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LPA Project Administration

Local Public Agency (LPA) projects encompass special project types that involve many government agencies at the local, state, and/or federal levels and, oftentimes, several Kentucky Transportation Cabinet (KYTC) offices. As such, delivering a successful LPA project requires robust communication and collaboration.

An LPA project is any project where a government entity other than the Cabinet receives transportation funding for a project. Because funding for LPA projects flows through KTYC, it is responsible for oversight and ensuring projects are administered according to all rules and regulations attached to the funding. The most common situation for an LPA project is where a local county or city government receives federal transportation funding to implement a project on city- or county-owned infrastructure (e.g., roadway, sidewalk, parking facility). Many local government agencies lack the resources to handle the numerous regulations associated with receiving federal funds, which requires assistance and oversight from KYTC.

While some LPA projects are state-funded, a significant majority of LPA projects are funded by federal programs. The latter are Federal-Aid Projects and fall under the jurisdiction of the Federal Highway Administration (FHWA). This article describes basic requirements and administration procedures for Federal-Aid Projects. While the article tries to discuss procedures chronologically, often procedures run parallel to one another.

KYTC has a guide for LPA projects at the following location: https://transportation.ky.gov/Program-Management/Pages/LPAGuide.aspx

    1. Project Conception

    Typically, LPA projects are conceived at the local level and are intended to improve city- or county-owned infrastructure. However, there are also situations where local governments may want to improve KTYC-owned facilities that will benefit locally owned transportation infrastructure.

    Most LPA projects come to fruition via one of the following processes:

    • Through the typical KYTC planning process
    • Through a competitively based application process

    Projects that move through the typical KYTC planning process generally have larger scopes and undergo a rigorous screening process involving local Area Development Districts (ADD), KYTC’s Division of Planning, and local government officials. If the project is in certain urban areas, a Metropolitan Planning Organization (MPO) will be involved. For more information on KYTC’s planning process see the KYTC Planning Guidance Manual.

    Application-based projects go through a competitive application process, where projects are evaluated and compared to one another. Projects that receive the highest evaluations are selected for funding.   Table 1.1 in Chapter 1 of the KYTC LPA Guide lists the various LPA project types and whether or not they are application based.

    2. Administering Office

    The Administering Office is the KYTC office in responsible charge of the project. It serves as the primary point of contact for the LPA. The administering office is contingent on the project type and is determined by the project’s funding source.  Table 1.1 in Chapter 1 of the KYTC LPA Guide lists Administering Offices by funding source. A project manager from the Administering Office is assigned to each project and acts as the project manager for KYTC.  The Administering Office for LPA projects is from one of two Departments within KYTC:

    • One of the divisions or offices within the Department of Highways (DOH)
      • Primary administering offices will usually be one of the following: a District Office, Division of Planning, Division of Program Management, Division of Traffic and Division of Highway Design
      • These projects are referred to as District Administered Projects because much of the administration, coordination, and oversight is done through district offices.
    • The Office of Local Programs (OLP) within the Department of Rural and Municipal Aid
      • These projects are referred to as OLP-Administered Projects.
      • While OLP-Administered projects are administratively handled through OLP, there is coordination with other KYTC offices, especially district offices.

    Regardless of which office administers a project, the LPA project development process is a team effort involving the LPA and many offices or divisions within KYTC.

    One exception to the administrative structure discussed above is Recreational Trails program. The Department for Local Government administers this program.

    3. Initial Scoping

    Understanding a project’s purpose and need and physical footprint is critical for developing the initial scope.  For application-based projects this begins with acquiring the original grant application. Typically, CMAQ, TAP, SLO, SLX, SNK, SHM and RTP (See Table 1.1 in Chapter 1 of the KYTC LPA Guide) projects are application-based. The application contains a project narrative, an estimate, and usually a map that depicts the project limits. Non-application-based projects usually have programming or other documentation that indicates the intent, scope, and costs of the project. Contact the Administering Office as early as possible to obtain documentation that describes the project’s scope and intent. Exceeding the original project scope could render costs incurred by the LPA ineligible for reimbursement.

