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APTA: CARES Act Provides $25 Billion, With Conditions

Written by William C. Vantuono, Editor-in-Chief

President Trump on March 27 signed H.R. 748, the Coronavirus Aid, Relief and Economic Security (CARES) Act (or Title XII of Division B), into law, following swift passage in the House of Representatives by voice vote, and one day after the U.S. Senate passed the bill in a unanimous 96-0 vote. The CARES Act is a $2 trillion stimulus package that addresses the devastating economic and societal impacts of the COVID-19 pandemic. It includes many funding measures that directly benefit the railway industry—all modes, freight and passenger. In the bill is approximately $25 billion for public transportation. Distribution of the funds is rather complex, and APTA (American Public Transportation Association), which took the lead in working with Congress on the bill’s transit provisions, provided an explanation to its members.

“APTA has aggressively worked to ensure that Congress include emergency aid to public transportation agencies and Amtrak to help offset their extraordinary costs and lost revenue related to COVID-19,” the association noted in a Legislative Update.

The CARES Act includes $24.9 billion for public transit formula operating and capital grants “to prevent, prepare for, and respond to COVID-19,” APTA said. “The bill provides that the Federal Transit Administration (FTA) distribute the transit funds proportionally based on the ratio of funding of four specific programs: Urbanized Area Formula Grants (49 U.S.C. § 5307); Rural Area Formula Grants (49 U.S.C. § 5311); State-Of-Good-Repair (SOGR) formula grants (49 U.S.C. § 5337); and Growing/High-Density States Formula Grants (49 U.S.C. § 5340). It provides almost three times (280%) of the FY 2020 appropriations for each of these programs, and distributes the funds proportionally based on the ratio of funding for these formula programs in the FY 2020 apportionments.”

“However, it is important to note that CARES Act funds are only eligible for grants to prevent, prepare for, and respond to COVID-19,” APTA pointed out. “Under the bill, the funds are eligible for COVID-19 impacts as if they were made available under Urbanized Area Grants or Rural Area Grants. The bill requires the FTA to apportion these funds (using FY 2020 apportionment formulas) within seven days of the date of enactment. The federal share of the costs for grants made available under the bill is 100%, at the option of the recipient. In general, transit law requirements (Chapter 53 of Title 49) apply to these operating and capital grants.

“However, notwithstanding transit law limitations, these funds are expressly available for operating expenses to prevent, prepare for and respond to COVID-19 beginning on Jan. 20, 2020. These funds are available to reimburse public transit agencies for operating costs to maintain service and lost revenue due to the coronavirus public health emergency, including the purchase of personal protective equipment and paying administrative leave of operations personnel due to reduction in service.

“Although these specific operating expenses are outlined in the bill, other operating costs may also be eligible. These operating expenses are not required to be part of state-wide or metropolitan transportation improvement programs or state-wide or long-range transportation plans. The bill prohibits FTA from waiving the prevailing wage and transit labor standards (49 U.S.C. § 5333) for these formula grants.

“Finally, the CARES Act includes important provisions for businesses and other employers. First, it allows employers to defer payment of employer payroll taxes until Dec. 31, 2021, and Dec. 31, 2022. Second, it includes relief for small businesses, including a Paycheck Protection Program that provides $350 billion in guaranteed loans to employers with fewer than 500 employees who maintain their payroll during the COVID-19 emergency. Loans can be used to pay for covered payroll costs, including employee group health benefits, interest on mortgage obligations, rent, and utilities, among others. These loans may be forgiven under certain circumstances.

“The proposal is retroactive to Feb. 15, 2020, to bring workers who may have already been furloughed back onto an employers’ payroll. The bill also requires the Small Business Administration (SBA) to pay all principal, interest and fees on all existing SBA loan products.

“Third, the bill includes a $500 billion loan program for businesses and nonprofits that employ between 500 and 10,000 employees. This program includes several limitations, such as limits on executive compensation, to be eligible for the program.”

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