STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6498

February 23, 1988

COMPREHENSIVE TRANSPORTATION FUND:

FEDERAL AID:

Distribution by regional transportation authority for region to local units

Distribution of federal urban mass transportation funds by regional transportation authority

The Legislature has not required a regional transportation authority to use state comprehensive transportation operating funds received for the region to make payment for public transit services under contract with a city in an amount equivalent to the funds it receives from the state as a result of the eligible operating costs of the city's transportation system.

A regional transportation authority designated as a recipient of Federal Mass Transportation Act funds is not required by federal law to pass through to a city an amount equivalent to the federal funds received by the authority based upon the population, population density, and transportation revenue miles of the city.

Honorable Francis R. Spaniola

State Representative

State Capitol

Lansing, Michigan 48909

You have indicated that the Southeastern Michigan Transportation Authority (SEMTA) receives state and federal funds to finance a comprehensive, consolidated regional transportation system for the entire seven county region of southeastern Michigan, which includes the City of Detroit.

The Michigan Department of Transportation advises that for the period covered by SEMTA's June 30, 1986, audit, SEMTA compensated the City of Detroit $49,898,742 in operating assistance with $15,887,603 from federal funds, and $34,011,139 from state funds. In addition, special state and federal operating assistance in the amount of $77,092 was passed on to the City of Detroit. The distribution of state or federal funds by SEMTA to the City of Detroit has been made pursuant to contractual obligations or a discretionary decision by SEMTA to make such distribution.

You request my opinion on two questions relating to the 'pass-through' of state and federal funds to the City of Detroit. Your first question is:

The obligations of SEMTA in regard to these state and federal public transportation funds are contained in statutes and rules.

SEMTA is a metropolitan transportation authority organized pursuant to 1967 PA 204, MCL 124.401 et seq; MSA 5.3475(101) et seq.

1951 PA 51, Sec. 10c(b); MCL 247.660c(b); MSA 9.1097(10d)(b), defines an 'eligible authority' as 'an authority organized pursuant to the metropolitan transportation authorities act of 1967, Act No. 204 of the Public Acts of 1967, as amended, being sections 124.401 to 124.425 of the Michigan Compiled Laws.' SEMTA is, therefore, an 'eligible authority' under Act 51, Sec. 10c(b).

With respect to state funds, 1951 PA 51, Sec. 10e(4)(a)(i), MCL 247.660e(4)(a)(i); MSA 9.1097(10f)(4)(a)(i), covers the appropriation and distribution of comprehensive transportation funds to eligible authorities and governmental agencies. It is through this statute that SEMTA receives operating grants for eligible operating expenses. The amount of funds distributed to SEMTA for urban areas is determined by a statutory formula which is based on the difference between eligible operating expenses and certain federal funds provided to offset those expenses. Thus, Act 51, Sec. 10e(4)(a)(i), provides that an eligible authority or governmental agency shall receive 'a grant up to 50% of the difference between the eligible operating expenses of the eligible governmental agency or eligible authority and the amount of operating grants received by that agency or authority pursuant to section 9 of the urban mass transportation act of 1964, 49 U.S.C. 1607a.'

The Michigan Department of Transportation has promulgated rules which state that eligible operating expenses include '[t]he costs of a transit system with whom the eligible authority or eligible governmental agency has an approved purchase of service agreement.' 1979 AC, R 247.806(4)(g).

SEMTA has entered into a purchase of service agreement with the City of Detroit for the city to provide certain transit services. It is my understanding that pursuant to this agreement, SEMTA then compensates the city for those services. The Michigan Department of Transportation advises that it does, in fact, include the operating costs of the City of Detroit's transportation system when computing the amount of comprehensive transportation funds to be distributed to SEMTA, as a result of SEMTA's purchase of service agreement with the City of Detroit.

Act 51 imposes no statutory conditions and there are no rules requiring SEMTA to pay the City of Detroit that portion of the comprehensive transportation fund distribution attributable to the City of Detroit's eligible operating costs for services performed under the purchase of service agreement with SEMTA.

Under Act 204, Sec. 3, MCL 124.403; MSA 5.3475(103), SEMTA may 'plan, acquire, construct, operate, maintain, replace, improve, extend and contract for public transportation facilities.'

Under Act 204, Sec. 6, SEMTA has the following powers and duties:

Furthermore, Act 204, Secs. 20 and 21, provide:

Neither Act 51 nor Act 204 require SEMTA to pay part of the comprehensive transportation fund distribution it receives from the State to governmental agencies with whom it has contracted for transportation services.

Thus, the Legislature has authorized SEMTA to determine by a purchase of service agreement with the City of Detroit what transit services are to be provided by the city and at what cost.

It is my opinion, in answer to your first question, that while SEMTA is required by contract to make payments to the city for public transit services, the Legislature has not compelled SEMTA to dispense to the City of Detroit, from the comprehensive transportation operating funds it receives for the region pursuant to Act 51, Sec. 10e(4), an amount equivalent to the funds it receives as a result of the eligible operating costs of the City of Detroit's transportation system.

Your second question is:

For the region which includes the City of Detroit, SEMTA is the only designated recipient of federal funds distributed under 49 USC 1607a(m)(1). It should be observed that more than one recipient may be designated to receive and dispense federal urban mass transportation funds within one regional transit area. Letter opinion of the Attorney General (Rep. Curtis Hertel, April 1, 1987).

As indicated in your letter, the formula for calculating the amount of such funds takes into account population, population density, and revenue miles, including those attributable to the City of Detroit.

There is no requirement in 49 USC 1607a(m)(1) or any other federal law, rule, or regulation that SEMTA must dispense to the City of Detroit, from the Federal Mass Transportation Act operating funds it receives, an amount equivalent to the funds SEMTA receives as a result of the City of Detroit's population, population density, and transportation revenue miles.

Furthermore, 49 USC 1607a(e)(1), provides:

Additionally, the Regional Office of the Urban Mass Transportation Administration has advised that SEMTA is not required by federal law to dispense any of the federal funds to the City of Detroit.

It is my opinion, in answer to your second question, that SEMTA is not required by law to provide to the City of Detroit from the Federal Mass Transportation Act operating funds it receives as a designated recipient under 49 USCA 1607a(m)(1), an amount equivalent to the funds it receives as a result of the City of Detroit's population, population density and transportation revenue miles.

Frank J. Kelley

Attorney General