      4. Initial Project Budget

      Preparing an initial project budget is a critical first step when developing an LPA project. Because there is limited information available at the project’s outset, it is quite difficult to accurately estimate the actual cost. But every effort must be made to generate the best possible estimate with available information. Setting an unreasonably low budget at the beginning of a project can lead to many issues and delays as the project moves forward.

      When developing the initial project budget, keep in mind that KYTC personnel will incur administrative costs. Most projects require that these costs be separated out in the budget (See Table 1.1 in Chapter 1 of the KYTC LPA Guide). As a general rule, 10% of project costs are needed for KYTC’s administrative effort.  For example, if an LPA receives $100,000 in federal funding for a project, $10,000 would typically be set aside to cover the Cabinet’s administrative costs, leaving $90,000 available for the LPA.  The LPA should discuss the budget for KYTC’s oversight funding with the Administering Office.

      Indirect costs (e.g., overhead, administrative duties) are not eligible for reimbursement unless the LPA has an approved Indirect Cost Allocation Plan. An Indirect Cost Allocation Plan is an accounting analysis used to allocate the indirect costs of various functions to specific projects. For information on what indirect costs are eligible for reimbursement and the requirements for an Indirect Cost Allocation Plan visit the Federal-aid Essentials for Local Public Agencies website at: https://www.fhwa.dot.gov/federal-aidessentials/catmod.cfm?id=11. If the LPA wishes to include indirect costs in its budget, it must develop an Indirect Cost Allocation Plan that is approved by KYTC.

      5. Funding Source Allocation

      Using the initial project budget, the Administering Office and Division of Program Management program the project by allocating funds from the appropriate funding source. All Federal-aid LPA Projects are programmed in the Statewide Transportation Improvement Plan (STIP). The STIP includes projects from Transportation Improvement Plans (TIP), which are developed by each MPO across the state, and many other projects not located in an MPO.

      A project’s funding source is based on the eligibility requirements for the type and amount of available funding. Deciding which funding to use lays the groundwork for the project’s administrative structure. Table 1.1 in Chapter 1 of the KYTC LPA Guide lists the typical LPA funding sources.

      6. Initial Memorandum of Understanding (MOA)

      At the beginning of the project, the LPA and KYTC enter into an agreement that defines the relationship between the parties and stipulates each party’s responsibilities with respect to the other. The MOA also describes the project’s scope, clearly defines measurable objectives, and includes the schedule and budget.

      Most LPA projects have multiple phases (e.g., design, right of way, utilities, construction). However, the initial MOA usually covers just the design phase (environmental may also be included on larger projects). As the project progresses, modifications are made as needed to manage the right of way, utilities, and construction phases. Infrastructure project MOAs also include a maintenance plan. Arrangements for funding long-term maintenance should be included in the MOA.

      7. Initial Funding Authorization

      While the funding allocation establishes a financial plan that describes the project’s funding source, the funding authorization officially makes funding available for the project. Like the MOA, a funding authorization is issued at the beginning of the project to cover the initial phases, which usually includes design and/or environmental. Funding authorization must be approved by KTYC and FHWA.

      Red Flag

      Once funds are allocated, the MOA is approved and signed (fully executed), funding is authorized, and the LPA has received a written notice to proceed from its Administering Office, the LPA may begin work on the project. Any funds spent by the LPA before receiving the notice to proceed are not reimbursed. This applies to future project phases as well.

      8. Matching Requirement

      Most LPA projects require that the local government agency provide matching funds. Matching funds are combined with the LPA funding source revenue to pay for project costs. A typical match ratio is 80/20. This means that the LPA funding source covers 80% of the costs and local funding covers the remaining 20%. However, the funding ratio varies by funding source (See Table 1.1 in Chapter 1 of the KYTC LPA Guide).

      Red Flag

      Because the LPA program is not a grant program, LPAs do not receive funding up front. LPAs use their own funds to pay project costs and then submit a package to KTYC for reimbursement of the portion of the project covered by the LPA funding source. Using the 80/20 match ratio as an example, if an LPA receives an invoice from a contractor for $100,000, it pays that cost up front and then requests an $80,000 reimbursement from KYTC.

