[Federal Register Volume 72, Number 25 (Wednesday, February 7, 2007)]
[Notices]
[Pages 5788-5800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-1977]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
[Docket No: FTA-2006-23511]
Notice of Final Agency Guidance on the Eligibility of Joint
Development Improvements Under Federal Transit Law
AGENCY: Federal Transit Administration (FTA), DOT.
ACTION: Final Agency Guidance.
-----------------------------------------------------------------------
SUMMARY: This final Agency guidance describes the eligibility of
``joint development'' improvements under 49 U.S.C. 5301 et seq.
(Federal transit law) by interpreting the definition and operation of
the term ``capital project'' as defined at 49 U.S.C. 5302(a)(1)(G), and
as amended by Section 3003(a) of the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU).
This final Agency guidance is the culmination of three notices issued
by the Federal Transit Administration (FTA or Agency), the first of
which appeared in the Federal Register on January 31, 2006. FTA intends
to publish the text of this final Agency guidance as a stand-alone FTA
Circular
[[Page 5789]]
titled The Eligibility of Joint Development Improvements under Federal
Transit Law.
DATES: Effective Date: The effective date of this final Agency guidance
is February 7, 2007.
Availability of the Final Agency Guidance and Comments: Copies of
this final Agency guidance and comments and material received from the
public, as well as any documents indicated in the preamble as being
available in the docket, are part of docket number FTA-2006-23511. For
access to the DOT docket, please go to http://dms.dot.gov at any time
or to the Docket Management System facility, U.S. Department of
Transportation, Room PL-401 on the plaza level of the Nassif Building,
400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: Jayme L. Blakesley, Attorney-Advisor,
Office of Chief Counsel, Federal Transit Administration, 400 Seventh
Street, SW., Washington, DC 20590-0001, (202) 366-0304,
[email protected]; or Robert J. Tuccillo, Associate
Administrator, Office of Budget & Policy, Federal Transit
Administration, 400 Seventh Street, SW., Washington, DC 20590-0001,
(202) 366-4050, [email protected]. Office hours are from 8:30
a.m. to 5 p.m., Monday through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION: This document is organized in the following
sections:
I. Background
II. Final Agency Guidance on the Eligibility of Joint Development
Improvements under Federal Transit Law
III. Response to Comments Received
Appendix A: Joint Development Checklist
Appendix B: Certificate of Compliance
I. Background
This final Agency guidance describes the eligibility of ``joint
development'' improvements under 49 U.S.C. 5301 et seq. (Federal
transit law). The Safe, Accountable, Flexible, Efficient Transportation
Equity Act of 2005: A Legacy for Users (SAFETEA-LU) enacted certain
amendments to the definition of the term ``capital project'' as used in
49 U.S.C. 5302(a)(1)(G) relating to ``joint development'' activities by
recipients of Federal funds under Federal transit law. This amendment
permits the Federal Transit Administration (FTA or Agency) to issue
public transportation grants ``for the construction, renovation, and
improvement of intercity bus and intercity rail stations and
terminals,'' including the construction, renovation, and improvement of
commercial revenue-producing intercity bus stations or terminals. In
doing so, it modifies the underlying policy of joint development
improvements, and therefore enhances the ability of FTA grantees to
work with the private sector and others for purposes of joint
development. To ensure maximum benefit to the people who ride public
transportation, to FTA grantees that choose to sponsor joint
development improvements (each, a project sponsor), and to their joint
development partners, this final Agency guidance (i) Seeks to afford
FTA grantees maximum flexibility within the law to work with the
private sector and others for purposes of joint development, (ii)
generally defers to the decisions of the project sponsor, negotiating
and contracting at arm's length with third parties, to utilize federal
transit funds and program income for joint development purposes, and
(iii) aims to promote transit-oriented development, subject to the
broad parameters set forth herein.
This final Agency guidance is the culmination of three notices
issued by FTA, the first two of which appeared in the Federal Register
on January 31, 2006, at 71 FR 5107, and March 26, 2006, at 71 FR 15513.
