Tapered match is a form of Federal-aid matching flexibility that allows a project's
Federal share to vary from year to year as long as the final contribution of Federal
funds does not exceed the project's maximum authorized share. This tapered match,
or delayed local match, as it is commonly called for transit projects, allows states
to vary the required matching ratio over the life of a project. For example, the
Federal share could start out at 100 percent and taper off to zero as the project
With tapering, a state can advance a project before fully securing bond and capital
market financing. Tapered match may also be useful when the project sponsor lacks
the funds needed to match a Federal-aid project at the start, but will accumulate
the match over the life of the project. For example, this technique may facilitate
a project when a new local tax has recently been enacted. Using tapered match, the
project can move forward immediately with 100 percent Federal funds, allowing time
for the new tax revenues to accumulate. The use of tapered match also may help a
state overcome near-term gaps in state matching funds.
Historically, tapered match underwent several years of experimentation through TE-045
and was formally instituted when TEA-21 amended Sections 121 and 133 of Title 23,
no longer requiring that the Federal share of project costs be applied to each progress
payment. Instead, the Federal share is applied to the total project costs.
An example is provided below illustrating a tapered match project with total project
costs of $200 million. In this example the required non-Federal match is equal to
20 percent of total project costs, or $40 million. The project construction timeframe
is four years. During the first two years of construction, the Federal contribution
is equal to 100 percent of project costs. The state begins to provide the non-Federal
share starting in year 3 and by the end of year 4 has provided its entire $40 million
share of funding for this project, i.e. the entire 20 percent of total contributions
to the project.
States may request use of a tapered match approach for most projects eligible for
Federal-aid assistance under Title 23 when meeting at least one of three objectives:
to expedite project completion, to reduce project costs, or to leverage additional
non-Federal funds. However, a few exceptions exist: tapered match cannot be used
on advance construction projects, STP projects for which the non-Federal match is
being provided on a program-wide basis, or projects that are financed with GARVEE
bonds. These activities are considered to be inconsistent with the intent of tapered
The process for using a tapered match is as follows:
A State submits a tapered match project request to FHWA accompanied by a statement
indicating that it will achieve at least one of the three objectives noted above
under Qualified Projects.
FHWA determines that requirements are met and establishes a Federal-aid share to
be applied to total project costs, expressed as a pro rata percentage of total project
costs or as a lump sum amount.
The State and FHWA agree on taper schedule.
FHWA approves the match and executes a project agreement specifying the non-Federal
match schedule. It is possible for this amount to be revised when a contract for
the project is actually awarded. The agreement also specifies the point at which
the state will provide the non-Federal share of funds.
The State submits billings for progress payments.
FHWA reimburses costs according to the schedule.
By the close of the project, the Federal/non-Federal share equals the agreed ratio.
Title 23, Section 121, Payment to States for Construction
and Title 23, Section 133, Surface Transportation Program (Subsection
e(3)(A)) allows FHWA to establish a more flexible matching share policy for progress
payments, as the restriction of applying the required Federal share of project costs
to each progress payment was removed by TEA-21.
A guidance memorandum describing the use of tapered matches
was issued by FHWA.