(a) A designated recipient that is a rural or urban transit district or municipal transit department may use money from the formula or discretionary program and any local funds for any transit-related activity.
(b) A designated recipient not included in a transit authority but located in an urbanized area that includes one or more transit authorities and that received state transit funding during the biennium ending August 31, 1997, may receive money from the formula or discretionary program in an amount that does not exceed the amount of funds expended during that biennium to provide:
(1) 65 percent of the local share requirement for a federally financed capital improvement project;
(2) 50 percent of the local share requirement for a federally financed project for operating expenses;
(3) 65 percent of the local share requirement for federally financed planning activities; and
(4) 50 percent of the total cost of a public transportation capital improvement project, if the designated recipient certifies that money from the United States is unavailable for the project and the commission determines that the project is vitally important to the development of public transportation in this state.

(c) In this section, “rural transit district” and “urban transit district” have the meanings assigned by Section 1, Chapter 645, Acts of the 74th Legislature, Regular Session, 1995 (Article 6663c-1, Vernon’s Texas Civil Statutes).