HB 2318
Initials LM Page 1 Transmitted
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature
Second Regular Session
House: TI DP 11-0-0-0 | 3
rd
Read 57-1-1-0
Senate: TTMC DP 4-2-1-0 | 3
rd
Read 30-0-0-0
HB2318: state match fund; rural transportation
Sponsor: Representative Dunn, LD 25
Transmitted to the Governor
Overview
Changes requirements relating to the State Match for Rural Transportation (SMART) Fund.
Requires applicants who were awarded funding for design and engineering services to apply
for a federal grant within two years or else have to repay the awarded funds. Modifies
application requirements for SMART Fund monies.
History
The SMART Fund was established by Laws 2022, Ch. 322 and is administered by the Arizona
Department of Transportation (ADOT). Monies in the SMART Fund are continuously
appropriated. Monies consist of appropriations from the Legislature and any nonfederal gifts,
grants, donations or other amounts received from any public or private source for
transportation projects.
On notice from ADOT, the State Treasurer must invest and divest monies in the SMART
Fund and monies earned from the investment must be credited to the SMART Fund. The
Transportation Board (Board) may not approve any expenditures from the SMART Fund
unless the expenditure is made in accordance with requirements relating to the SMART
Fund.
Monies in the SMART Fund must be used only for the following:
1) to reimburse up to 50% of the costs associated with developing and applying for a
federal grant;
2) as a match for a federal grant; and
3) to reimburse design and other engineering services expenditures that meet federal
standards for projects eligible for a federal grant.
Monies in the SMART Fund must be allocated as follows:
1) 20% to counties with a population of 100,000 persons or more;
2) 20% to counties with a population of less than 100,000 persons;
3) 20% to municipalities with a population of 10,000 persons or more;
4) 20% to municipalities with a population of less than 10,000 persons; and
5) 20% to ADOT to match federal grants and to reimburse design and other engineering
services expenditures for federal grant eligible projects.
A county with a population of more than 1,000,000 persons is not eligible for funding. A
municipality that is partially or entirely located in an urbanized area of a county with a
population of more than 1,000,000 persons is not eligible for funding. ADOT may not use
monies from the SMART Fund for projects that are located in an urbanized area of a county
with a population of more than 1,000,000 persons (A.R.S § 28-339). HB 2318
Initials LM Page 2 Transmitted
Laws 2022, Ch. 309 appropriated $50 million from the State Highway Fund and Laws 2023,
Chapter 135 appropriated $12.5 million from the state General Fund into the SMART Fund.
Provisions
1. Prohibits ADOT, rather than the Board, from approving any expenditures from the
SMART Fund unless it is made in accordance with requirements relating to the SMART
Fund. (Sec. 1)
2. Clarifies that monies in the SMART Fund must be used to provide match or
reimbursement of a match for a federal grant and to fund or reimburse design and other
engineering services expenditures that meet federal standards for projects eligible for a
federal grant. (Sec. 1)
3. Requires applicants awarded SMART Fund monies for design and other engineering
services to apply for a federal grant within two years after the award, otherwise the award
lapses. (Sec. 1)
4. Directs an applicant whose award lapses to repay any expended monies to the SMART
Fund and to submit repayment within 30 days after receiving an invoice from ADOT.
(Sec. 1)
5. Clarifies that ADOT must suballocate SMART Fund monies to projects located in
specified counties and municipalities. (Sec. 1)
6. Specifies that a project located in a county, or a municipality partially or entirely located
in an urbanized area of a county, with a population of more than 1,000,000 people is not
eligible for funding. (Sec. 1)
7. Allows an entity eligible to receive a federal grant to apply to ADOT to be eligible for an
award from the SMART Fund. (Sec. 1)
8. Directs an entity to first obtain the approval of the applicable metropolitan planning
organization or council of governments before applying to ADOT. (Sec. 1)
9. Allows ADOT to require additional documentation to ensure an applicant is eligible for
the federal grant. (Sec. 1)
10. Permits the Board to determine the extent to which an applicant has the technical and
financial capacity to successfully complete the project. (Sec. 1)
11. Specifies that ADOT must determine, on receipt of an application, if the requirements of
the Federal Statutes establishing the federal grant are met. (Sec. 1)
12. Allows the Board to give preference to applicants that can demonstrate other factors as
deemed appropriate by the Board for the applicable federal grant. (Sec. 1)
13. Removes the requirement for ADOT to execute an intergovernmental agreement, to
instead execute an agreement with the applicant regarding reimbursement and
expenditures relating to monies used in the SMART Fund. (Sec. 1)
14. Permits ADOT to annually use up to 5% of SMART Fund monies earned in the previous
fiscal year from the State Treasurer's investment and divestment of SMART Fund monies
to administer the Fund, rather than 1% from SMART Fund monies allocated to ADOT.
(Sec. 1)
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note HB 2318
Initials LM Page 3 Transmitted
15. Removes the requirement for an applicant, who received a federal grant award but could
not secure it, to notify ADOT within 15 days after receiving notice that the applicant has
not secured the federal grant. (Sec. 1)
16. Allows the Board to redistribute the unawarded SMART Fund monies to ensure each
suballocated category for projects located in counties and municipalities receives a share
of the monies based on the percentage prescribed for each suballocated category. (Sec. 1)
17. Requires ADOT to post the amount available for each category on ADOT's website within
30 days after the Board's approval of the redistribution. (Sec. 1)
18. Allows the Board to direct ADOT to close applications for any category and return any
unawarded applications to the applicants. (Sec. 1)
19. Requires the Board to rescind an award if an applicant receives funding from another
source for the same project and purpose in an amount equal to or greater than the award
made under the SMART Fund. (Sec. 1)
20. Directs an applicant to repay any monies expended from the SMART Fund within one
year after the date of the rescission resolution approved by the Board. (Sec. 1)
21. Makes technical and conforming changes. (Sec. 1)