Transportation Enhancements: Status of the $2.4 Billion Authorized for
Nonmotorized Transportation (Letter Report, 07/26/96, GAO/RCED-96-156).

Pursuant to a congressional request, GAO reviewed the transportation
enhancement set-aside program under the Intermodal Surface
Transportation Efficiency Act (ISTEA), focusing on: (1) how the
obligation rates for fiscal year (FY) 1992 through FY 1995 compare with
the obligation rates for other major highway programs; (2) what factors
have affected the states' use of these funds; (3) the types of projects
funded with enhancement funds; and (4) stakeholders' views on
reauthorizing the program.

GAO found that: (1) states obligated 22 percent of their enhancement
funds in FY 1992 and 55 percent by FY 1995; (2) by FY 1995, other new
ISTEA programs had obligation rates of about 70 percent and
long-standing highway programs had obligation rates above 90 percent;
(3) states' FY 1995 obligation rates ranged from 7 percent to 99
percent; (4) factors hindering states' obligation of enhancement funds
include the resources needed to implement a new program, the
nontraditional nature of such projects, sponsors' unfamiliarity with
administrative requirements, and federal limits on total annual funding
for all federal-aid highway programs; (5) the Federal Highway
Administration (FHwA) has provided states and sponsors with additional
guidance on regulatory requirements to promote such projects and
alleviate confusion over project eligibility; (6) miscoded FHwA data
show that over 50 percent of the projects received FY 1995 funding for
ineligible enhancement activities; (7) FHwA did not start collecting
specific financial data until FY 1995, but FY 1992 through February 1996
data show that bicycle and pedestrian projects, rail-to-trail
conversions, restoration of historic transportation facilities, and
landscaping projects received most of the obligated funding; and (8)
most states favor modifying the set-aside program to reduce federal aid
allocations for enhancement activities, which they consider less
important than improving highway capacity or mobility.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-96-156
     TITLE:  Transportation Enhancements: Status of the $2.4 Billion 
             Authorized for Nonmotorized Transportation
      DATE:  07/26/96
   SUBJECT:  Federal aid for highways
             Ground transportation operations
             Construction grants
             Set-asides
             Historic preservation
             Data integrity
             Budget obligations
             Intergovernmental fiscal relations
IDENTIFIER:  FHwA Transportation Enhancement Set-Aside Program
             FHwA Federal-Aid Highway Program
             Washington
             Iowa
             FHwA Highway Bridge Replacement and Rehabilitation Program
             FHwA Interstate Maintenance Program
             San Francisco (CA)
             Liberty County (GA)
             Minneapolis (MN)
             Griffin (GA)
             Maryland
             Georgia
             Delaware
             DOT Surface Transportation Program
             
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Cover
================================================================ COVER


Report to Congressional Requesters

July 1996

TRANSPORTATION ENHANCEMENTS -
STATUS OF THE $2.4 BILLION
AUTHORIZED FOR NONMOTORIZED
TRANSPORTATION

GAO/RCED-96-156

Transportation Enhancements

(342915)


Abbreviations
=============================================================== ABBREV

  FHWA - Federal Highway Administration
  ISTEA - Intermodal Surface Transportation Efficiency Act of 1991

Letter
=============================================================== LETTER


B-271840

July 26, 1996

The Honorable John H.  Chafee
Chairman
The Honorable Max S.  Baucus
Ranking Minority Member
Committee on Environment and
 Public Works
United States Senate

The Honorable John W.  Warner
Chairman, Subcommittee on
 Transportation and Infrastructure
Committee on Environment and
 Public Works
United States Senate

The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA)
included a $24 billion, 6-year authorization that created a new
federal-aid highway program--the surface transportation program. 
This program included a requirement that states set aside at least 10
percent of the $24 billion exclusively for 10 categories of
"transportation enhancements," such as pedestrian walkways, bikeways,
scenic easements, or historic preservation projects.  Such
enhancements are designed to strengthen the cultural, aesthetic, or
environmental aspects of transportation or to encourage greater use
of nonmotorized transportation. 

The transportation enhancement set-aside, like the other provisions
of ISTEA, is scheduled for reauthorization in 1997.  You asked us to
provide you with information and analysis to assist in your
deliberations on the enhancement program.\1 Specifically, we are
reporting on the following four questions: 

  -- How do the obligation rates for transportation enhancement funds
     for fiscal years 1992-95 compare with the obligation rates for
     other major highway programs?\2

  -- How do the obligation rates for transportation enhancement funds
     vary by state, and what factors have affected the states' use of
     these funds? 

  -- What types of projects are being funded with transportation
     enhancement funds? 

  -- What are stakeholders' views on reauthorizing the transportation
     enhancement set-aside? 

To address these questions, we analyzed national data and
supplemented this analysis by interviewing transportation officials
in 16 states, representatives of five national organizations with an
interest in the transportation enhancement set-aside, and four local
sponsors of enhancement projects.  Appendix I discusses our scope and
methodology in more detail. 


--------------------
\1 A set-aside from the surface transportation program is used to
fund transportation enhancement projects, and funding for this
category of projects is referred to throughout this report as a
transportation enhancement set-aside or as constituting a
transportation enhancement program. 

\2 An obligation represents a commitment made by a federal agency to
pay out money, as distinct from an actual payment. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

During fiscal years 1992-95, the states obligated their
transportation enhancement funds more slowly than their funds for
other federal-aid highway programs, including other programs
established at the same time as the transportation enhancement
program.  During fiscal year 1992, the first funding year for the
transportation enhancement program, the states obligated 22 percent
of the available funds.  By the end of fiscal year 1995, the overall
rate of obligation had risen to 55 percent.  In comparison, by fiscal
year 1995, the obligation rate for another newly established highway
program--the congestion, mitigation, and air quality improvement
program--was about 70 percent, and the rates for long-standing
programs, such as the bridge program, were above 90 percent. 

The obligation rates for transportation enhancement funds vary
substantially from state to state.  At the end of fiscal year 1995,
Washington State had obligated 99 percent of its available
enhancement funds, while Iowa had obligated 7 percent.  Factors
hindering the states' obligation of enhancement funds include the
time and staff resources required to implement a new program, the
nontraditional nature of transportation enhancement projects, and
sponsors' lack of familiarity with the administrative requirements of
federal-aid highway programs. 

The Federal Highway Administration's (FHWA) data on transportation
enhancement projects have significant problems.  These data indicate
that over 50 percent of the enhancement funding for fiscal year
1995--the first year FHWA collected such data--was apparently used
for ineligible activities.  To determine why, FHWA reviewed a sample
of projects in four states and found that the funds were generally
spent correctly but the state or FHWA division offices miscoded the
projects when entering them into the data system.  Also, although
FHWA obtained some estimates from the states, it did not begin to
collect actual financial data on the types of projects funded by the
enhancement set-aside until fiscal year 1995.  Historical enhancement
project data have, however, been developed by the Rails-to-Trails
Conservancy.\3 Data from the Conservancy show that from fiscal year
1992 through February 1996, 4 of the 10 eligible categories have
received over 80 percent of the obligated funding.  Bicycle and
pedestrian projects have received more than one-third of the
obligated funds, while rail-to-trail conversions, restorations of
historic transportation facilities, and landscaping projects have
each received approximately 15 to 17 percent. 

State transportation officials, representatives of national interest
groups, and local project sponsors expressed mixed views on
reauthorizing the transportation enhancement set-aside.  Twelve of
the 16 state officials we interviewed said they would prefer more
flexibility in deciding how much federal aid to devote to
transportation enhancement activities.  They voiced general support
for such activities but considered them less important than improving
highway capacity or mobility.  The four remaining state officials, as
well as the five interest group representatives and four project
sponsors we contacted, said they supported the existing set-aside. 
They said that not having a set percentage for transportation
enhancements would result in substantially less funding for such
activities. 


--------------------
\3 The purpose of the Rails-to-Trails Conservancy, a public interest
organization, is to convert abandoned rail corridors into public
multiuse trails. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Funds provided under ISTEA's surface transportation program may
generally be used by states and localities for any road on the
federal-aid highway network.\4

The transportation enhancement set-aside is an exception.  Over
ISTEA's 6-year life, the set-aside authorizes $2.4 billion for 10
categories of eligible projects, including bikeways, pedestrian
walkways, and historic preservation projects.  Appendix II lists the
10 categories and provides an example of the types of projects funded
under each.  An enhancement project may be a separate project or a
distinct part of a larger transportation project. 

Funds for the transportation enhancement program, like the funds for
other federal-aid highway programs, are annually made available to
the states by the Department of Transportation's FHWA.  The states
then obligate these funds for specific projects.  An obligation
represents a commitment by FHWA, met through a reimbursement to a
state, to pay the federal share of a project's cost.  The states are
not required to obligate the funds in the year in which they are made
available but may, subject to certain restrictions, carry them
forward for potential obligation in subsequent years. 

