ADVANCE CONSTRUCTION.

SEC. 306. ADVANCE CONSTRUCTION. (a) Discretionary Grant Program.—Section 3 of the Urban Mass Transportation Act of 1964 is amended by adding at the end thereof the following new subsection: “(l) Advance Construction.— “(1) Approved project.—Upon application of a State or local public body which carries out a project described in this section or a substitute transit project described in section 103(e)(4) of title 23, United States Code, or portion of such a project without the aid of Federal funds in accordance with all procedures and requirements applicable to such a project and upon the Secretary’s approval of such application, the Secretary may pay to such applicant the Federal share of the net project costs if, prior to carrying out such project or portion, the Secretary approves the plans and specifications therefor in the same manner as other projects under this section or such section 103(e)(4), as the case may be. “(2) Bond interest.— “(A) Eligible cost.—Subject to the provisions of this paragraph, the cost of carrying out a project or portion 101 STAT. 225thereof, the Federal share of which the Secretary is authorized to pay under this subsection, shall include the amount of any interest earned and payable on bonds issued by the State or local public body to the extent that the proceeds of such bonds have actually been expended in carrying out such project or portion. “(B) Limitation on amount.—In no event shall the amount of interest considered as a cost of carrying out a project or portion thereof under subparagraph (A) be greater than the excess of— “(i) the amount which would be the estimated cost of carrying out the project or portion if the project or portion were to be carried out at the time the project or portion is converted to a regularly funded project, over “(ii) the actual cost of carrying out such project or portion (not including such interest). “(C) Changes in construction cost indices.—The Secretary shall consider changes in construction cost indices in determining the amount under subparagraph (B)(i).”. (b) Block Grant Program.—Section 9 of such Act is amended by adding at the end thereof the following new subsection: “(p) Advance Construction.— “(1) Approved project.—When a recipient has obligated all funds apportioned to it under this section and proceeds to carry out any project described in this section (other than a project for operating expenses) or portion of such a project without the aid of Federal funds in accordance with all procedures and all requirements applicable to such a project, except insofar as such procedures and requirements limit a State to carrying out projects with the aid of Federal funds previously apportioned to it, the Secretary, upon application by such recipient and his approval of such application, is authorized to pay to such recipient the Federal share of the costs of carrying out such project or portion when additional funds are apportioned to such recipient under this section if, prior to carrying out such project or portion, the Secretary approves the plans and specifications therefor in the same manner as other projects under this section. “(2) Limitation on projects.—The Secretary may not approve an application under this subsection unless an authorization for this section is in effect for the fiscal year for which the application is sought beyond the currently authorized funds for such recipient. No application may be approved under this subsection which will exceed— “(A) the recipient’s expected apportionment under this section if the total amount of funds authorized to be appropriated to carry out this section for such fiscal year were so appropriated, less “(B) the maximum amount of such apportionment which could be made available for projects for operating expenses under this section. “(3) Bond interest.— “(A) Eligible cost.—Subject to the provisions of this paragraph, the cost of carrying out a project or portion thereof, the Federal share of which the Secretary is authorized to pay under this subsection, shall include the amount of any interest earned and payable on bonds issued 101 STAT. 226by the recipient to the extent that the proceeds of such bonds have actually been expended in carrying out such project or portion. “(B) Limitation on amount.—In no event shall the amount of interest considered as a cost of carrying out a project or portion under subparagraph (A) be greater than the excess of— “(i) the amount which would be the estimated cost of carrying out the project or portion if the project or portion were to be carried out at the time the project or portion is converted to a regularly funded project, over “(ii) the actual cost of carrying out such project or portion (not including such interest). “(C) Changes in construction cost indices.—The Secretary shall consider changes in construction cost indices in determining the amount under subparagraph (B)(i).”.