Public Transit


Funding Program Updates


Federal transit funding programs


The Federal Transit Administration of the U.S. Department of Transportation administers programs offering financial assistance for capital, operating, planning, and training assistance of local public transportation.

Metropolitan Transportation Planning (Section 5303)

These funds support planning activities in metropolitan areas on an 80 percent federal, 20 percent nonfederal basis. In Iowa, these funds are administered by the Iowa DOT's Systems Planning Bureau and are distributed annually to each of the state’s nine metropolitan planning organizations (MPOs) through a funding formula. The 5303 funds can support any MPO costs related to intermodal transportation planning activities for the urbanized area.

Statewide and Nonmetropolitan Transportation Planning (Section 5304)

These funds are intended to support transit planning in addition to what is conducted by the individual metropolitan planning organization (MPO). By law, the state is the direct recipient of the funding. Iowa uses these funds, along with 5311 funds set aside specifically for planning, to support a system of regional planning affiliations (RPAs). The RPAs are responsible for local intermodal transportation planning in areas of the state not included in a MPO. Iowa DOT's Office of Systems Planning serves as the direct recipient of these funds. The combined 5304 and 5311 planning funds are distributed annually to each of the Iowa's 18 RPAs through a funding formula. These funds jointly support regional intermodal planning on an 80 percent federal, 20 percent nonfederal basis.

Urbanized Area Formula Grants (Section 5307)

These funds come to the state on the basis of population and population densities in urbanized areas with populations between 50,000 and 200,000 to support public transit activities. They go directly to areas with a population exceeding 200,000. Public transit systems may use up to 10 percent of these funds to pay for some of their Americans with Disabilities Act paratransit costs on an 80 percent federal and 20 percent nonfederal basis. In urbanized areas with populations greater than 200,000, at least  1 percent of these funds must be set aside for transit enhancement activities. In areas with populations less than 200,000, the funding can be used to support operating deficit. Funds used in this manner must be matched by nonfederal funds (other than passenger revenues) on a dollar-for-dollar basis. The remainder can be used to fund capital improvements (including preventative maintenance activities) or planning activities on an 80 percent federal, 20 percent nonfederal basis. (Purchase of vehicles equipped for access by persons with disabilities can be funded at 85 percent federal participation, and purchase of special equipment required under the Clean Air Act Amendments can be funded at 90 percent federal participation.)

Enhanced Mobility of Seniors and Individuals with Disabilities (Section 5310)

This is a federal program for support of transit services serving elderly and persons with disabilities. These funds are allocated to Iowa on the basis of the number of persons who are elderly or have disabilities within the state compared to other states. By law, the state is the direct recipient of the funding for areas with populations less than 200,000. Urbanized areas with populations exceeding 200,000 receive a direct allocation. Public agencies responsible for coordinating human service transportation are eligible, as are private not-for-profit agencies. Because Iowa requires the designated public transit systems to coordinate all publicly funded passenger transportation services, Iowa distributes these funds to the public transit agencies. The funds may be used for the cost of contracted operations, equipment, and passenger or vehicle shelters on an 80 percent federal, and 80 percent nonfederal basis. Projects that “go beyond the ADA” and mobility management activities also are eligible. Purchase of vehicles equipped for access by persons with disabilities can be funded at 85 percent federal participation. Facilities other than passenger or vehicle shelters are not eligible.

Formula Grants for Other Than Urbanized Areas (Section 5311)

This federal program supports transit activities in rural areas and communities with populations less than 50,000. These funds are allocated to Iowa based on the number of persons living outside urbanized areas compared to other states. By law, the state is the direct recipient of the funding. Iowa DOT serves as the direct recipient of the funds, through both the Public Transit Section and the Systems Planning Bureau. Public Transit administers the bulk of the 5311 funding provided to small urban and regional transit systems, as well as the 15 percent of the annual apportionment, that in conformance with federal law, is utilized to support intercity bus services, described later in this chapter. The Systems Planning Bureau administers that portion of the 5311 funds that are combined with the 5304 funding to support rural transit and intermodal planning.

Rural Transit Assistance Program (RTAP) (Section 5311(b)(3))

This federal program provides a source of funding to assist in the design and implementation of training and technical assistance programs and other support services tailored to meet the specific needs of transit operators in nonurbanized areas (less than 50,000 in population). RTAP funds are mainly used to provide local transit agencies training fellowships. The fellowships pay 80 percent of the cost for Iowa's small urban and regional transit systems and their planners to attend Iowa DOT sponsored seminars, as well as transit-related courses or conferences sponsored by other groups. Transit systems may also be reimbursed for training held in-house. A parallel program funded with State Transit Assistance pays for costs incurred by large urban systems and their planners.