Each state's department of transportation is responsible for
administering the state's transportation enhancement program, but the
sponsors of transportation enhancement projects are often local
governments or, in some cases, nonprofit organizations, according to
an FHWA official.  The state transportation department, often in
cooperation with metropolitan planning organizations,\5

decides which transportation projects will be funded in the next year
or two and incorporates the decision in a multiyear statewide
transportation plan.  Like many federal-aid highway programs, this
program generally requires the state or local agency to provide 20
percent of a project's funding. 


--------------------
\4 The nation has approximately 3.9 million miles of highways, about
950,000 miles of which are designated as federal-aid highways and are
therefore eligible for federal highway funds. 

\5 A metropolitan planning organization represents an entity
designated by a governor as responsible, together with a state, for
transportation planning in an urbanized area. 


   STATES' OBLIGATION OF
   ENHANCEMENT FUNDS HAS BEEN
   RELATIVELY SLOW BUT SHOWS
   IMPROVEMENT
------------------------------------------------------------ Letter :3

In fiscal year 1992, the first year of funding for the transportation
enhancement program, most states moved slowly to obligate the funds. 
By the end of the fiscal year, the states had obligated $79 million
of the $353 million available, or 22 percent.  Nine states had not
obligated any of their available funding for enhancements; 34 states
had obligated 25 percent or less. 

By the end of fiscal year 1995, after 4 fiscal years, the states had
more than doubled the percentage of funds they had obligated for
transportation enhancements.  Specifically, they had obligated $887
million, or 55 percent, of the $1.6 billion available since the
program's inception.  All but six states had obligated at least 25
percent of their total available funding for enhancements. 

While representing a significant improvement over the earlier
obligation rates, the 55-percent obligation rate was considerably
lower than the obligation rates for the other highway programs we
reviewed.  For example, the obligation rate for the bridge program, a
long-standing surface transportation program, was approximately 90
percent during all 4 fiscal years.  Similarly, programs such as the
interstate maintenance program, which existed before ISTEA's
enactment but were modified by this legislation, had obligation rates
of about 90 percent during all 4 fiscal years.  (Fig.  1 shows the
cumulative obligation rates for transportaion enhancement funds and
other highway programs for fiscal years 1992-95.  In addition, an
alternative graph, prepared by the Rails-to-Trails Conservancy and
presented in app.  VII, compares the amounts obligated with the
amounts apportioned for enhancement funds during each of these fiscal
years.) These obligation rates may be high because, despite the
changes made by ISTEA, certain of the programs' core components
remained the same.  Thus, the states were familiar with the programs,
and their familiarity positioned them to have a number of projects
readily available for funding.  (App.  III presents nationwide
information on the obligations for major federal-aid highway funding
programs and for the transportation enhancement program for fiscal
years 1992-95.)

In contrast to long-standing highway programs, the transportation
enhancement program was new.  Before funds could be obligated for
enhancement projects, state departments of transportation had to
decide with metropolitan planning organizations how to structure the
program and allocate funds.  Furthermore, for the enhancement
program, as for other federal-aid highway programs, sponsors needed
to be prepared to pay most, if not all, of a project's costs up front
and then receive reimbursement from FHWA, via the state.  FHWA's
practice of providing reimbursements rather than grants was
unfamiliar to some local officials.  However, as discussed later, a
legislative change now gives sponsors the option of receiving an
advance payment for a transportation enhancement project based on the
project's schedule of cash needs. 

   Figure 1:  Cumulative
   Obligation Rates for
   Transportation Enhancement
   Funds and Other Selected
   Highway Programs, Fiscal Years
   1992-95

   (See figure in printed
   edition.)

Note:  The selected programs represent major federal-aid highway
programs and account for approximately 70 percent of the highway
funds authorized by ISTEA. 

Source:  GAO's presentation of data from FHWA's information system. 


   OBLIGATION RATES VARY AMONG
   STATES FOR A VARIETY OF REASONS
------------------------------------------------------------ Letter :4

The obligation rates for transportation enhancements vary
considerably from state to state.  At the end of fiscal year 1995,
Washington State had obligated 99 percent of its available funds,
while Iowa had obligated 7 percent.  Figure 2 groups and displays the
states' obligation rates, and appendix IV provides the obligation
rates for each state for fiscal years 1992-95. 

   Figure 2:  Cumulative
   Obligation Rates for
   Transportation Enhancement
   Funds, Fiscal Years 1992-95

   (See figure in printed
   edition.)

   Source:  GAO's presentation of
   data from FHWA's information
   system.

   (See figure in printed
   edition.)

We asked transportation department officials from 16 states, as well
as representatives from five interest groups and four sponsoring
organizations, what difficulties they had encountered in obligating
enhancement funds.  They mentioned four major factors:  (1) Local
sponsors were unfamiliar with federal-aid highway programs'
administrative procedures, (2) programs mandated by ISTEA took time
to develop, (3) administering a large number of low-cost projects was
perceived as burdensome, and (4) state transportation departments
lacked the staff or expertise needed to administer enhancement
projects, since such projects differed significantly in scope and
nature from traditional highway construction projects.  In addition,
the Rails-to-Trails Conservancy mentioned a fifth factor--a limit
imposed by federal budgetary constraints on the total amount a state
can obligate in a given year.  Because this limit applies to the
federal-aid highway program as a whole and the states have the
discretion to allocate their available authority among the individual
highway programs, transportation enhancement projects are competing
for funds with higher-priority traditional highway projects and find
themselves at a disadvantage, according to Conservancy officials.  A
Wisconsin transportation enhancement program manager told us that
because of the federal limit on obligations, the state has restricted
its obligations for transportation enhancements to approximately 40
percent of the funds apportioned for enhancements in recent years. 
(App.  V discusses these factors in more detail.)

The process for obtaining enhancement funds was eased through
provisions of the National Highway System Designation Act of 1995,
enacted in November of that year.  This legislation permits the
streamlining of environmental and historic preservation reporting
requirements for transportation enhancement projects.  It also gives
sponsors the option of receiving advance payments for transportation
enhancement projects.  These payments, FHWA officials noted, are
based on the projects' schedules of cash needs. 

To promote transportation enhancement projects, FHWA is currently
providing the states and local sponsors with additional guidance on
federal-aid highway and other relevant federal regulatory
requirements, according to an FHWA official.  FHWA also helped
sponsor a conference on transportation enhancements in 1994 that was
attended by over 300 stakeholders from 49 states.  The intent of the
conference was to assess the achievements realized to date and
brainstorm what changes might be needed to maximize the benefits of
transportation enhancement funding.  A second conference, held in
June 1996, was intended to showcase successful enhancement projects
and demonstrate why such efforts are essential for developing
effective community-based transportation systems. 


   DATA ON USES OF ENHANCEMENT
   FUNDS
------------------------------------------------------------ Letter :5

FHWA's data on the types of projects being funded with transportation
enhancement moneys are limited and have significant problems. 
However, data collected by the Rails-to-Trails Conservancy indicate
that nearly all of the projects for which funds were obligated from
October 1, 1992, through February 1996 fell into 4 of the 10 eligible
categories:  bicycle/pedestrian facilities, rail-to-trail
conversions, landscaping projects, and the rehabilitation of historic
transportation buildings or facilities.  In addition, the states and
FHWA division offices have variously interpreted the link between
transportation and the rehabilitation of historic buildings and
facilities. 


      FHWA'S DATA ON
      TRANSPORTATION ENHANCEMENT
      PROJECTS RAISES CONCERNS
---------------------------------------------------------- Letter :5.1

From fiscal year 1992 through fiscal year 1994, FHWA formally tracked
information only on the states' overall obligations for
transportation enhancement funds.  FHWA did not track the obligations
for specific projects, but it did ask the states to estimate the
amounts they obligated to each of the 10 transportation enhancement
categories beginning in fiscal year 1992.  FHWA recognized that,
because of incomplete and perhaps inaccurate reporting, the data were
of limited use.\6

In fiscal year 1995, however, FHWA began to collect data on the
obligations for individual enhancement projects.  Our analysis of
these data showed that over 50 percent of the transportation
enhancement funds had apparently been used for ineligible
activities.\7 Specifically, according to FHWA's data, transportation
enhancement funds were used for construction engineering, training,
highway and bridge raw materials, and traffic signals, but these
types of activities are not eligible for enhancement funding unless
they are linked to one of the 10 categories listed in appendix II. 

After we advised FHWA of this problem, FHWA began an investigation in
four states where a high proportion of transportation enhancement
funds had apparently been used for ineligible activities.  According
to a program official, FHWA's preliminary findings, based on a sample
of projects in each state, indicate that in most cases state and/or
FHWA officials did not code the projects for the proper statistical
category in FHWA's database.  In other words, the projects were
eligible, but they were coded in the wrong category.  In one
instance, funds were obligated to the wrong program category, but the
responsible state has corrected this misobligation of funds.  A
program official stated that FHWA's review of this issue is now
complete and the problems have been corrected for the projects
sampled from the four states.  However, the problem is not limited to
the four states; it occurred nationwide and involved over 50 percent
of the transportation enhancement funds obligated in fiscal year
1995. 

