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SEC. 3007. URBANIZED AREA FORMULA GRANTS.

    (a) Section Heading.--
        (1) Amendment to section 5307.--Section 5307 is amended by
    striking the section heading and inserting the following:

``Sec. 5307. Urbanized area formula grants''.

        (2) Conforming amendment.--The item relating to section 5307 in
    the table of sections for chapter 53 is amended to read as follows:
``5307. Urbanized area formula grants.''.

    (b) Definitions.--Section 5307(a) is amended--
        (1) by striking ``In this section--'' and inserting ``In this
    section, the following definitions apply:'';
        (2) by inserting ``Associated capital maintenance items.--The
    term'' after ``(1)''; and
        (3) by inserting ``Designated recipient.--The term'' after
    ``(2)''.
    (c) General Authority.--Section 5307(b) is amended--
        (1) in paragraph (1)--
            (A) by striking ``, improvement, and operating costs'' and
        inserting ``and improvement costs''; and
            (B) by adding at the end the following: ``The Secretary may
        also make grants under this section to finance the operating
        cost of equipment and facilities for use in mass transportation
        in an urbanized area with a population of less than 200,000.'';
        (2) in paragraph (2)(A)--
            (A) by inserting ``, in writing,'' after ``approved''; and
            (B) by striking ``and'' at the end;
        (3) in paragraph (2)(B) by striking the period at the end and
    inserting ``; and'';
        (4) in paragraph (2) by adding at the end the following:
            ``(C) the metropolitan planning organization in approving
        the use under subparagraph (A) determines that the local
        transit needs are being addressed.'';
        (5) by striking paragraphs (3) and (5); and
        (6) by redesignating paragraph (4) as paragraph (3).
    (d) Advance Construction.--Section 5307(g)(3) is amended by
striking ``the amount by which'' and all that follows through the
period at the end and inserting ``the most favorable financing terms
reasonably available for the project at the time of borrowing. The
applicant shall certify, in a manner satisfactory to the Secretary,
that the applicant has shown reasonable diligence in seeking the most
favorable financing terms.''.
    (e) Coordination of Reviews.--Section 5307(i)(2) is amended by
adding at the end the following: ``To the extent practicable, the
Secretary shall coordinate such reviews with any related State or local
reviews.''.
    (f) Transit Enhancement Activities.--Section 5307(k) is amended to
read as follows:
    ``(k) Transit Enhancement Activities.--
        ``(1) In general.--One percent of the funds apportioned to
    urbanized areas with a population of at least 200,000 under section
    5336 for a fiscal year shall be made available for transit
    enhancement activities in accordance with section 5302(a)(15).
        ``(2) Period of availability.--Funds apportioned under
    paragraph (1) shall be available for obligation for 3 years
    following the fiscal year in which the funds are apportioned. Funds
    that are not obligated at the end of such period shall be
    reapportioned under the urbanized area formula program of section
    5336.
        ``(3) Report.--A recipient of funds apportioned under paragraph
    (1) shall submit, as part of the recipient's annual certification
    to the Secretary, a report listing the projects carried out during
    the fiscal year with those funds.''.
    (g) Conforming Amendments.--Section 5307(n)(2) is amended by
inserting ``5319,'' after ``5318,''.

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