(a) Purpose. Transportation Code, Chapter 456 requires the commission to allocate, at the beginning of each state fiscal year, certain amounts appropriated for public transportation. This section sets out the policies, procedures, and requirements for that allocation.
(b) Formula allocation. At the beginning of each state fiscal year, an amount that does not exceed the amount appropriated from all sources to the commission by the legislature for that biennium for public transportation, other than federal funds and amounts specifically appropriated for coordination, technical support, or other costs of administration, will be allocated to urban and rural transit districts.
  (1) If the appropriated amount to which this subsection applies is at least $73,752,134, the commission will allocate $10,365,694 to large urban transit districts, $15,927,748 to small urban transit districts, and $45,917,020 to rural transit districts. If the appropriated amount is less than $73,752,134, the amounts allocated by this paragraph will be reduced proportionately.
    (A) Urban funds available under this section will be allocated to urban transit districts as provided by this subparagraph.
      (i) If at least $73,752,134 is appropriated as described in paragraph (1) of this subsection, an urban transit district receiving funds under Transportation Code, Section 456.006(b), will be allocated for each year of the biennium an amount equal to the amount received by that district in Fiscal Year 1997. These districts include the cities of Arlington (amount $341,663), Grand Prairie (amount $170,584), Mesquite (amount $142,455), and North Richland Hills (amount $116,134). These allocations will be assigned from the small urban transit district funds. If less than $73,752,134 is appropriated, the amounts allocated by this clause will be reduced proportionately. If more than $73,752,134 is appropriated, an urban transit district to which this clause applies is not eligible for additional funds under paragraph (2) or (3) of this subsection.
      (ii) One-half of the funds allocated to small urban transit districts will be based on population by using the latest census data available from the U.S. Census Bureau for each small urbanized area relative to the sum of all small urbanized areas. One-half of the funds allocated to small urban transit districts will be performance-based allocations.
      (iii) One-half of the funds allocated to large urban transit districts will be based on population by using the latest census data available from the U.S. Census Bureau for each large urbanized area relative to the sum of all large urbanized areas served by urban transit districts. A large urban transit district with an urbanized area population of 300,000 or more will have the population adjusted to reflect a population level of 299,999. One-half of the funds allocated to large urban transit districts will be performance-based allocations.
      (iv) An urban transit district is eligible for a performance-based allocation under clause (ii) or (iii) of this subparagraph, as appropriate, if it is in good standing with the department and has no deficiencies and no findings of noncompliance. The commission will award the performance-based funding based on the following weighted criteria: 30 percent for local funds per operating expense, 20 percent for ridership per capita, 30 percent for ridership per revenue mile, and 20 percent for revenue miles per operating expense. These criteria may be calculated using the urban transit district's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.
      (v) The public transportation division director commission, in any year, may waive or approve an alternate calculation of an allocation under this paragraph to an urban transit district or a group of urban transit districts to mitigate unique conditions that negatively affect the performance of the district or group, including natural disaster, pandemic, or another event that specifically affects the service level of the district or group. The alternate calculation may be used in subsequent years at the discretion of the department.
    (B) Rural funds allocated under this paragraph will be allocated only to rural transit districts in rural areas based upon need and performance as described in clauses (i) and (ii) of this subparagraph.
      (i) Sixty-five percent of the funding under this subparagraph will be allocated to rural transit districts as a need based allocation giving consideration to population weighted at 75 percent and on land area weighted at 25 percent for each rural area relative to the sum of all rural areas.
      (ii) Thirty-five percent of the funding under this subparagraph will be allocated to rural transit districts as a performance based allocation. A rural transit district is eligible for funding under this clause if it is in good standing with the department and has no deficiencies and no findings of noncompliance. The commission will award the funding by giving equal consideration to local funds per operating expense, ridership per revenue mile, and revenue miles per operating expense. These criteria may be calculated using the rural transit district's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.