FHWA officials told us they will be sending a memorandum to their
field offices instructing the staff to be more diligent in the future
when coding transportation enhancement projects.  They are also
considering incorporating edit checks into the transportation
enhancement coding process, if appropriate, after an FHWA task force
completes an ongoing review of the entire financial information
system.  However, the officials implied that although they may
consider incorporating edit checks, they will probably not do so,
since the task force is expected to recommend a reduction in the
number of codes requiring choices on the part of data entry clerks. 
FHWA expects this streamlining to improve the accuracy of the data
throughout its information system.  However, FHWA officials also
observed that the streamlining could eliminate coding for
transportation enhancement projects altogether. 

Since FHWA has corrected the data for only the sampled projects in
the four states it reviewed, reliable information on obligations for
enhancement projects, from fiscal year 1995 (when FHWA began
collecting the data) to the present does not exist.  Therefore, FHWA
will not have data to report to the Congress on how the funds
authorized for transportation enhancements have been used. 


--------------------
\6 We attempted, but were unable, to reconcile these data with the
states' actual obligations of transportation enhancement funds. 

\7 For closed projects, 57 percent of the obligations were listed as
applied to apparently ineligible activities; for active projects, 55
percent of the obligations were listed as applied to such activities. 


      FOUR TYPES OF PROJECTS
      RECEIVED MOST OF THE FUNDING
---------------------------------------------------------- Letter :5.2

According to data collected by the Rails-to-Trails Conservancy,
projects involving facilities for bicyclists or pedestrians accounted
for about 36 percent of the obligations for transportation
enhancements during the 4-year period.  (See fig.  3.) Rail-to-trail
conversions, restorations of historic transportation facilities, and
landscaping projects have each accounted for approximately 15 to 17
percent of the obligations.  (See app.  VI for examples of the types
of transportation enhancement projects funded most frequently during
fiscal years 1992-95.) Projects involving highway water runoff,
billboard removal, and archeological planning and research accounted
for the smallest proportions of the obligations.  These projects
received 1.5 percent, 1.3 percent, and 0.8 percent of the total
enhancement funding, respectively. 

   Figure 3:  Percentages of
   Federal Transportation
   Enhancement Funds, by Project
   Category, From October 1, 1991,
   Through February 1996

   (See figure in printed
   edition.)

Note:  "Other" includes historic preservation (7.0 percent),
scenic/historic acquisitions (3.9 percent), scenic/historic highways
(2.6 percent), highway water runoff (1.5 percent), billboard removal
(1.3 percent), and archaeological planning and research (0.8
percent). 

Source:  GAO's presentation of data from the Rails-to-Trails
Conservancy. 

Projects for bicyclists and pedestrians received the bulk of
transportation enhancement funds largely because they were very
popular with community organizations, were much farther along in the
design process than other projects, and were readily defined in
statewide or urban area bikeway plans and trail systems.  Although
such projects were often eligible for federal-aid highway funding
before the enactment of the enhancement set-aside--when, for example,
they were incorporated as components of larger projects--the
enhancement program dramatically increased the amounts designated
specifically for them.  Between 1973 and 1991, the states spent a
total of $40.7 million on such projects; from fiscal year 1992
through February 1996, the states had awarded approximately $581
million, according to data from the Rails-to-Trails Conservancy. 

As previously mentioned, FHWA helped sponsor a conference on
transportation enhancements in June 1996 that was intended to
showcase successful enhancement projects and demonstrate why such
efforts are essential for developing effective community-based
transportation systems.  The conference featured 25 of the best
projects, chosen from over 80 that were nominated.  Some of these
projects include the following: 

  -- In San Francisco, California, transportation enhancement funds
     are being used to support preliminary engineering, design, and
     construction work on the long-neglected Ferry Building.  This
     effort is intended to reestablish the building as a major
     intermodal transportation and mixed-use complex, emphasizing the
     historic and public nature of the building and improving
     connections between transportation by land and water. 

  -- In rural Liberty County, Georgia, transportation enhancement
     funds are being used to link five heritage tourism sites of
     statewide and national historic significance.  The sites, which
     commemorate African-American life from slavery through more
     recent times, are linked through directional and interpretive
     signage, a common travel brochure, and a joint marketing effort. 

  -- In Minneapolis, Minnesota, transportation enhancement funds were
     used to rehabilitate a once-closed bridge as a short-line
     trolley, bicycle, and pedestrian corridor.  A survey conducted
     last summer indicated that over 12,000 people per week were
     using the bridge; of these, nearly half were commuting to and
     from the downtown business district.  The bridge also connects
     the downtown with the University of Minnesota. 


      SOME ENHANCEMENT PROJECTS
      MAY NOT HAVE A DIRECT LINK
      TO TRANSPORTATION
---------------------------------------------------------- Letter :5.3

According to many of the state officials and some of the interest
group representatives we contacted, the eligibility criteria for
funding some enhancement projects--especially historic preservation
projects--have been variously interpreted.  ISTEA's definition of
historic preservation is broad and general:  It simply lists historic
preservation as an activity eligible for enhancement funding.  FHWA's
implementing guidance requires that to be eligible for funding, any
transportation enhancement project--including a historical
preservation project--must have a direct link to an intermodal
transportation system by function, proximity, or impact.\8 However,
the states and FHWA's division offices have interpreted this link in
different ways.  According to a 1994 FHWA review of enhancement
programs in nine states,\9

     "[t]here was a rather wide variety of eligibility decisions made
     in the historic preservation category and it was not unusual to
     find actions that had been approved in one State and denied in
     another.  This was generally due to varying interpretations of
     what constituted a direct relationship to the intermodal
     transportation system."

Some interpretations have resulted in the funding of historic
preservation projects that appear to have little or no link to
transportation.  The questionable link to transportation is shown in
the following examples, which we identified through discussions with
state officials and interest group representatives. 

  -- Rehabilitation of grandstands at the Iowa State Fair.  Iowa's
     transportation department and FHWA's division office approved
     $750,000 to renovate the historic Iowa State Fair grandstand,
     built in 1927.  This renovation, a $4.3 million project to be
     completed in four phases, will restore the grandstand to its
     original condition.  According to a state transportation
     official, some groups within the state, such as bicycle
     advocates, opposed the use of enhancement funds for this project
     because they believed it had no direct link to transportation. 

  -- Purchase and renovation of Oddfellows' Building in Griffin,
     Georgia.  Georgia's transportation department and FHWA's
     division office approved $1 million to restore the Oddfellows'
     Building and convert it into an opera house and meeting hall in
     1994.  Local officials saw the rehabilitation as providing space
     for meetings and theater performances as well as boosting
     tourism in the downtown area.  A Georgia transportation official
     suggests that this project would probably not be approved for
     funding today because more is known about the guidance requiring
     a direct link to transportation. 

The written proceedings of a June 1994 workshop on transportation
enhancements--attended by officials from over 300 federal, state, and
local governments, as well as representatives of private
organizations interested in transportation enhancements--highlighted
stakeholders' concerns about the link to transportation.  The
document noted that during the workshop, questions arose about
Maryland's justification for using enhancement funds to restore a
Civil War battlefield.  In response to a question about the link
between the battlefield and transportation, a Maryland state
representative explained that "you can see the battlefield when you
drive down the road." Furthermore, this official's advice was to not
worry about drawing the line on a project's eligibility, but rather
to push until stopped by FHWA.  During the discussion, a
representative from the Office of the Secretary of Transportation
concurred with the state official and noted the Department was
encouraging creativity. 

Although officials from the Rails-to-Trails Conservancy estimated
that the problem extended to only a small fraction of the historic
preservation projects, FHWA released additional guidance in June 1995
on the eligibility requirements for historic preservation projects. 
This guidance reads as follows: 

     ".  .  .  In the case of non-transportation historic properties,
     the concept of direct relationship has been very widely
     interpreted.  For example, some have interpreted it very
     broadly, allowing virtually any historic property to be
     rehabilitated using transportation enhancement funds.  Others
     have interpreted this language more narrowly, requiring a
     substantial transportation linkage in order for an undertaking
     to be considered eligible.  We believe this latter
     interpretation reflects the legislative intent."

Some stakeholders, however, believe that further guidance is still
warranted.  Among the state transportation officials and interest
group representatives we contacted, several said additional
clarification was needed because interpretations of what constitutes
a direct link to transportation continue to vary.  According to
several officials, the criteria are still too subjective and each
state or FHWA division office has its own opinion on how to interpret
this requirement. 


--------------------
\8 According to ISTEA, "the term 'transportation enhancement
activities' means, with respect to any project or the area to be
served by the project, provision of facilities for pedestrians and
bicycles .  .  .[and the other nine categories of eligible
activities]." FHWA interpreted the overall context of the phrase
"with respect to any project" to mean that the proposed
transportation enhancement project or activity must have a direct
relationship to the intermodal transportation system, but not
necessarily to a currently planned highway project.  The guidance
specified that this relationship should be one of function,
proximity, or impact but did not further define these terms except to
give examples of eligible projects, such as an independent bike path
and the removal of outdoor advertising. 

