Testimony of Hal Hiemstra
Vice President for National Policy Rails-to-Trails Conservancy
presented to the Subcommittee on Transportation and Infrastructure of the
Committee on Environment and Public Works of the United States Senate
March 19, 1997

Good morning. Mr. Chairman and Members of the Committee, my name is Hal Hiemstra. I am the Vice President for National Policy at the Rails-to-Trails Conservancy, a national non-profit trails, bicycling and transportation reform organization with approximately 100,000 members and supporters. I also serve on Steering Committees for the Surface Transportation Policy Project and Bikes Belong! Campaign, and co-chair STPP's Transportation Enhancements Committee which includes among many others representatives of the National Trust for Historic Preservation, Scenic America, League of American Bicyclists, American Planning Association, and the American Institute of Architects. I want to thank you for the opportunity to address you this morning on issues relating to the reauthorization of the Transportation Enhancement provisions (TEP) of ISTEA.

Since the passage of ISTEA, Rails-to-Trails Conservancy (RTC) has maintained an ongoing dialogue with State Departments of Transportation and projects sponsors about spending and implementation issues associated with the TEP. We track Enhancement money programmed, money matched, money obligated and money reimbursed. We also track projects funded and project spending by Transportation Enhancements Activity (TEA) category. Twice a year, RTC complies the spending information into a comprehensive Enhancements funding report which details programmed as well as obligated and reimbursed funds by TEA category, and also documents the amount of local matching funds spent on transportation enhancement projects.

While I could speak at length about the successes nationally of the Transportation Enhancements Program, in the interest of time, today I want to share five main points with Members of the Committee.

1) First, transportation is about more than roads. True, we all need and benefit from highway infrastructure, however bicyclists and pedestrians need safe on and off-road routes, sidewalks and convenient access to transit stations and other intermodal transfer points as well.

An important eligible funding category of the TEP which speaks directly to the broader goals of ISTEA is the renovation of historic transportation facilities. Renovated transportation facilities have the potential to become focal points for new transit riders, increased Amtrak users and related commercial development.

Clearly, local community leaders want transportation-related projects that help to offset the strains that are sometimes imposed by highway infrastructure development. The Intermodal Surface Transportation Efficiency Act calls for public investment in a variety of transportation modes and types of transportation facilities. The Transportation Enhancements Program is helping to meet these broader transportation goals by directing just 1.7 percent of ISTEA's funds to projects which are helping to build diverse transportation infrastructure. (see Appendix A)

Investments in these types of facilities are what the American people want.

A new poll released in late February by the Bikes Belong! Campaign, a coalition of bicycle advocacy and industry groups, has found that a majority of Americans support the use of a portion of gas tax revenue for funding transportation enhancements. The bipartisan poll, conducted by Lake Research and the Terrance Group, found 64% of those polled favored using gas tax revenues for alternative transportation projects such as funding bike lanes, bike trails and sidewalks. The response increased to 70 percent when respondents were asked whether they also favored using Enhancement funds for related transportation purposes including renovation of historic train depots, scenic road enhancements and similar projects. And, a whopping 79 percent of the respondents supported using gas tax dollars to build safe places for children to walk and bicycle. According to a spokesperson for the Terrance Group, the poll data shows "that continued federal support for alternative transportation projects is among the few topics upon which most Americans can agree.

2) Second, the Transportation Enhancements Pro grain helps to stabilize and rebuild community infrastructure by improving the quality of life in communities lucky enough to have received enhancement funding since 1991, and stimulating local economic development --both of which are goals associated with any type of transportation project.

And, unlike many other types of transportation projects, Transportation Enhancement projects are actually very popular.

The Enhancements Program also responds to local priorities. Since enhancement projects tend to be small projects (the average federal share is $289,000), local community leaders have been able to play an important role in helping to define and design transportation enhancement projects. Because the program responds to local priorities, the Transportation Enhancement Program -- perhaps more than any other new program created by ISTEA -- builds new public support for transportation funding. In fact, the TEP has attracted more new players than any other program or provision of ISTEA. While enhancement opponents may see this phenomenon as a bothersome consequence of the program, these same individuals and groups are often the first to complain that there are not enough dollars for needed transportation investments. But, any increase in transportation spending is hard to imagine without broad -- and growing -- public support.

In addition to recruiting new supporters of transportation spending, the Enhancement Program is already bringing additional investments into the transportation sector by leveraging more than the required twenty percent local match. Nationally, the average local match for Transportation Enhancement projects is 27 percent -- that's a seven percent overmatch. Typically, the sources of funding for the overmatch come from non- traditional transportation partners including local governments, private foundations, or state agencies other than the DoT. This type of local hyper-investment speaks volumes about the level of commitment these communities and the local elected officials making tough spending decisions have for the Transportation Enhancements Program.

