The Urban Canal Modernization Act amends the Omnibus Public Land Management Act of 2009 to address the safety and maintenance of critical water infrastructure. It introduces a new definition for an "urban canal of concern," identifying canals or segments whose failure could lead to significant loss of life or property damage, specifically more than 100 individuals at risk or over $5 million in property damage, or those classified as urban by the Bureau of Reclamation. The legislation authorizes the Secretary of the Interior or the transferred works operating entity to undertake extraordinary operation and maintenance work on these designated urban canals. For such necessary work, the Secretary is required to provide Federal funds covering 35 percent of the operating entity's total cost on a nonreimbursable basis. Any additional Federal funds advanced for the work would be reimbursable, and these reimbursable funds are to be considered a non-Federal source for cost-sharing requirements.