\9 See The Implementation of Transportation Enhancements, FHWA,
Office of Program Review and Office of Environment and Planning (Aug. 
1994). 


   VIEWS ARE MIXED ON
   REAUTHORIZING TRANSPORTATION
   ENHANCEMENT SET-ASIDE
------------------------------------------------------------ Letter :6

Twelve of the 16 state officials we interviewed favored greater
flexibility in deciding how much federal aid to use for
transportation enhancements.  They wanted to see ISTEA's 10-percent
set-aside modified.  The other four state officials and all of the
interest group representatives and project sponsors we contacted
wanted to see the set-aside reauthorized to ensure continued support
for enhancement activities. 

Transportation officials who favored modification of the set-aside
wanted to see it replaced with another funding mechanism.  Many said
it restricted their state's ability to spend surface transportation
funds on other higher-priority infrastructure or highway projects,
and they stressed the need to spend increasingly scarce resources on
projects for improving highway capacity or mobility.  The manager of
Georgia's enhancement program said, for example, that the
fixed-percentage requirement was diverting scarce resources from
highway preservation and capacity-enhancement projects, which were
40-percent underfunded in his state. 

Many of the state officials who favored modification of the set-aside
said that transportation enhancement projects were needed and would
continue to receive some funding if the set-aside were lifted. 
Several said the enhancement program fostered good public relations
and helped them forge new partnerships with organizations that often
opposed transportation departments' actions on more traditional
highway construction projects.  The managers for the Delaware and
Georgia enhancement programs said, for example, that their programs
brought their departments together with many community,
environmental, and other organizations to plan and develop
enhancement projects.  However, many of these officials acknowledged
that if the set-aside were eliminated, the funding for transportation
enhancements would be reduced. 

Supporters of the set-aside indicated they were generally to very
satisfied with it because it provides a fixed amount of funding to
complement traditional highway projects.  Almost one-half the
supporters said it ensured that enhancements would retain a share of
the increasingly scarce federal funds for transportation
infrastructure.  Without it, they said, the states' funding for
enhancements would likely be curtailed significantly. 

Interest group representatives said that enhancement projects have
received strong public support, improved safety and mobility for
pedestrians and cyclists, and provided various other benefits, such
as a better quality of life, increased civic pride, and more livable
communities.  As proof of the projects' popularity, a representative
of the Rails-to-Trails Conservancy said that some 10,000 projects
have been proposed nationwide and local sponsors have been willing to
contribute an average of 29 percent of the projects' costs in local
matching funds, well above the general minimum matching requirement
of 20 percent. 

FHWA found a similar split in opinion between state transportation
officials, who generally opposed the fixed-percentage set-aside, and
local sponsors and interest groups, who generally supported it.\10
FHWA interviewed representatives of 9 state transportation
departments, 39 local governments or metropolitan planning
organizations, and 16 special interest groups.  The state
transportation officials acknowledged that the set-aside would have
to be retained to ensure that enhancement projects would be
implemented.  Although some enhancements would continue to be funded
through other transportation projects, the funding for them would not
be tracked separately from the overall funding for the projects. 
Furthermore, according to eight of the nine state transportation
officials FHWA contacted, if the set-aside were eliminated, the
states could not commit themselves to funding their enhancement
programs at current levels because their infrastructure and highway
capacity needs far exceed their financial resources.  In contrast,
virtually all of the local sponsors and interest groups contacted by
FHWA favored continuing the set-aside beyond ISTEA's 6-year
authorization period because they believe the program needs a longer
incubation period. 


--------------------
\10 See the FHWA report cited in footnote 6. 


   CONCLUSIONS
------------------------------------------------------------ Letter :7

The relatively slow rate of obligation for transportation enhancement
funds may reflect the difficulty of implementing a new and
nontraditional program.  Also, as officials from the Rails-to-Trails
Conservancy noted, this difficulty may be compounded by the fact that
transportation enhancement projects have to compete with more
traditional programs for available obligation authority, which is
subject to an overall limitation imposed by budgetary constraints. 
Thus, obligations for transportation enhancements continue to be
lower than for other transportation programs, although substantial
progress has been made in obligating funds for enhancements. 

Although transportation officials differed over whether the
transportation set-aside should be continued, they agreed that
without the set-aside, the funding for transportation enhancements
would be reduced.  Whether funding should continue to be reserved for
transportation enhancements and, if so, how much are policy questions
for the Congress to consider in reauthorizing ISTEA. 

State officials frequently point to the gap between infrastructure
needs and available resources.  In light of this gap, enhancement
projects need to have a strong link to transportation to justify
allocating surface transportation resources for them.  Such a link
has been tenuous for some historic preservation projects.  Although
FHWA has revised its guidance to clarify the link, its efforts may
not be sufficient, since the key phrase "substantial transportation
linkage" is not clearly defined in the revised guidance.  Monitoring
the field offices' implementation of the revised guidance and further
clarifying the definition, if necessary, could encourage consistent
interpretations by state and FHWA division office officials. 

It is unclear whether a memorandum directing staff to be more
diligent when coding transportation enhancement projects for entry
into the data system will encourage greater accuracy.  Changes to
FHWA's coding or data entry procedures could help to limit miscoding
in the future.  Unless such changes are made and the data entered
since the start of fiscal year 1995 are corrected, we see no point in
continuing to collect data that appear to be largely inaccurate on
transportation enhancement projects.  One disadvantage of eliminating
the data is that FHWA will not be able to report to the Congress on
how funds are being used for transportation enhancements. 


   RECOMMENDATION
------------------------------------------------------------ Letter :8

We recommend that the Secretary of Transportation require the
Administrator of FHWA to (1) revise FHWA's coding or data entry
procedures to ensure that transportation enhancement funds can be
programmed only for eligible activities and (2) correct previous
coding and misobligation information from fiscal year 1995 to the
present.  Alternatively, if action is not taken to improve the
quality of the transportation enhancement data, we recommend that the
collection of data on specific transportation enhancement projects be
discontinued. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :9

We provided a draft of this report to FHWA for its review and
comment.  We also provided a draft to the Rails-to-Trails
Conservancy, since we were relying in part on its information on
transportation enhancements.  To obtain FHWA's comments, we met with
the Associate Administrator for Program Development, the former and
current Chiefs of the Environmental Programs Branch, and other FHWA
officials.  According to these officials, our statement that
transportation enhancement funds are often being used for apparently
ineligible activities is misleading, since FHWA's four-state review
disclosed that the problem consisted largely of coding mistakes.  We
discuss the results of FHWA's four-state review and emphasize that
the projects were generally eligible but coding errors were made. 
Whether the problem consisted largely of coding mistakes in the other
46 states remains to be determined. 

In responding to our recommendation, FHWA officials said, as
previously noted, that they would issue a memorandum directing their
field offices to pay closer attention to the quality of the
transportation enhancement data entered into the information system. 
However, these officials doubted that previously entered
transportation enhancement data would be revised.  They said that
recoding all prior projects, especially those that predated the 1995
project coding requirements, would create an undue burden.  We did
not intend to suggest that projects predating FHWA's fiscal year 1995
coding requirements should be recoded, and we have explicitly limited
our recommendation to data from fiscal year 1995 to the present.  We
believe that these data need to be corrected to comply with the
reporting requirements in effect at that time.  Furthermore, these
data would furnish the Congress with information on the uses of
transportation enhancement funds as it considers reauthorizing
highway and related activities. 

FHWA officials stated that they would consider installing edit checks
after an FHWA task force completes its review of the whole
information system.  They further noted that the task force is trying
to streamline the information system, and this streamlining may
eliminate the collection of data on specific transportation
enhancement projects. 

One of the major concerns expressed by officials from the
Rails-to-Trails Conservancy was that we were not adequately
recognizing the progress made in obligating transportation
enhancement funds by the end of fiscal year 1995.  While our draft
report did note this progress, our final report further highlights
this information.  Conservancy officials also identified another
reason--a limit on obligations--that can impede the obligation of
enhancement funds.  We recognize this limit in our final report. 
Comments from the Rails-to-Trails Conservancy and our responses
appear in appendix VII. 

Technical and clarifying comments provided by FHWA and the
Rails-to-Trails Conservancy have been incorporated where appropriate. 


---------------------------------------------------------- Letter :9.1

We performed our review from July 1995 through June 1996 in
accordance with generally accepted government auditing standards. 

As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 14 days after the date of this letter.  At that time, we will
send copies to the Secretary of Transportation, the Administrator of
FHWA, the President of the Rails-to-Trails Conservancy, and other
interested parties.  We will also make copies available to others on
request. 

Please call me at (202) 512-2834 if you or your staff have any
further questions.  Major contributors to this report are listed in
appendix VIII. 