      In most instances, the match required of the LPA is expected to be cash. But in some unique situations an in-kind contribution may be allowed. With an in-kind contribution, the LPA provides goods or services of monetary value to the project in lieu of cash. Examples include professional services by an LPA employee, property donations, and construction materials. In-kind contributions are highly scrutinized by the FHWA and must be carefully planned and documented.

      9. Building the Project Team

      The LPA must assign a project manager who is in responsible charge of the project and can act on the LPA’s behalf. The project’s success depends on this critical decision. The project manager should be able to perform a multitude of tasks and have excellent communication skills. Experience with transportation infrastructure projects is also beneficial for the LPA project manager.

      The LPA project manager and KYTC project manager bear the greatest responsibility for the project and should discuss project team composition as early as possible. The entire team needs expertise in a wide range of subjects such as environmental, design, right of way, utilities, construction, procurement, and accounting. Initial discussions should also be used to determine if outside professional services are needed.

      Keep in mind that certain tasks require professional certifications. For example, design plans must be stamped by a professional engineer, purchasing right of way requires an approved right of way agent, and architects may be required if buildings are involved.  The LPA has several options for procuring outside professional services (if needed).  See Chapter III of the LPA Guide for more information.   

      If the LPA employs staff with the requisite professional certifications (e.g., professional engineer, landscape architect) they may elect to have these employees perform some of the professional services. The cost of providing these employees may be eligible for use as in-kind match.

      10. Project Development Checklist (PDC)

      KYTC has developed a checklist to help LPA’s effectively navigate the project development process. Although many items on this checklist will not be known during the early stages of project development, it is beneficial to prepare the PDC early and continually update it throughout project development. The project development checklist can be found in Chapter 1 of the KYTC LPA Guide.

      11. Project Team Meetings

      LPA projects will likely involve several project team meetings throughout the project development process.  Two meetings in the initial stages of the project are required to ensure that the project gets off to a successful start.  For more information on these two meeting, see Chapter 2 of the LPA Guide. 

      12. Professional Services

      As previously mentioned, some tasks on LPA projects require the procurement of outside professional services. During the early stages of project development, professional services are typically used for design and/or environmental activities. As the project progresses, additional professionals may be needed to handle items such as right-of-way acquisition and/or construction inspection.

      LPAs must follow numerous federal and state statutes when acquiring professional services. These statutes are intended to ensure that a qualified professional is obtained through an equitable selection process, which referred to as qualifications-based selection (QBS).  See Chapter III of the LPA Guide for more information.

      Red Flag

      The LPA’s procurement process and selection for professional services must be approved by KYTC.  The LPA must also receive a notice to proceed before any professional services are performed on the project.  Any professional services expenditures before the notice to proceed will not be eligible for reimbursement.

      13. Design

      Design of LPA projects is a phased process that begins with preliminary design, that may include some environmental components.  Preliminary design begins with a conceptual project analysis and involves an evaluation of project alternates. It encompasses more than just design — it entails coordination with other functional areas such as environmental, right of way (ROW), and utilities. For example, the environmental process relies on layout information developed during preliminary design to delineate a project footprint. This footprint is used to evaluate potential impacts. Thus, preliminary design goes hand in hand with the environmental process.  A preliminary line and grade meeting (PL&G) is often held to culminate the preliminary design process.  At this meeting, the project team will discuss the various alternatives that have been investigated during the preliminary design and decide on the preferred alternative.  Once preliminary design is complete, the project footprint will defined enough to allow the project to move into other phases such as right of way, utility, and final design phases.  Smaller LPA projects that do not significantly impact the human or natural environment may combine the preliminary design, environmental process, and final design into one phase.  For more information on the design process see Chapter V of the LPA Guide.

