SECTION 15.52. Agreements

This section describes the contents of the department's funding agreement with a local government for a highway improvement or other transportation project and the responsibilities of the parties to such an agreement. The department may refuse to enter into an agreement with a local government that has not previously complied with the financial obligations under an agreement entered into under this subchapter.

(1) Right of entry. If the local government is the owner of the project site, it shall permit the department or its authorized representative to occupy the site to perform all activities required to execute the work. If the department is the owner of the project site, it shall permit the local government or its authorized representative to occupy the site to perform all approved activities required to execute the work.

(2) Right of way and utility relocations and adjustments. The local government will provide all necessary right of way and utility relocations and adjustments, whether publicly or privately owned, in accordance with §15.55 of this subchapter (relating to Construction Cost Participation). Existing utilities will be relocated and adjusted by the local government with respect to location and type of installation in accordance with the requirements of the department under §21.21 of this title (relating to State Participation in Relocation, Adjustment, and/or Removal) and Chapter 21, Subchapter C of this title (relating to Utility Accommodation).

(3) Responsibilities of the parties. The local government and the department shall identify in the agreement the responsibilities of each party. Responsibilities assigned to the local government must comply with subparagraph (A) of this paragraph and have the approvals required by subparagraph (B) of this paragraph.

(A) Local government performance and management of projects. For state highway improvement projects and other transportation projects using state or federal funds, the agreement between the department and a local government may provide for the local government to:

(i) perform a highway improvement project on the state highway system using employees under the direct control of the local government;

(ii) outsource preliminary project engineering and design, bid opening, contract award, and construction management of an improvement project for which federal or state reimbursement is requested;

(iii) contract for highway construction; or

(iv) perform other projects and programs as authorized by law.

(B) Approval authority. Before a local government may perform an act described in subparagraph (A) of this paragraph, the executive director must authorize the local government to perform that act. The executive director may also approve the performance by employees of the local government of projects or activities appurtenant to a state highway, including drainage facilities, surveying, traffic counts, driveway construction, landscaping, guardrails, and other items incidental to the roadway itself, such as signing, pavement markings, signals, illumination, and traffic management systems.

(C) Conditions. A local government may perform an act described in subparagraph (A) of this paragraph only if the following conditions are met:

(i) the local government must commit in the agreement to comply with all federal, state, and department requirements, standards, and specifications, and agree to forfeit any claim to federal and state reimbursement if it fails to comply;

(ii) the project must be authorized by the commission in the current Unified Transportation Program, Statewide Transportation Improvement Program, or a specific minute order;

(iii) a project on the state highway system performed or managed by a local government must be operationally beneficial to the state;

(iv) a roadway construction project requested by the local government that is to be on the state highway system, and for which local management is proposed, must be funded at least 50 percent from a non-federal and non-state source, unless a lesser percentage is approved by the executive director;

(v) a project that includes the local government improving freeway mainlanes on the state highway system must have the express written approval of the executive director;

(vi) the local government must agree to pay any cost overruns in addition to its local participation on an off-state highway system bridge program project for which local management is proposed; and

(vii) the department must review and approve all plans, contract awards, and change orders.

(D) Approval. Prior to execution of the funding agreement, a local government must receive written approval by the executive director to perform or manage one or more elements of a highway improvement or other transportation project. In determining whether to recommend approval or disapproval of a project, the department will evaluate the following criteria:

(i) availability of department resources to perform or manage the highway improvement or other transportation project in an efficient and timely manner;

(ii) the demonstrated capability of the local government to perform the type of work proposed or to award and manage a contract for that work in a timely manner, consistent with federal, state, and department regulations, standards, and specifications;

(iii) the percentage of total project cost to be provided by the local government;

(iv) the department's determination of cost effectiveness of local performance of the work as compared to the department's performance of the project; and

(v) any other considerations relating to the benefit of the state, the traveling public, and the operations of the department.