John H.  Anderson, Jr.
Director, Transportation and
 Telecommunications Issues


SCOPE AND METHODOLOGY
=========================================================== Appendix I

To determine how the obligation rates for transportation enhancement
funds compared with the obligation rates for other major highway
programs during fiscal years 1992-95, we analyzed fiscal data for
federal-aid highway programs from the Federal Highway
Administration's (FHWA) Office of Fiscal Services in Washington, D.C. 
For each federal fiscal year, from 1992 through 1995, we compared the
obligation rates for the transportation enhancement program with the
obligation rates for the congestion, mitigation, and air quality;
surface transportation; bridge; national highway system; and
interstate maintenance federal-aid highway programs.  We selected
these five federal-aid highway programs because (1) they represent a
mix of established and newly created highway programs, (2) their
funds have been used for a variety of traditional and nontraditional
highway projects, and (3) they account for approximately 70 percent
of the highway funds authorized by the Intermodal Surface
Transportation Efficiency Act of 1991 (ISTEA). 

To determine how the obligation rates for transportation enhancements
vary by state and what factors have affected the states' use of
enhancement funds, we contacted state transportation enhancement
officials in 16 states.  Specifically, using cumulative enhancement
obligation data as of July 1995, we selected the eight states with
the highest obligation rates (Georgia, New Mexico, New York,
Pennsylvania, South Carolina, Tennessee, Washington, and Wyoming) and
the eight states with the lowest obligation rates (Arizona, Delaware,
Hawaii, Iowa, Louisiana, Virginia, and Wisconsin) for transportation
enhancement funds.  We conducted an in-depth telephone interview with
a transportation enhancement official in each state, using a standard
series of questions about the organization of the state's
transportation enhancement program, factors affecting the state's
rates of obligation for enhancement funds, and future mechanisms for
funding transportation enhancements. 

To understand the views of interest groups that have been involved in
proposing and implementing transportation enhancement projects, we
contacted five national interest groups and four sponsors of local
enhancement projects.  We selected the five national interest
groups--the Bicycle Federation of America, the National Trust for
Historic Preservation, the Rails-to-Trails Conservancy, Scenic
America, and the Trust for Public Land--because they comprise a
cross-section of the national organizations involved in the
transportation enhancement program.  According to the manager of
FHWA's transportation enhancement program, these five organizations
represent a good mix of national organizations with several years'
experience working with local organizations that have been
implementing transportation enhancement projects. 

To understand the concerns of local sponsors, we contacted the
coordinators of transportation enhancement projects with local
governments in Cheshire, Connecticut; Douglas, Georgia; Danville,
Virginia; and Seattle, Washington.  We selected these sponsors
because their locations were geographically diverse and each had
experience with a project in one of the four most frequently funded
transportation enhancement categories.  We asked the representatives
of the five national organizations and the four local sponsors the
same questions we asked the state transportation enhancement program
managers about the factors affecting obligation rates for enhancement
funds and future funding mechanisms for transportation enhancements. 

We also reviewed several studies on transportation enhancements,
including an August 1994 study of transportation enhancement programs
in nine states conducted by FHWA's Office of Program Review; the
proceedings of a June 1994 National Transportation Enhancements
Workshop attended by representatives of 328 federal, state, and local
governments, as well as private organizations or companies with an
interest in transportation enhancements; several national studies on
the implementation of transportation enhancements by the
Rails-to-Trails Conservancy, which included detailed state-by-state
data on enhancement projects, funding, and policies and procedures
obtained through contacting each state's transportation enhancement
coordinator; and a book published jointly in 1995 by FHWA and the
National Trust for Historic Preservation, Building on the
Past--Traveling to the Future:  A Preservationist's Guide to the
ISTEA Transportation Enhancement Provision. 

In addition, we discussed FHWA's policies, plans, and activities for
the transportation enhancement program with the official responsible
for administering the transportation enhancement program in FHWA's
Environmental Programs Branch, Environmental Operations Division,
Office of Environment and Planning.  We also discussed FHWA's
policies and procedures for reporting fiscal data for transportation
enhancements and other major federal-aid highway programs with the
Chief, Information Management and Systems Control Branch, Office of
Fiscal Services, FHWA. 


CATEGORIES OF TRANSPORTATION
ENHANCEMENT PROJECTS
========================================================== Appendix II

Category                            Example of a funded project
----------------------------------  ----------------------------------
Provision of facilities for         Construction of a freeway
pedestrians and bicyclists          pedestrian overpass or bike trail

Acquisition of scenic easements     Construction of a scenic highway
and scenic or historic sites        parking area overlooking a Civil
                                    War battlefield

Scenic or historic highway          Construction of a turnout along a
programs                            scenic byway

Landscaping and other scenic        Planting of wildflowers to
beautification                      beautify a highway

Historic preservation               Renovation of a historic building

Rehabilitation and operation of     Renovation of a historic train
historic transportation buildings,  depot or subway/trolley car
structures, or facilities

Preservation of abandoned railway   Conversion of an abandoned railway
corridors, including their          into a walking and biking trail
conversion into walking or biking
trails

Control and removal of outdoor      Removal of billboards along a
advertising                         scenic highway

Archaeological planning and         Development of a database of
research                            statewide archeological sites and
                                    survey boundaries to aid highway
                                    planning

Mitigation of water pollution due   Restoration of a wetland or
to highway runoff                   renovation of a storm drainage
                                    system.
----------------------------------------------------------------------
Source:  ISTEA and the Rails-to-Trails Conservancy's database. 


CUMULATIVE OBLIGATION RATES FOR
TRANSPORTATION ENHANCEMENT FUNDS
AND OTHER SELECTED FEDERAL-AID
HIGHWAY PROGRAMS, FISCAL YEARS
1992-95
========================================================= Appendix III

                                                                                (Dollars in millions)


                                                                   Cumulative
Federal-aid             Total       Total                   Total  obligation                                   Cumulative                         Total    Cumulative
highway program     available   obligated     Percent   available           s     Percent  Total available     obligations         Percent     available   obligations       Percent
-----------------  ----------  ----------  ----------  ----------  ----------  ----------  ---------------  --------------  --------------  ------------  ------------  ------------
Transportation           $353         $79          22        $772        $193          25           $1,193            $459              38        $1,617          $887            55
 enhancements
Congestion,              $810        $340          42      $1,777        $940          53           $2,739          $1,755              64        $3,695        $2,706            73
 mitigation, and
 air quality
 improvement
National highway       $3,079      $2,894          94      $6,624      $6,189          93           $9,927          $9,428              95       $13,408       $12,885            96
 system
Bridge\a              $17,090     $16,242          95     $19,298     $17,878          93          $21,463         $19,760              92       $23,621       $21,807            92
Interstate             $2,125      $1,899          89      $4,705      $4,076          87           $7,292          $6,518              89        $9,870        $8,909            90
 maintenance
Surface                $4,376      $3,036          69      $9,322      $6,979          75          $14,510         $11,869              82       $19,738       $16,819            85
 transportation
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note:  The "total available" category represents the cumulative funds
provided but not obligated.  The "percent" category represents the
cumulative obligations as a percentage of the total available funds. 

\a Includes the funds available prior to ISTEA's enactment. 

Source:  GAO's presentation of data from FHWA. 


CUMULATIVE OBLIGATION RATES FOR
TRANSPORTATION ENHANCEMENT FUNDS,
BY STATE, FISCAL YEARS 1992-95
========================================================== Appendix IV