3) Third, the TEP has and continues to be successfully implemented all across the country Nationally, as of February this year, approximately 7,321 Enhancement Projects had been programmed for funding. Funds committed to these projects total some 80.6 percent of available money. For a variety of reasons TEP obligation rates are 53 percent and reimbursement rates fall to a disappointing 26 percent. Later in this testimony I will offer suggestions on ways to streamline the TEP in an effort to improve these obligation and reimbursement rates.

The attached pie chart (Appendix B) illustrates that just over 52 percent of funded projects are either bicycle/pedestrian or trail projects, and another 16.7 percent are for projects which rehabilitate historic (and often in use) transportation facilities.

But numbers and statistics are sterile. What has the Transportation Enhancements Program really accomplished?

-- Children in Jackson Hole, Wyoming now have a series of trails that converge upon their middle school allowing them safe routes to bicycle, walk or ski to school, and enabling their moms or dads to leave the car at home for at least two trips a day.

-- One thousand Minnesotans a day now commute to work in Minneapolis on the Cedar Lake Park Bikeway which shares the corridor with a Burlington Northern mainline carrying coal from Montana to Chicago. By allowing this many people to arrive in Minneapolis through bicycling, walking or in-line skating, the need for another parking lot was eliminated preserving valuable greenspace in the central city.

-- In heavily congested downtown business district of Indianapolis, Indiana enhancement funds were used for major infrastructure reconstruction involving curbs, sidewalks, streets, and landscaping. Without compromising traffic flow or the historic integrity of this National Road corridor, a "pedestrian friendly" downtown has been created for the more than 100,000 pedestrians visiting downtown hotels, restaurants, office buildings and retail shops on a daily basis.

-- In Great Falls, Montana enhancement funds are helping to build the 5 1/2 mile long Rivers Edge Trail which will provide new off-road transportation choices for students and residents of adjacent neighborhoods and communities along the Missouri River.

-- The renovated rail depot in Danville, Virginia not only provides an inviting Amtrak station for today's passengers, but it has also anchored a deteriorating neighborhood and gives promise of restoring the city's downtown life.

-- And, in San Francisco, enhancement funds are helping to redesign and construct the central passenger concourse of the National Landmark Ferry Building. By improving the intermodal connection between water and land based transportation options for commuters using the long-neglected Ferry Building, initial daily passenger numbers are projected to increase from 8,500 to 12,500.

But, the Transportation Enhancements approach has just begun to tap community needs for the kind of projects it funds. In fact, for every project programmed, nationally literally thousands of other eligible enhancements projects remain unfunded.

The Transportation Enhancement Program has not, however, glided effortlessly to its successes. Despite early reactions of bewilderment and denial by many of the 50 states, thanks to the efforts of FHwA staff, dedicated state DOT officials and enthusiastic private sector stakeholders, by mid-1993 every state had a TEP program up and running. To clarify a variety of implementation issues including concerns about project linkages to the transportation system, FHwA has issues or referenced 16 Enhancement guidance documents since 1991. (Appendix C) And, this Committee enacted several implementation streamlining amendments in last year's NHS bill.

Despite these clarifying and streamlining steps however, the Transportation Enhancement Program has and continues to come under criticism as being too burdensome or for funding some projects which have less than obvious transportation linkages. When considering these criticisms, it is important to understand that l) states were given tremendous latitude over the ways in which they could design their enhancements programs and their project selection process; 2) it is the state DOT or Transportation Commission which makes the final decision about which projects get funded; 3) it is important to separate the individual project from the overall TEP program; and 4) under current law, states are free to withhold obligation authority (OA) from TEP projects when OA levels are below state apportionments and many states do so using the Enhancements Program disproportionately to make up budgetary shortfalls. If complaints are being lodged about particular projects, the problem, if any, rests with the state designed project selection process, and does not reflect any structural problem with theTransportation Enhancements Provision.

4) Changes which could be made to strengthen and continue streamlining the TEP. These recommendations are offered as the product of the STPP Transportation Enhancements Committee and have the endorsement of this broad coalition of partners. (See Appendix D for a more detailed outline.)

1. Make Enhancements a non-reimbursement program (i.e. a grant program at the request of the states);
2. Continue the innovative financing and soft match provisions enacted in the NHS legislation;
3. Explicitly allow TE program funds to be spent on overhead and staffing charges;
4. Require proportionate use of obligation authority;
5. Encourage the creation of State TEP Advisory Committees made up of TEA stakeholders;
6. Allow sole-source contracting with non-traditional partners in certain situations; and
7. Add a clear statement of policy about this important program.

if these changes were adopted as part of ISTEA II, effective implementation of the Transportation Enhancement Program would be accelerated, obligation rates would increase significantly, and issues of reimbursement could become moot in states choosing to take advantage of the advance payments option.