(4) Funding arrangement. The agreement will specify the funding arrangement designated by the department. Funding arrangements in the agreement shall include any adjustments required by §15.55 of this subchapter. The funding arrangement for drainage construction costs will be as specified under §15.54(e) of this subchapter (relating to Construction). Available funding types are as follows:

(A) Fixed price. The fixed price amount will be based on the department's estimated cost of the work to be performed.

(i) In determining the fixed price amount, the department will consider:

(I) eligibility of local government requested work for federal or state cost participation;

(II) the department's experience in performing or managing the proposed type of work;

(III) the clarity of defining the local government's proposed work scope and the department's ability to accurately estimate its cost; and

(IV) any other considerations relating to the benefit of the state, the traveling public, and the operations of the department.

(ii) A local government is responsible for the fixed price amount, which is not subject to adjustment unless:

(I) differing site conditions are encountered;

(II) further definition of the local government's requested scope of work identifies greatly differing costs from those estimated;

(III) work requested by the local government is determined to be ineligible for federal participation; or

(IV) the adjustment is mutually agreed to by the department and the local government.

(B) Specified percentage. The local government is responsible for a specified percentage of actual project costs.

(i) Minimum percentage participation amounts for preliminary engineering, construction engineering, construction, right of way, and eligible utilities for various state and federal funding programs will be designated by the department. In addition to the designated specified percentages, with this funding type, the local government is also responsible for the direct cost of any work included in the project which is ineligible for federal or state participation and all project costs that are greater than the maximum state and federal participation specified in the funding agreement between the department and the local government.

(ii) For federally funded non-construction programs, the local government is responsible for any required match and for any work included that is ineligible for federal or state participation.

(C) Periodic.

(i) The executive director may approve a local government to make periodic payments of its funding share only if:

(I) the periodic payments sought are based on the estimated cost for the work for which the funds are received and the local government proposes a schedule to repay the entire amount; and

(II) the local government does not have a delinquent obligation to the department, as defined in 5.10 of this title (relating to Collection of Debts).

(ii) In approving a request for periodic payments, the executive director will consider:

(I) inability of the local government to pay its total funding share prior to the department's scheduled date for contract letting, based upon population level, bonded indebtedness, tax base, and tax rate;

(II) past payment performance;

(III) needs of the department for delivery of the project to proceed in advance of receiving local funding participation;

(IV) whether the project is located in a local government that consists of all or a portion of an economically disadvantaged county; and

(V) any other considerations relating to the benefit of the state, the public, and the operations of the department.

(D) Off-State Highway System Bridge Program Fixed Amount. For projects funded in the Off-State Highway System Bridge Program, the local government is responsible for a fixed amount that is based on the specified percentage of the estimated direct costs for preliminary engineering, construction engineering, and construction, and for the actual direct costs for right of way and eligible utilities. The estimated direct costs that will be used to establish the fixed amount under this subparagraph, are based on the department's estimate of the eligible work at the time the agreement is executed. The local government is responsible for the estimated direct cost of any project cost item or portion of a cost item that is not eligible for federal participation under the Highway Bridge Program, 23 U.S.C. §144 and Highway Bridge Replacement and Rehabilitation Program, 23 C.F.R. §650 Subpart D. The fixed amount under this subparagraph will be adjusted through the execution of an amendment to reflect additional costs resulting from changes made at the request of the local government, either during preliminary engineering or construction.

(5) Interest. The department will not pay interest on funds provided by the local government. Funds provided by the local government will be deposited into, and retained in, the state treasury.

(6) Amendments. In the case of significantly differing site conditions or other mutually agreed upon changes in the scope of work authorized in the agreement, the department, and the local government will amend the funding agreement, setting forth the reason for the change and establishing the revised participation to be provided by the local government.

(7) Payment provision. The agreement will establish the conditions for payment by the local government, including, but not limited to, the method of payment and the time of payment.