                               Cumulative                          Cumulative
                        Total  obligation                   Total  obligation                                   Cumulative                         Total    Cumulative
State               available           s     Percent   available           s     Percent  Total available     obligations         Percent     available   obligations       Percent
-----------------  ----------  ----------  ----------  ----------  ----------  ----------  ---------------  --------------  --------------  ------------  ------------  ------------
Alabama            $7,203,463  $4,171,360          58  $15,509,67  $4,908,259          32      $24,233,237     $13,086,824              54   $32,373,541   $23,106,576            71
                                                                8
Alaska             $11,188,77    $381,800           3  $23,167,37  $7,028,786          30      $35,432,036     $19,015,196              54   $47,886,234   $31,267,354            65
                            2                                   5
Arizona            $5,542,257  $2,243,771          40  $12,244,29  $4,157,644          34      $19,049,868      $4,650,299              24   $25,516,836    $7,044,393            28
                                                                4
Arkansas           $3,881,586    $275,178           7  $8,700,264  $1,597,987          18      $14,062,598      $9,283,062              66   $19,378,962   $11,560,028            60
California         $29,537,92  $4,491,567          15  $64,343,82    $788,240           1      $99,315,279     $18,664,381              19  $133,730,336   $51,001,852            38
                            6                                   4
Colorado           $5,740,023  $3,329,653          58  $12,544,97  $10,042,96          80      $19,439,151     $13,322,573              69   $26,013,491   $20,639,214            79
                                                                6           1
Connecticut        $4,560,527  $4,418,993          97  $12,326,60  $8,814,772          72      $20,578,745     $14,274,966              69   $30,410,542   $25,439,092            84
                                                                8
Delaware           $2,519,008  $1,016,623          40  $5,143,453    $720,863          14       $7,803,297      $1,566,172              20   $10,598,079    $2,611,583            25
Dist. of Columbia  $1,730,362    $378,973          22  $3,749,531  $1,313,139          35       $5,840,164      $2,115,904              36    $8,041,853    $2,383,653            30
Florida            $17,303,63    $696,644           4  $38,289,49  $11,684,61          31      $59,405,504     $22,142,121              37   $80,029,195   $59,035,769            74
                            4                                   1           5
Georgia            $10,966,16  $10,964,73         100  $23,731,72  $11,855,40          50      $36,193,667     $27,472,018              76   $49,078,441   $48,288,671            98
                            0           0                       3           0
Hawaii             $5,614,054      $7,200           0  $12,481,77  $1,023,836           8      $18,961,408      $3,212,201              17   $25,200,685    $7,783,142            31
                                                                0
Idaho              $4,433,230      $9,266           0  $8,823,297    $977,121          11      $13,408,191      $3,522,085              26   $18,335,918    $5,640,273            31
Illinois           $16,613,42    $179,002           1  $36,915,77  $4,774,950          13      $56,711,984     $12,235,200              22   $77,904,322   $32,362,560            42
                            5                                   5
Indiana            $9,284,580    $897,610          10  $19,945,37  $1,935,517          10      $29,945,615      $5,179,546              17   $39,895,383   $16,745,479            42
                                                                0
Iowa               $5,728,767    $731,123          13  $12,803,34    $731,123           6      $19,952,643      $1,214,123               6   $27,160,681    $1,902,123             7
                                                                2
Kansas             $5,487,822                       0  $10,935,59  $1,319,287          12      $16,463,406      $9,136,528              55   $22,519,376   $13,778,740            61
                                                                1
Kentucky           $6,166,844    $784,572          13  $13,419,84  $1,489,929          11      $20,897,336      $9,112,462              44   $27,646,735   $26,572,511            96
                                                                3
Louisiana          $5,160,346  $2,400,000          47  $11,684,09  $3,968,720          34      $18,517,207      $4,335,952              23   $24,426,960    $5,332,977            22
                                                                9
Maine              $2,414,977    $811,073          34  $5,417,105  $1,688,829          31       $8,245,703      $3,897,311              47   $11,084,644    $5,231,025            47
Maryland           $4,935,338    $545,200          11  $11,105,36  $8,227,992          74      $16,353,133     $12,187,550              75   $22,298,920   $22,054,848            99
                                                                2
Massachusetts      $1,373,045                       0  $1,871,934  $1,629,720          87       $3,435,054      $1,489,163              43    $6,087,940    $1,855,963            30
Michigan           $8,116,795  $1,470,507          18  $17,634,60  $8,166,512          46      $27,012,856     $16,874,785              62   $36,483,760   $25,240,429            69
                                                                5
Minnesota          $7,591,523                       0  $15,583,80  $2,367,563          15      $23,546,110      $8,033,378              34   $34,436,793   $16,572,525            48
                                                                3
Mississippi        $4,378,804                       0  $9,128,045                       0      $13,808,197                               0   $18,919,847    $4,389,440            23
Missouri           $6,743,740                       0  $14,238,61                       0      $21,289,934      $3,222,000              15   $27,960,143    $8,410,928            30
                                                                9
Montana            $5,337,954     $16,000           0  $11,036,85    $332,494           3      $16,474,346      $3,847,804              23   $22,478,578   $11,040,608            49
                                                                3
Nebraska           $4,856,146    $440,000           9  $9,727,793    $199,587           2      $14,545,463      $5,766,064              40   $19,415,905   $10,098,140            52
Nevada             $3,281,753  $1,552,194          47  $7,324,747  $1,528,178          21      $11,399,721      $2,727,400              24   $15,727,488    $6,224,474            40
New Hampshire      $2,655,185    $680,000          26  $5,565,379    $753,600          14       $8,511,086      $4,038,194              47   $11,499,480    $8,251,078            72
New Jersey         $5,754,465  $5,550,000          96  $13,065,29  $12,844,89          98      $23,460,587     $13,613,399              58   $33,551,037   $16,579,265            49
                                                                9           5
New Mexico         $6,463,730  $1,354,521          21  $12,980,31  $4,203,348          32      $19,617,899     $11,543,045              59   $26,486,721   $23,243,224            88
                                                                3
New York           $11,855,42  $11,173,20          94  $27,146,33  $27,146,33         100      $42,096,346     $36,134,734              86   $60,347,551   $59,395,434            98
                            6           4                       7           7
North Carolina     $11,361,18  $6,054,384          53  $23,784,30  $10,124,52          43      $36,116,055     $16,027,268              44   $48,819,762   $26,729,994            55
                            9                                   4           4
North Dakota       $4,110,272    $792,100          19  $8,444,084  $1,300,838          15      $12,832,740      $5,445,230              42   $17,420,151   $11,036,111            63
Ohio               $9,944,767  $1,608,000          16  $22,928,07  $3,282,166          14      $36,053,956      $6,447,428              18   $49,310,543   $18,471,578            37
                                                                4
Oklahoma           $5,622,879  $2,942,431          52  $12,089,26  $3,065,188          25      $19,152,311      $4,649,946              24   $26,063,763    $9,675,837            37
                                                                9
Oregon             $4,435,371    $947,170          21  $9,388,049    $807,089           9      $13,655,507      $3,138,119              23   $18,269,982    $9,133,082            50
Pennsylvania       $4,645,047                       0  $14,215,81  $8,636,800          61      $23,740,114     $11,297,666              48   $28,295,974   $23,131,252            82
                                                                8
Rhode Island       $2,169,231  $1,146,400          53  $4,476,354  $1,146,400          26       $6,567,081      $5,610,000              85    $8,659,645    $6,059,532            33
South Carolina     $5,413,861    $920,550          17  $11,693,35  $1,154,550          10      $18,233,812     $13,023,454              71   $23,917,887   $19,825,976            83
                                                                7
South Dakota       $4,178,720  $1,861,733          45  $8,289,573  $2,889,136          35      $12,962,965      $4,480,740              35   $17,757,850    $8,895,242            50
Tennessee          $7,104,954    $354,025           5  $14,967,31    $658,025           4      $23,170,305     $15,204,615              66   $31,909,637   $27,258,500            85
                                                                3
Texas              $25,886,61                       0  $57,001,66                       0      $87,895,662     $18,899,969              22  $118,181,498   $44,730,961            38
                            2                                   2
Utah               $3,833,665                       0  $7,105,678                       0      $10,526,567      $3,422,306              33   $13,849,245    $3,851,115            28
Vermont            $2,321,911     $22,000           1  $4,643,537    $884,510          19       $6,903,194      $1,743,673              25    $9,340,187    $3,216,889            34
Virginia           $6,285,910                       0  $13,735,84                       0      $20,952,579      $2,358,722              11   $28,266,107    $6,729,105            24
                                                                9
Washington         $3,627,113    $173,000           5  $11,751,89  $7,540,409          64      $19,448,104     $15,508,881              80   $23,379,017   $23,273,313           100
                                                                3
West Virginia      $2,878,693     $16,000           1  $6,072,310  $1,433,018          24       $9,602,361      $5,471,539              57   $13,726,337   $10,489,910            76
Wisconsin          $9,332,605    $400,000           4  $20,435,57    $400,000           2      $31,326,907      $3,056,632              10   $42,124,050    $9,549,792            23
                                                                3
Wyoming            $3,504,018    $356,611          10  $7,206,539  $1,655,484          23      $10,843,469      $6,261,680              58   $14,590,850   $11,317,298            77
Puerto Rico        $2,349,317                       0  $4,909,653                       0       $7,468,149        $168,000               2   $10,209,801    $2,349,317            23
====================================================================================================================================================================================
Total              $353,427,8  $78,565,16          22  $771,725,3  $193,200,3          25   $1,193,459,609    $459,132,307              38  $1,617,018,6  $886,808,175            55
                           02           9                      87          40                                                                         63
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source:  FHWA's information system. 


FACTORS THAT SLOWED THE USE OF
ENHANCEMENT FUNDS
=========================================================== Appendix V

We asked the 16 state transportation department officials and the
five interest group and four sponsoring organization representatives
we interviewed what difficulties they encountered in obligating
transportation enhancement funds.  They mentioned four major factors: 
(1) local sponsors were unfamiliar with federal-aid highway
administrative procedures, (2) programs mandated by ISTEA took time
to develop, (3) administering a large number of low-cost projects was
perceived as burdensome, and (4) state transportation departments
lacked the staff or expertise to administer nontraditional
transportation projects.  The following sections discuss these
factors in more detail. 