5) Fifth, and finally, eve want to urge the Committee in the strongest possible terms, to reauthorize ISTEA's Transportation Enhancement program as a dedicated program with assured levels of funding. It is certainly my hope, and the desire of groups like Rails-to-Trails Conservancy and the Surface Transportation Policy Project that eventually we will not need a separate set-aside for the Transportation Enhancements Program. However, experience with the state DOTs across the country leaves us with little illusions about the program's future if it becomes simply "eligible" or is made "flexible." In most cases, the program would be gone within a year, three years at most.

We are not alone in this surmise. At last summer's National Transportation Enhancements Conference sponsored by FHwA, AASHT0, the mid-Atlantic State DOT's, and various STPP partners, participants from 42 states signaled by a vote of 300 to 11 that their state DOT's led by those traditionally focused on building roads and highways would abolish enhancements if given the chance. The conference audience was comprised of approximately one-third local project sponsors, one-third private citizens, and one-third mid-level state and federal DOT officials.

A GA0 report on the status of Transportation Enhancements released in July 1996 further confirmed the urgency of maintaining dedicated funding for the program. All of the State transportation officials interviewed in the report acknowledged that the set-aside would have to be retained to ensure that enhancement projects would be implemented.

One final comment on the various ISTEA II bills now being considered by this Committee. We are pleased that most of the bills include a dedicated Transportation Enhancement Program. While funding levels and program structure vary among the proposals (with the Administration's proposal significantly strengthening the TEP by providing a 29 percent increase in funding) enhancement supporters are gratified to see that many members of this Committee recognize that six years of ISTEA has not been enough time for institutional transportation thinking to embrace an Enhancements philosophy. Clearly, Federal leadership is still needed and we support you in your efforts to provide it.

Thank you. I look forward to working with the committee to identify ways to make this already strong program even better.

Appendix

Proposed Changes to the Transportation Enhancements program in ISTEA II:

1. Making enhancements a non-reimbursement pro gram. We propose requiring DOT to advance funds to the states on a quarterly basis for this program so long as the state commits to following all relevant federal requirements, and agrees to an end-of year audit if USDOT feels one is necessary. This would make the program less of a burden for state DOTs to run, and would reduce the delays experienced by project sponsors trying to get their projects through the pipeline.

2. Continuing innovative financing and soft match provisions. Guidance issued by FHwA in 1995 to test innovative finance techniques has really helped the enhancements program. It has made the process of determining what expenditures can count as non-federal match much more flexible, and this has allowed projects to move forward with less red tape. We propose that this authority be continued.

3. Increasing allowable overhead charges. Long-standing FHwA rules determine which costs state DOTs can charge against federal funds. In general, any work or overhead that can directly be attributed to a federally funded project or a federal funding program can be reimbursed on an 80/20 basis. However, as far as we can tell these requirements have been interpreted differently in different states. Because enhancement projects tend to be small (average size $300,000) overhead costs make up a larger share of total funding than in other programs. Making it clear that states can charge these costs to the enhancements program (including up to 100% of the cost of employees who run the program consistent with the soft-match provisions described in 2 above,) would make it possible for states to allocate the staff resources necessary to get projects through the pipeline. This would be particularly helpful in states where state gas taxes can only be spent on road projects. This has been interpreted to mean that state funds cannot pay even the non-federal share of flu salary of the people to run the program.

4. Requiring proportionate use of obligation authority For the first 5 years of ISTEA, (FY92-96), enhancements funds were obligated at a 63 percent rate. This is in contrast to an average rate of obligation for all programs of 92 percent. Some (but by no means all) of this gap is due to delay in getting the program going in the first few years. To make matters worse, it looks as if the gap between authorized funding and obligation limitations may grow to several billion per year or more in the next few years. In this environment, it seems certain that many states would allocate this shortfall disproportionately to enhancements or other programs they have less than full enthusiasm for, like safety, CMAQ, IM and even Bridge. The obligation rate for enhancements could fall to near zero in such an environment. We are recommending that obligation authority be tied more closely to apportionments for all programs, but this is particularly necessary for enhancements. We propose that states be asked to maintain equal obligation rates over a 3-year average.

5. State advisory committees. Our review of the implementation of the enhancements program shows that, in most eases, the states with the best run, most popular and most effective programs are those that established broad-based advisory committees to help the state run the program. Although there are states without such committees that have good programs (i.e. Michigan) and states with them that have mediocre program (i.e. Ohio), in general the pattern holds true. We recommend that Congress ask those states that have not yet established such committees to do so.

6. Allowing sole-source contracting with non-profits in certain situations. The enhancements programs has brought new players into the process of suggesting projects for funding, but federal contracting requirements make their formal participation difficult. We propose that in specific circumstances, non-profit community organizations that have played a unique role in suggesting a project for enhancement funding be eligible for sole-source contracts to advise the state on design, community participation or other aspects of the project for which they have unique status.

7. Adding a statement of policy To give the program a greater feeling of legitimacy and sense of purpose without actually making it a full-fledge program, it might be useful to enact a clear goal statement.