A. The state match advantage for rural transportation fund is established. The department shall administer the fund. Monies in the fund are continuously appropriated. The fund consists of the following:

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1. Monies appropriated by the legislature.

2. Any nonfederal gifts, grants, donations or other amounts received from any public or private source for transportation projects.

B. On notice from the department, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.

C. The department may establish any subaccount in the fund that the department determines is necessary to carry out the purposes of this section.

D. The board may not approve any expenditures from the fund unless the expenditure is made in accordance with this section.

E. Monies in the fund shall be used only for the following:

1. To reimburse up to fifty percent of the costs associated with developing and submitting an application for a federal grant.

2. As a match for a federal grant.

3. To reimburse design and other engineering services expenditures that meet federal standards for projects eligible for a federal grant.

F. Except as provided in subsection G of this section, monies in the fund shall be allocated as follows:

1. Twenty percent to counties with a population of one hundred thousand persons or more for uses described in subsection E, paragraphs 2 and 3 of this section.

2. Twenty percent to counties with a population of less than one hundred thousand persons for uses described in subsection E of this section.

3. Twenty percent to municipalities with a population of ten thousand persons or more for uses described in subsection E, paragraphs 2 and 3 of this section.

4. Twenty percent to municipalities with a population of less than ten thousand persons for uses described in subsection E of this section.

5. Except as provided in subsection L of this section, twenty percent to the department for uses described in subsection E, paragraphs 2 and 3 of this section.

G. A county with a population of more than one million persons is not eligible for funding pursuant to subsection F, paragraph 1 of this section. A municipality that is partially or entirely located in an urbanized area of a county with a population of more than one million persons is not eligible for funding pursuant to subsection F, paragraph 3 or 4 of this section. The department may not use monies pursuant to subsection F, paragraph 5 of this section for projects that are located in an urbanized area of a county with a population of more than one million persons.

H. A political subdivision of this state shall submit an application to the department to be eligible for an award from the fund. A political subdivision of this state must first obtain the approval of the applicable metropolitan planning organization or council of governments before submitting an application to the department. The department may establish an application deadline for each federal grant match.

I. On receipt of an application, the department shall determine if the requirements of the notice of funding opportunity are met and if the approval required under subsection H of this section is granted. If the department determines that the application meets the requirements and is complete, the department shall forward the application to the departmental committee established pursuant to section 28-6951 for a recommendation. If a recommendation is made, the department shall notify the chairperson of the board that the application is ready for consideration and action by the board.

J. Once notified pursuant to subsection I of this section, the chairperson of the board shall place the application on an agenda for action within forty-five days after original receipt of the notification. The board may give preference to applicants that can demonstrate either or both of the following:

1. The percentage of matching monies provided by the applicant.

2. The extent that the applicant will partner with other entities to deliver the project.

K. The board may approve, deny, modify or request more information on the application. If the board approves an award, the department shall execute an intergovernmental agreement with the applicant regarding reimbursement and expenditures pursuant to subsection E of this section.

L. On the department’s request, the board shall approve the use of monies as described in subsection F, paragraph 5 of this section. The department may use up to one percent of the monies allocated under subsection F, paragraph 5 of this section to administer the fund.

M. If an applicant receives an award pursuant to subsection E, paragraph 2 of this section but is not able to secure the federal grant, the applicant must notify the department within fifteen days after receiving notice that the applicant has not secured the federal grant. After receiving the applicant’s notice pursuant to this subsection, the department shall make the award monies available for other applications.

N. For the purposes of this section:

1. "Federal grant" means a federal discretionary grant program administered by any federal agency for surface transportation purposes.

2. "Urbanized area" means an urbanized area as defined in the most recent decennial census certified by the United States census bureau.