   LOCAL SPONSORS WERE UNFAMILIAR
   WITH FEDERAL-AID HIGHWAY
   ADMINISTRATIVE PROCEDURES
--------------------------------------------------------- Appendix V:1

The factor mentioned most frequently,\1 and the one cited as the
greatest hindrance to obligation,\2 was the lack of familiarity on
the part of local sponsors, mainly local governments, with the
administrative procedures required for transportation enhancement
projects.  Although many enhancement projects are smaller and less
costly than traditional highway projects, the same administrative
rules and requirements apply to a $10,000 enhancement project as to a
multimillion-dollar highway project.  Such administrative or
regulatory requirements include compliance with the National
Environmental Policy Act, the National Historic Preservation Act, and
federal regulations for property acquisition, competitive bidding,
and FHWA's oversight of project approvals.  Also, the timing of
payments was confusing to some local sponsors, since the federal-aid
highway program operates on a reimbursement basis.  This meant that
sponsors had to be prepared to pay most, if not all, of their
projects' costs up front and then receive reimbursement from the
federal government.  FHWA's reviews have also identified these
requirements as hindering the obligation of transportation
enhancement funds. 

Some of these concerns were addressed in the National Highway System
Designation Act of 1995.  This legislation allows for relaxing or
streamlining the environmental and historic preservation reporting
requirements for transportation enhancement projects.  The
legislation also gives sponsors the option of receiving an advance
payment for a transportation enhancement project based on the
project's schedule of cash needs.  In addition, FHWA is developing
additional guidance on the regulatory requirements associated with
enhancement funding for state and local sponsors. 

Washington, the state with the highest percentage of enhancement
funds already obligated, was little affected by the concerns that
hampered other states in their use of these funds.  The state has a
history of passing federal-aid highway funds directly through to
metropolitan planning organizations and local governments.  Hence,
the local sponsors were very familiar with the regulatory
requirements involved in administering enhancement projects,
according to a Washington official.  In Iowa, however, where the
lowest percentage of enhancement funds has been obligated, the local
sponsors did not initially understand the complexities of the
program.  As a result, they needed more time to get their projects up
and running, according to the state's enhancement program manager. 


--------------------
\1 Fifteen of the 16 states, all five interest groups, and three of
the four project sponsors said that this factor hindered the states'
obligation of enhancement funds. 

\2 Nine of the 16 states, two of the five interest groups, and all
four of the project sponsors said that this factor hindered the
states' obligation of enhancement funds to a great or very great
extent. 


   ISTEA-MANDATED PROGRAMS TOOK
   TIME TO DEVELOP
--------------------------------------------------------- Appendix V:2

Most of those interviewed\3 said the amount of time required to
implement the new programs mandated by ISTEA, such as the
transportation enhancement program, hindered the states' obligation
of enhancement funds.  While this factor hindered the states with low
and high obligation rates more or less equally, the states with
higher obligation rates tended to implement their programs faster
than the states with lower obligation rates.  The eight
high-obligation states had, on average, fully implemented their
enhancement programs in 13 months, compared with an average of 18
months for the low-obligation states.\4 For example, Washington
State's program was established in 9 months, according to the state's
enhancement program manager.  In contrast, Iowa took 2 years to
implement its program because, according to the state's enhancement
program manager, considerable time was spent seeking public input on
how the program should be structured, among other factors. 


--------------------
\3 Eleven of the 16 states, three of the five interest groups, and
all four project sponsors said that this factor hindered the states'
obligation of enhancement funds. 

\4 This figure does not include Hawaii, one of the eight
low-obligation states, which had not fully implemented its
enhancement program as of September 1995. 


   ADMINISTERING A LARGE NUMBER OF
   LOW-COST PROJECTS WAS
   BURDENSOME
--------------------------------------------------------- Appendix V:3

Most of the persons\5 we interviewed said the length of time required
to administer so many enhancement projects was a hindrance in
obligating funds.  The states fund a large number of enhancement
projects that are relatively small in scope compared with more
traditional highway projects.  According to FHWA's data for fiscal
years 1992-95, 2,300 (or about 61 percent) of the 3,786 projects that
used funds from the enhancement set-aside were projects costing less
than $50,000.  While traditional highway projects also include a
relatively large number of projects costing less than $50,000, the
percentage is somewhat lower than for the enhancement set-aside.  For
instance, during the same period of time, 3,282 (or 43 percent) of
the 7,632 more traditional highway projects that received National
Highway System funds cost less than $50,000.  Respondents said the
nature of transportation enhancement projects created a burden on
state transportation departments, which were not used to
administering, or lacked sufficient staff to effectively administer,
a large number of low-cost enhancement projects.  Unlike large
highway projects, small enhancement projects have a small financial
base for supporting the necessary administrative overhead. 


--------------------
\5 Eleven of the 16 states, four of the five interest groups, and all
four project sponsors said that this factor hindered the states'
obligation of enhancement funds. 


   STATE TRANSPORTATION
   DEPARTMENTS LACKED STAFF OR
   EXPERTISE TO ADMINISTER
   NONTRADITIONAL PROJECTS
--------------------------------------------------------- Appendix V:4

Most of those\6 we interviewed said the nontraditional nature of
enhancement projects hindered the states' obligation of funds. 
Because many enhancement projects differed significantly in scope and
type from traditional highway construction projects, several of the
16 state officials we contacted said their transportation departments
lacked sufficient staff, or staff with the necessary technical
expertise, to review or approve certain types of enhancement
projects, especially those involving historic preservation or
building renovation.  State enhancement program managers in Georgia
and Wisconsin said, for example, that their transportation
departments had to bring in specialists from outside the department
to review historic preservation projects because they did not have
this ability in-house.  When local enhancement projects came on line,
the Delaware transportation department had to hire a consultant to
help its staff get up to speed on FHWA's administrative requirements
because it lacked in-house staff to manage the program. 


--------------------
\6 Ten of the 16 states, four of the five interest groups, and two of
the four project sponsors said that this factor hindered the states'
obligation of enhancement funds. 


EXAMPLES OF TRANSPORTATION
ENHANCEMENT PROJECTS
========================================================== Appendix VI

As we previously noted, most of the funds for transportation
enhancement projects have been obligated in 4 of the 10 project
categories:  facilities for pedestrians and bicyclists, rail-to-trail
conversions, rehabilitation of historic transportation buildings or
facilities, and landscaping.  This appendix provides examples of
transportation enhancement projects in these four commonly funded
categories. 


   FACILITIES FOR PEDESTRIANS AND
   BICYCLISTS
-------------------------------------------------------- Appendix VI:1

  -- In Everett, Washington, $1.6 million in federal enhancement
     funds was used to build a 9-mile multiuse trail that connects
     two park-and-ride lots to mass transit service.  This trail is
     expected to alleviate increasing vehicular congestion by
     providing an alternative, contiguous connection between retail
     and employment centers and a number of parks and other trails in
     the area north of Seattle.  The trail, as shown in figure VI.1,
     is part of the Interurban Trail Project, a multijurisdictional
     effort to design and construct missing pieces of a regional
     trail system that, when completed, will span an 18-mile stretch
     that runs largely within the historic Interurban Railroad
     right-of-way, for which the trail is named. 

   Figure VI.1:  Multiuse Trail in
   Everett, Washington

   (See figure in printed
   edition.)

   Source:  Puget Sound Regional
   Council, Seattle, Washington.

   (See figure in printed
   edition.)

  -- Another project, shown in figure VI.2, involved the installation
     of bicycle racks in neighborhood business districts in Tacoma,
     Washington.  Washington State used $7,000 in enhancement funds
     on this project in fiscal years 1992-93.  The bicycle racks are
     the first phase of a project to revitalize neighborhood business
     districts through streetscape projects that also include the
     installation of benches, trash receptacles, and other amenities
     for pedestrians. 

   Figure VI.2:  Bicycle Racks
   Installed in Tacoma, Washington

   (See figure in printed
   edition.)

   Source:  Puget Sound Regional
   Council, Seattle, Washington.

   (See figure in printed
   edition.)


   RAIL-TO-TRAIL CONVERSIONS
-------------------------------------------------------- Appendix VI:2

  -- In Cheshire, Connecticut, $900,000 in federal enhancement funds
     was used to convert the abandoned Farmington Canal and Boston
     and Main Railroad right-of-way into a recreational and open
     space corridor.  This project included the construction of a
     3.3-mile path for bicyclists and pedestrians with stone edging,
     split-rail fences, benches, and other landscaping amenities. 
     The converted trail parallels the historic Farmington Canal,
     which was originally built in 1828 and was replaced 20 years
     later by a railroad line that was used continuously until 1982. 
     Figure VI.3 illustrates the site before the trail was
     constructed, and figure VI.4 depicts the site after the project
     was completed.  The renovated trail now connects the town center
     of Cheshire with the Farmington Canal Lock 12 Historic Park and
     serves residents who work in town and commute by bicycle or on
     foot.  The trail and adjacent linear park also serve as a
     greenway for wildlife, marshes, and native vegetation. 

   Figure VI.3:  Site Before the
   Railroad Right-of-Way Was
   Converted to a Trail in
   Cheshire, Connecticut

   (See figure in printed
   edition.)

   Milone and MacBroom, Inc.,
   Cheshire, Connecticut.

   (See figure in printed
   edition.)

   Figure VI.4:  Site After the
   Railroad Right-of-Way Was
   Converted to a Trail in
   Cheshire, Connecticut

   (See figure in printed
   edition.)