Intercity Bus Program (Section 5311(f))

A minimum of 15 percent of each year's nonurbanized formula funds allocated to Iowa under the 5311 program is required to be set aside to support intercity bus transportation. Private-for-profit companies, private nonprofit corporations, or public entities may apply for this funding. Connections to Amtrak or passenger air service terminals are desirable. Service strictly for commuter purposes is not eligible. Projects may include operating assistance, capital assistance, planning, or administrative costs, such as marketing and insurance.

Bus and Bus Facilities Formula Grants (Section 5339)

These funds can finance capital projects to replace, rehabilitate, and purchase buses and related equipment and to construct bus-related facilities. In Iowa, approximately $1,250,000 is received annually to be spent in small urban (less than 50,000 population) and regional transit systems and receives individual allocations for each large urban transit system serving populations between 50,000 and 200,000. The large urban funds are pooled since individual allocations would not allow for bus purchases on an annual basis. All funds are spent on vehicle replacements rather than on expansion vehicles or bus-related facilities and are distributed utilizing the vehicle rankings of the Public Transit Management System (PTMS). Transit systems serving populations of more than 200,000 receive direct allocations from the Federal Transit Administration and are not included in the statewide distribution through PTMS.

Federal flexible funds available to Transit

Flexible funds are certain legislatively specified funds that may be used either for transit or highway purposes. The idea of flexible funds is that a local area can choose to use certain federal surface transportation funds based on local planning priorities, not on a restrictive definition of program eligibility. Funds that can be transferred from the Federal Highway Administration and used for public transit purposes include the Surface Transportation Program and Congestion Mitigation and Air Quality Improvement Program.

Surface Transportation Program (STP)

These funds come to the state based on a number of factors, including vehicle-miles of travel, highway lane miles, and the number and size of bridges. The funds can be used for roadway, transit capital projects, pedestrian/bikeway projects, or intermodal planning projects on an 80 percent federal, local basis. In Iowa, a portion of these funds are programmed by local governments acting through metropolitan or regional planning agencies.

Iowa's Clean Air Attainment Program (ICAAP)

Iowa does not have any areas in violation of transportation-related federal clean air standards; therefore, the state receives a minimum allocation of Congestion Mitigation and Air Quality Improvement Program funding that can be used for any purpose for which STP funds can be used and on the same 80 percent federal and 20 percent nonfederal basis. In Iowa, funds are programmed for highways or transit projects through a statewide application process that selects projects based on their anticipated air quality or congestion relief benefits. The Iowa program is referred to as Iowa's Clean Air Attainment Program.

State Transit Funding Programs

The State of Iowa currently offers three programs providing financial assistance to public transit system: State Transit Assistance, Public Transit Infrastructure Grant Fund, and the Capital Match Revolving Loan Fund.

State Transit Assistance (STA)

Iowa devotes an amount equal to 4 percent of the fees for new registration collected on sales of motor vehicle and accessory equipment to support public transportation. Most of this money is distributed by the STA formula that is based on each transit system's performance during the previous year in terms of rides, miles, and local funding support. These formula funds are usable for support of any operating, capital, or planning expenses related to the provision of public passenger transportation.

  • STA special projects - Each year up to $175,000 of the total STA funds are set aside to fund special projects. These can include grants to individual systems to support transit services that are developed in conjunction with human services agencies. Grants can also be awarded to statewide projects that improve public transit in Iowa through such means as technical training for transit system or planning agency personnel, statewide marketing campaigns, etc.

Public Transit Infrastructure Grant (PTIG)

This program is funded annually by the state legislature to fund some of the vertical infrastructure needs of Iowa’s transit systems. Projects can involve new construction, reconstruction, or remodeling, but must include a vertical component to qualify. Projects are evaluated based on the anticipated benefits to transit, as well as the ability to have projects completed quickly. The infrastructure program participation in the cost of transit-related elements of a facility project is limited to 80 percent and cannot, in combination with federal funding, exceed that number. No single system can receive more than 40 percent of the available infrastructure funding in a given year.

Capital Match Revolving Loan Fund (Amoco Loan)

The intent of Capital Match Revolving Loan program is to increase the inherent energy conservation benefits of public transit by expediting the implementation of transit capital projects by providing loans for local match to federal or state funds received for a capital project. The fund was created by the Iowa Legislature in the early 1980s with funds from Iowa's share of the federal government’s petroleum overcharge settlement against the American Oil Co. (Amoco). All public transit systems are eligible for loans under this program.

Local Transit Funding

Local funding support for transit includes fares or contributions received from riders, revenues from contracts with social service agencies, student fees, and taxes levied by local cities and counties. Cities are allowed under the Iowa Code to levy a dedicated property tax for transit of 95 cents per $1,000 assessed valuation. Other local tax funding comes from general fund levies, and from "trust and agency" levies.


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