      (iii) The public transportation division director commission, in any year, may waive or approve an alternate calculation under this paragraph to a rural transit district or a group of rural transit districts to mitigate unique conditions that negatively affect the performance of the district or group, including natural disaster, pandemic, or another event that specifically affects the service level of the district or group. The alternate calculation may be used in subsequent years at the discretion of the department.
    (C) Funds allocated under this section and any local funds may be used for any transit-related activity except that an urban transit district not included in a transit authority but located in an urbanized area that includes one or more transit authorities may use funds allocated under this section only to provide up to:
      (i) 65 percent of the local share requirement for federally financed projects for capital improvements;
      (ii) 50 percent of the local share requirement for projects for operating expenses and administrative costs;
      (iii) 50 percent of the total cost of a public transportation capital improvement, if the urban transit district certifies that federal money is unavailable for the proposed project and the commission finds that the proposed project is vitally important to the development of public transportation in the state; and
      (iv) 65 percent of the local share requirement for federally financed planning activities.
    (D) Subject to available appropriation, no award to an urban or rural transit district under this paragraph will be less than 90 percent of the award to that transit district for the previous fiscal year. All allocations under subsection (b)(1)(A) and (B) of this section are subject to revision to comply with this standard.
  (2) The commission will award on a pro rata basis, competitively, or using a combination of both, any appropriated amount that remains after other allocations made under this subsection. Funds awarded under this paragraph may be used to address transit district service and capital development needs, changes in transit district boundaries, unforeseen funding anomalies, emergency services response and recovery needs, changes in economic conditions or availability of assets significantly impacting current year operational expenses, or other needs determined by the commission. Awards under this paragraph are not subject to subsection (b)(1)(D) of this section in succeeding fiscal years.
(c) Change in service area. If part of an urban or rural transit district's service area is changed due to declaration by the U.S. Census Bureau, or if the service area is otherwise altered, the department and the urban or rural transit district shall negotiate an appropriate adjustment in the funding awarded to that urban or rural transit district for that funding year or any subsequent year, as appropriate. This negotiated adjustment is not subject to subsection (b)(1)(D) of this section.
(d) Unobligated funds. Any funds under this section that an urban or rural transit district has not applied for before the November commission meeting in the second year of a state fiscal biennium may be administered by the commission under the discretionary program described in §31.13 of this subchapter (relating to Discretionary Program).
(e) Returned funds. Any funds under this section that an urban or rural transit district agrees to return to the department, if eligible for reallocation, will be administered by the commission under the discretionary program described in §31.13 of this subchapter.
(f) Application. To receive funds allocated under this section, a transit district must first submit a completed and certified application, in the form prescribed by the department. The application must include a statement that the proposed public transportation project is consistent with continuing, cooperating, and comprehensive regional transportation planning implemented in accordance with 49 U.S.C. §5301. Federal approval of a proposed public transportation project will be accepted as a determination that all federal planning requirements have been met.
(g) Project evaluation. In evaluating a project under this section, the department will consider the need for fast, safe, efficient, and economical public transportation and the approval of the FTA, or its successor.

Source Note: The provisions of this §31.11 adopted to be effective November 23, 1989, 14 TexReg 5938; amended to be effective January 10, 1992, 17 TexReg 47; amended to be effective January 13, 1994, 19 TexReg 90; amended to be effective March 22, 1996, 21 TexReg 2096; amended to be effective March 26, 1998, 23 TexReg 3044; amended to be effective February 15, 2001, 26 TexReg 1365; amended to be effective April 17, 2003, 28 TexReg 3080; amended to be effective September 1, 2004, 29 TexReg 6734; amended to be effective June 20, 2005, 30 TexReg 3606; amended to be effective July 20, 2006, 31 TexReg 5675; amended to be effective February 21, 2008, 33 TexReg 1380; amended to be effectiveApril 19, 2012, 37 TexReg 2696; amended to be effective November 21, 2013, 38 TexReg 8253; amended to be effective December 6, 2017, 42 TexReg 6815; amended to be effective May 15, 2024, 49 TexReg 3375