(A) Fixed price. If a fixed price funding arrangement is used, the fixed price amount is not subject to adjustment, except as provided for in paragraph (4)(A)(ii) of this section.

(B) Specified percentage.

(i) Upon execution of the agreement or at a later date, unless periodic payments have been requested by the local government and approved by the executive director, the local government will pay, as a minimum, its funding share for the estimated cost for any right of way and preliminary engineering for the project. Unless periodic payments have been requested by the local government and approved by the executive director, the local government, before the department's scheduled date for construction contract letting, will remit to the department an amount equal to the remainder of the local government's funding share for the project.

(ii) After the project is completed the final cost will be determined by the department, based on its standard accounting procedures. If it is found that the amount received is insufficient to pay the local government's funding share, then the department will notify the local government of the amount of the difference and the local government shall promptly transmit that amount to the department. If it is found that the amount received is in excess of the local government's funding share, the excess funds paid by the local government shall be returned.

(C) Periodic. After a periodically paid project is completed, the final cost will be determined by the department based on its standard accounting procedures. If it is found that the amount received is insufficient to pay the local government's funding share, then the department will notify the local government of the amount of the difference and the local government shall promptly transmit that amount to the department. If it is found that the amount received is in excess of the local government's funding share, the excess funds paid by the local government shall be returned.

(D) Off-State Highway System Bridge Program. For projects funded in the Off-State Highway System Bridge Program, the department will determine the final cost after the project is completed, based on its standard accounting procedures. The department will notify the local government of any amount due for payment of costs related to changes made at the request of the local government. The local government shall promptly transmit the required amount to the department.

(E) Valuation of in-kind contributions. Before the department may enter an agreement under which goods, services, or real estate are accepted rather than financial consideration, the department will document a value for the in-kind contributions consistent with 49 C.F.R. §18.24.

(8) Termination. If the local government withdraws from the project after the agreement is executed, it shall be responsible for all direct and indirect project costs incurred by the department for the items of work in which the local government is participating. If costs for local government requested items increase significantly due to differing site conditions, determination that local government requested work is ineligible for federal or state cost participation, or more thorough definition of the local government's proposed work scope, and the local government and the department are not able to execute a mutually agreeable amendment, the department may terminate the agreement. In this instance, the department will reimburse local government remaining funds to the local government within 90 days of termination.

(9) Acknowledgment. The local government must acknowledge in the agreement that while not an agent, servant, nor employee of the state, it is responsible for its own acts and deeds and for those of its agents or employees during the performance of the work authorized in the contract.

(10) Local regulations. If any existing, future or proposed local ordinance, commissioners court order, rule, policy, or other directive, including, but not limited to, outdoor advertising or storm water drainage facility requirements, that is more restrictive than state or federal regulations, or any other locally proposed change, including, but not limited to, plats or re-plats, results in any increased cost to the department for a highway improvement or other transportation project, the local government must commit in the agreement to being responsible for all increased costs associated with the ordinance, order, policy, directive, or change, regardless of the funding arrangement specified in the agreement.

Source Note: The provisions of this §15.52 adopted to be effective September 26, 1996, 21 TexReg 8957; amended to be effective September 23, 1997, 22 TexReg 9260; amended to be effective January 1, 1998, 22 TexReg 12090; amended to be effective November 22, 1998, 23 TexReg 11661; amended to be effective February 21, 1999, 24 TexReg 1194; amended to be effective August 20, 2000, 25 TexReg 7781; amended to be effective September 20, 2001, 26 TexReg 7126; amended to be effective September 19, 2002, 27 TexReg 8776; amended to be effective January 9, 2005, 29 TexReg 12241; amended to be effective March 17, 2011, 36 TexReg 1693; amendedto be effective April 19, 2012, 37 TexReg 2686; amended to be effective September 18, 2014, 39 TexReg 7351; amended to be effective June 15, 2016, 41 TexReg 4293; amended to be effective July 17, 2019, 44 TexReg 3551