT.
Outstanding Balance
In negotiating AFAs, the TxDOT district office must first check with the Finance Division (FIN) to determine if the LG has an outstanding balance owing to the state. In most cases, outstanding balances must be paid before further funding agreements can be executed.
Special Approvals
In some cases, special approvals are needed to allow a LG to perform the work. Some examples include the following.
  • Local Letting
    . The LG may locally let and award a construction contract if approved by TxDOT.
    43 TAC §15.52 (3)
    outlines the conditions required for a LG to receive TxDOT approval to let/award a construction contract. If the specified conditions are demonstrated, written approval by the TxDOT executive director or his designee is required. This approval should be obtained during preparation of the AFA and documented in the project files.
  • Local Force Account Work
    . The LG may use county or municipal employees to perform work on the project.
    43 TAC §15.52 (3)
    outlines the conditions required for a LG to perform project construction activities with its own forces. Once these conditions are demonstrated, written approval of the TxDOT executive director or his designee is required prior to performing the improvements. To reduce potential delays, this approval should be requested as early in the project as practicable.
  • Funding Agreement
    . All AFAs define the allocation of project costs between the parties to the agreement. Chapter 1, Section 5 of the
    Project Development Process
    manual includes charts that indicate standard funding participation values for numerous transportation programs. This document also includes an “AFA Recommended Funding Type Chart” that indicates which of the following funding types (fixed price or specified percentage) is recommended based upon the category of work, who is managing the work, and whether the project is on or off the state highway system or is a non-construction project. If the AFA proposes a funding type that is not aligned with the recommendation in the chart, special approval by the executive director or his designee is required.
    • Fixed Price
      .
      43 TAC §15.52 (4)
      defines fixed price as the LG funding participation amount based upon the department’s estimated cost of the work to be performed at the time of executing an AFA. TxDOT and the LG agree upon a fixed price amount of participation by the LG. This amount may be adjusted through execution of amendments to the AFA due to changes in project scope and/or unforeseen conditions. In this case, any project costs in excess of the amount specified in the AFA would be the responsibility of TxDOT (using either state or federal funds). This change is intended to incentivize both the LG and TxDOT to be more proactive in estimating and managing project costs and in significantly expediting the project close-out process at project completion.
    • Specified Percentage
      .
      43 TAC §15.52(4)
      defines specified percentage as the LG and TxDOT agreeing to each be responsible for specified percentages of estimated total project costs. This type of agreement will specify a percentage participation for federal funds, state funds and local funds with a cap on the amount of federal and state participation. In this case, any project costs in excess of the amount specified in the AFA are the responsibility of the LG.
  • Periodic Payment Agreement
    . In addition to determining whether to use fixed price or specified percentage funding,
    43 TAC §15.52(4)
    also allows the LG’s share of estimated project costs to be paid out using periodic payments under certain conditions. Periodic payment agreements must be approved by the executive director or his designee and may not be approved if the LG has any delinquent obligations to TxDOT.
  • Approval of Projects in Economically Disadvantaged Counties
    .
    43 TAC §15.55(b)
    provides special consideration for projects located in economically disadvantaged counties (including the cities and towns within these counties). In evaluating a proposal for a highway improvement project with a LG that consists of all or a portion of an economically disadvantaged county, the commission shall, for those projects in which the commission is authorized by law to provide state cost participation, adjust the minimum local matching funds requirement after receipt of a request for adjustment from the governing body of the LG. Further information regarding the
    Economically Disadvantaged County Program
    is available on the TxDOT website.
An economically disadvantaged county is one that has:
  • Below average per capita taxable property value;
  • Below average per capita income; and
  • Above average unemployment.