      14. Environmental

      The environmental process begins at the start of preliminary design and continues through final design. It is typically authorized in the initial project agreement and authorization. The environmental process is governed by the National Environmental Policy Act (NEPA). NEPA requires a systematic and interdisciplinary approach to decision making that considers engineering, environmental, and economic factors when selecting alternates and making project decisions. In addition to NEPA, all Federal-aid projects must abide by 49 U.S.C. § 303 (commonly referred to as section 4(f)), the National Historic Preservation Act, the Clean Water Act (CWA), the Endangered Species Act, and other applicable environmental laws and regulations.  For more information on the environmental requirements see Chapter IV of the LPA Guide

      15. Right of Way (ROW) and Utilities

      ROW plans developed in preliminary design are the foundation for the project’s ROW and utility phases. The ROW and utility phases proceed concurrently with final design, and ROW plans are refined as the design gains better definition. It is critical to begin these phases as early as possible or the project could suffer unnecessary delays.

      For projects with multiple phases, the initial MOA and project authorization do not usually include the ROW and/or utility phases. Accordingly, KYTC and the LPA will need to modify the initial MOA to include these phases. A separate funding authorization is needed as well, requiring estimates of these phases.

      The ROW phase involves acquiring interest in property (outside of existing ROWs) to construct, operate, and maintain a project. The ROW process involves experts from multiple areas, including title attorneys, appraisers, acquisition agents, and relocation agents. The current edition of KYTC’s Right of Way Guidance Manual must be followed on all LPA Projects.

      Red Flag

      An executed MOA, project authorization, and Official Order are required before ROW phase activities can begin. An approved environmental clearance is required before any offers are made on proposed property interests.

      Begin utility coordination as early as possible in preliminary design. If a consultant is responsible for preliminary design, ensure that hours are included in their proposal for utility coordination as it can require significant resources when a project affects a significant number of utilities. Once utilities are identified, located, and mapped, the design should make every effort to avoid conflict. In some cases, conflict with utilities is unavoidable, thus requiring full relocation of the utility. Utility coordination and/or relocations must be done in accordance with the KYTC Utilities and Rails Guidance Manual. The District Utility Supervisor is a valuable resource for LPAs that need to negotiate utility coordination and/or relocation requirements.

      An MOA between the LPA and KYTC that defines the utility coordination and/or relocation process must be executed. If the MOA indicates the LPA will negotiate with utility companies, its representatives will contact each of the known utilities and confirm the utility is within the project limits. If the MOA indicates KYTC is handling the utility coordination, the KYTC District Utilities Supervisor coordinates the work.

      For more information on the right of way and utility requirements of an LPA project see Chapter VI of the LPA Guide.

      16. Construction Procurement

      The construction procurement process involves publicly publishing all project details, advertising the project to prospective bidders, and selecting a contractor to perform the work. Once design plans and the PDC are complete and have been approved, the LPA must submit its Engineer’s Estimate to the Administering Office. The Administering Office then requests construction authorization for the amount indicated on the Engineer’s Estimate, plus the construction inspection and materials testing cost.

      Red Flag

      An LPA cannot advertise the project for bid or begin project work until it receives a Notice to Proceed in writing from its Administering Office that indicates funding authorization has been completed and that the Bid Proposal is approved.

      After the project is advertised and bids received, the LPA must review the bids and determine the lowest responsive bidder.

      Red Flag

      KYTC must concur with the LPA’s determination of the lowest responsive bidder. The construction contract cannot be awarded without this concurrence and a notice to proceed from the administering office. 

      For more information on the construction procurement requirements of an LPA project see Chapter VIII of the LPA Guide.

      17. Construction and Inspection

      Project construction and inspection move forward once the prime contractor is procured. This phase involves administering the construction contract and inspecting all work performed by the contractor and subcontractors and may also involve materials testing. Professional services are often used for construction inspection and material testing (See Chapter III of the LPA Guide).  For more information on the construction and inspection requirements for an LPA project see Chapter IX of the LPA Guide.

      18. Non-Construction Procurement

      Some LPA projects do not involve building traditional, on-the-ground, infrastructure. Examples of this include pamphlets, outreach programs, and purchasing vehicles. These projects follow the purchasing procedures outlined in KRS 45A. The LPA should discuss these options with their Administering Office before proceeding.  For more information on the right of way and utility requirements of an LPA project see Chapter VII of the LPA Guide.

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