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Transportation Funding & Financing

Third Party Donations

Overview

Third party donations allow states to apply the value of third party-donated funds, land, material, or services toward their nonfederal share of project costs.

This flexible match provision increases a state's ability to fund its transportation programs by:

  1. Accelerating certain projects that receive donated resources.

  2. Allowing states to reallocate funds that otherwise would have been used to meet Federal-aid matching requirements.

  3. Promoting public-private partnerships by providing incentives to seek private donations.

Third parties include private companies, organizations, and individuals. Federal, state, and local government agencies are excluded by this definition. The flexibility to apply the value of third party donations to nonfederal highway project shares has existed since the 1995 NHS Act, which amended Title 23, Section 323 Donations and Credits.

Further opportunities for state and local governments to leverage transportation investment exist through prudent and timely acquisition and management of real property. Title 23, Section 108 Advance Acquisition of Real Property permits States to receive credit toward a non-Federal match when State or locally owned lands are incorporated into a Federal project. This provision substantially expands the prior law enacted by the NHS Act already permitting matching credit for private property donations, and it provides more flexible ways for State and local governments to preserve corridors. Title 23, Section 156 Proceeds from the Sale or Lease of Real Property allows State and local governments to retain income from the sale, use, or lease of property previously acquired with Federal funds, if the income is used for Title 23 eligible projects. These provisions introduced by TEA-21 give State and local governments more flexibility in acquiring and managing real property in support of transportation systems.

Resources

FHWA issued Guidance on Section 322 of the NHS Act: Third Party Donations of Funds, Materials, or Services for Federally Assisted Projects. This section of the NHS Act had amended Title 23, Section 323 Donations and Credits.

Questions & Answers on TEA-21 Section 1301 that amended Title 23, Section 108 Advance Acquisition of Real Property.

Questions & Answers on TEA-21 Section 1303 that amended Title 23, Section 156 Proceeds from the Sale or Lease of Real Property.