   Source:  Milone and MacBroom,
   Inc., Cheshire, Connecticut.

   (See figure in printed
   edition.)


   REHABILITATION OF HISTORIC
   TRANSPORTATION BUILDINGS OR
   FACILITIES
-------------------------------------------------------- Appendix VI:3

  -- In Greensburg, Pennsylvania, $1.4 million in federal enhancement
     funds was used to rehabilitate the Greensburg train station,
     originally built in 1911 and now listed on the National Register
     of Historic Places.  The project's activities included the
     rehabilitation of the station's exterior and interior and the
     construction of a glassed-in concourse connecting the main
     station and the baggage- handling area.  Approximately 13,000
     passengers pass through the station each year; however, Amtrak
     expects the ridership to triple after the station is renovated. 
     The project's total cost is $2.6 million.  Large contributions
     from state and local sources, as well as from private
     corporations, supplemented the federal funding. 


   LANDSCAPING
-------------------------------------------------------- Appendix VI:4

  -- In Douglas, Georgia, $800,000 in federal enhancement funds was
     used to improve the streetscapes in the Douglas Downtown
     Historic District, which covers three blocks and six
     intersections.  Enhancement activities included landscaping and
     installing street furniture and lighting that complemented the
     district's historic character.  Also included were the
     development of urban spaces, or "pedestrian courts," on the
     corners of each block and at midblock locations.  The project's
     total costs were just over $1 million.  The Downtown Development
     Authority contributed a local match of about $217,300 to the
     federal funding. 


   ENHANCEMENT PROJECTS THAT
   INCLUDE ELEMENTS FROM SEVERAL
   CATEGORIES
-------------------------------------------------------- Appendix VI:5

Many enhancement projects include elements from more than 1 of the 10
eligible categories.  For example, the Stone Arch Bridge in
Minneapolis, Minnesota, a 2,100-foot-long historic rail bridge across
the Mississippi River, was rehabilitated and opened for use by a
short-line trolley, bicyclists, and pedestrians.  It also improved
local residents' and tourists' access to the nearby St.  Anthony
Falls area.  The funding for this $2.8 million project came from
several categories, including those for bikeways and pedestrian
facilities, historic preservation, the rehabilitation of historic
transportation facilities, and rail-to-trail conversions. 

Similarly, the renovation of the 94-year-old Danville, Virginia, rail
passenger station includes enhancements from several funding
categories.  Connections to the site for pedestrians and bicyclists
have been improved, and local businesses have raised funds to create
a Science Center at the station, a satellite facility for the Science
Museum of Virginia.  A second phase of the enhancement project will
convert a nearby freight depot into a farmers' market and festival
area.  Funding for this $2.6 million project, shown in figure VI.5,
came from the categories for bikeways and pedestrian facilities,
scenic easements, historic preservation, and the rehabilitation of
historic transportation facilities.  According to the Rails-to-Trails
Conservancy, up to 20 percent of all enhancement projects obtain
funding through more than one category. 

   Figure VI.5:  Renovation of
   Danville, Virginia, Rail
   Passenger Station

   (See figure in printed
   edition.)

   Source:  Department of
   Community Development,
   Danville, Virginia.

   (See figure in printed
   edition.)




(See figure in printed edition.)Appendix VII
COMMENTS FROM THE RAILS-TO-TRAILS
CONSERVANCY
========================================================== Appendix VI

individuals have been deleted. 



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Rails-to-Trails Conservancy's
letter dated July 2, 1996. 


   GAO COMMENTS
-------------------------------------------------------- Appendix VI:6

1.  According to the Rails-to-Trails Conservancy, some of the
examples and conclusions in our draft report are inaccurate or
inconclusive.  In its more detailed comments, the Conservancy
suggests that we broaden our effort to address other enhancement
issues and concerns.  The examples are based on findings from our
audit work.  The conclusions are drawn from our principal findings
and cannot be broadened beyond the scope of our work. 

2.  Figure 1 illustrates the statement, made on the previous page,
that by the end of fiscal year 1995, the states had obligated $887
million, or 55 percent, of the $1.6 billion available since the
enhancement program's inception.  While this statement refers to the
cumulative nature of enhancement obligations, we have further
clarified the content of the graph by indicating in the figure title
that the obligations represent cumulative rates.  Since the numbers
reflected in a bar graph or presented in a table would be the same,
we continue to display the cumulative data in a bar graph.  However,
we also refer to the annual data depicted in the Rails-to-Trails
Conservancy's graph in appendix VII. 

3.  A typographical error, causing the misalignment of data for some
states in appendix IV, has been corrected. 

4.  Because the funds obligated in fiscal year 1995 include funds
apportioned in earlier years, we continue to present information on
cumulative obligations.  Furthermore, the cumulative obligation rates
for transportation enhancement funds shown in figure 1 of our report
exhibit the same relative increase over time as the annual
information displayed in the alternative chart.  However, we refer in
our final report to the annual information presented in the chart
suggested by the Rails-to-Trails Conservancy (see comment 2). 

5.  Our report does recognize the improvement that states have made
in their obligation rates over time.  As both our draft and final
reports observe, by the end of fiscal year 1995, after 4 fiscal
years, the states had more than doubled the percentage of funds
obligated for transportation enhancements.  To further emphasize this
progress, we have added the statement in our final report that the
fiscal year 1995 obligation rate represents a significant improvement
over earlier obligation rates.  Nevertheless, the obligation rate for
transportation enhancement funds remains relatively low compared with
the obligation rates for other highway programs.  This fact was
recognized by the Rails-to-Trails Conservancy in its June 1, 1996,
report entitled Enhancing America's Communities.  According to this
report, "compared to other programs within ISTEA, the [transportation
enhancement] obligation rate remains one of the lowest."

6.  The examples are presented to show that the eligibility criteria
for funding some enhancement projects--especially historic
preservation projects--have been variously interpreted.  In 1994,
FHWA arrived at the same finding after reviewing enhancement programs
in nine states.  However, we have modified our report to include the
Rails-to-Trails Conservancy's estimate that eligibility problems
extended to only a small fraction of the historic preservation
projects. 

7.  The background section of our report recognizes that each state's
department of transportation is responsible for administering the
state's transportation enhancement program.  Nonetheless, FHWA
remains responsible for overseeing the states' uses of transportation
enhancement funds. 

8.  We have added to our final report a fifth factor that the
Rails-to-Trails Conservancy noted could hamper the obligation of
enhancement funds--a limit on the total amount that a state can
obligate in a given year. 

9.  Our intent was not to determine why FHWA did not initially
collect transportation enhancement project information.  However, our
final report does recognize that while FHWA did not initially track
information on obligations for specific projects, it did ask the
states to estimate the amounts they obligated to each of the 10
transportation enhancement categories beginning in fiscal year 1992. 
FHWA later recognized that this information was of limited use
because of incomplete and possibly inaccurate reporting.  Therefore,
in fiscal year 1995, FHWA began to collect data on obligations for
individual enhancement projects.  As our report explains, this
information has also proved problematic:  According to the data, over
50 percent of the enhancement funds have apparently been used for
ineligible activities.  As our report further points out, FHWA's
assessment of a sample of projects in four states has shown that
these projects were generally eligible; however, they were
incorrectly coded and therefore appeared ineligible in FHWA's
database. 

It was not within the scope of our review to address the
transportation enhancement data collected and disseminated by states
to citizens. 

10.  Our report notes that one of the factors that slowed the rate of
obligation for transportation enhancement funds was the lack of
familiarity on the part of local sponsors, mainly local governments,
with the administrative procedures required for transportation
enhancement projects.  Our report further notes that some of the
concerns we identified were addressed in the National Highway System
Designation Act of 1995.  Whether the states are taking advantage of
the opportunities for streamlining afforded by this act's provisions
is an open question, but the much-improved obligation rate for
transportation enhancement funds suggests that progress is being
made. 

11.  We have updated our data on the types of enhancement projects
funded from fiscal years 1992-95 to include data through February
1996. 

12.  Our objectives did not include evaluating the impact of
enhancement projects; therefore, we did not address this issue in the
report. 

13.  The conclusions in our report are based on the findings we
developed in response to our objectives; they cannot be broadened
beyond their factual base. 

14.  Similarly, our recommendation is limited to the scope of our
work.  Furthermore, neither our draft report nor our final report
advocates a "one size fits all approach." Instead, our report
recognizes that FHWA has revised its guidance for historic
preservation projects but has not clearly defined the key phase
"substantial transportation linkage." We are therefore suggesting
that FHWA monitor its field offices' implementation of the revised
guidance and provide further clarification if needed. 


MAJOR CONTRIBUTORS TO THIS REPORT
======================================================== Appendix VIII

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Phyllis F.  Scheinberg
Gary L.  Jones
Yvonne Pufahl

SEATTLE FIELD OFFICE

Brian A.  Estes
Stanley G.  Stenersen
Adrian Gonzales

*** End of document. ***