These notices were superseded by a Notice of Proposed Agency Guidance
and Request for Comments on the Eligibility of Joint Development
Improvements under Federal Transit Law published by FTA on September
12, 2006, in the Federal Register at 71 FR 53745.
In the past, FTA has appended its guidance on the eligibility of
joint development to its Circulars 5010.1, 9300.1 and 9030.1, guidance
for new Major Capital Investments, Grants Management, and Formula
Capital Grants, respectively. FTA has decided to consolidate these
appendices into one Circular on the eligibility of joint development
improvements. FTA intends to publish the text of this final Agency
guidance as a stand-alone FTA Circular titled The Eligibility of Joint
Development Improvements under Federal Transit Law.
FTA hereby adopts the following guidance in accordance with the
procedures for notice and an opportunity for the public to comment set
forth at 49 U.S.C. 5334(l) and in FTA's Notice of Final Policy
Statement for Implementation of Notice and Comment Procedures for
Documents Imposing ``Binding Obligations,'' as published in the Federal
Register on June 5, 2006.
II. Final Agency Guidance on the Eligibility of Joint Development
Improvements Under Federal Transit Law
This final Agency guidance describes the eligibility of ``joint
development'' improvements under 49 U.S.C. 5301 et seq. (Federal
transit law). The Safe, Accountable, Flexible, Efficient Transportation
Equity Act of 2005: A Legacy for Users (SAFETEA-LU) enacted certain
amendments to the definition of the term ``capital project'' as used in
49 U.S.C. 5302(a)(1)(G) relating to ``joint development'' activities by
recipients of Federal transit funds. This amendment permits the Federal
Transit Administration (FTA or Agency) to issue public transportation
grants ``for the construction, renovation, and improvement of intercity
bus and intercity rail stations and terminals,'' including the
construction, renovation, and improvement of commercial revenue-
producing intercity bus stations or terminals. In doing so, it modifies
the underlying policy of joint development improvements, and therefore
enhances the ability of FTA grantees to work with the private sector
and others for purposes of joint development. To ensure maximum benefit
to the people who ride public transportation, to FTA grantees that
choose to sponsor joint development improvements (project sponsor), and
to their joint development partners, this final Agency guidance (i)
Seeks to afford FTA grantees maximum flexibility within the law to work
with the private sector and others for purposes of joint development,
(ii) generally defers to the decisions of the project sponsor,
negotiating and contracting at arm's length with third parties, to
utilize federal transit funds and program income for joint development
purposes, and (iii) aims to promote transit-oriented development,
subject to the broad parameters set forth herein.
Table of Contents
This final Agency guidance is organized in the following sections:
I. Eligibility Criteria
a. Definition of ``Capital Project''
b. ``Enhances Economic Development or Incorporates Private
Investment''
i. ``Enhances Economic Development''
ii. ``Incorporates Private Investment''
c. ``Enhances the Effectiveness of a Public Transportation
Project''
d. ``Related Physically or Functionally''
i. ``Physically Related''
ii. ``Functionally Related''
e. ``Establishes New or Enhanced Coordination between Public
Transportation and Other Transportation''
[[Page 5790]]
i. ``New or Enhanced Coordination''
ii. ``Public Transportation''
iii. ``Other Transportation''
f. ``Provides a Fair Share of Revenue for Public Transportation
that Will Be Used for Public Transportation''
g. ``Reasonable Share of the Costs of the Facility''
II. Eligible Activities
a. Real Estate Acquisition
b. Demolition of Existing Structures
c. Site Preparation
d. Building Foundations
e. Utilities
f. Walkways
g. Open Space
h. Safety and Security Equipment and Facilities
i. Construction, Renovation, and Improvement of Bus and
Intercity Rail Stations and Terminals
j. Facilities that Incorporate Community Services
k. Capital Project, and Equipment, for an Intermodal Transfer
Facility or Transportation Mall
l. Furniture, Fixtures and Equipment
m. Parking
n. Project Development Activities
o. Professional Services
III. Ineligible Activities
a. Construction of a Commercial Revenue-Producing Facility or
Part of a Public Facility Not Related to Public Transportation
IV. Federal Requirements
a. Ground Lease or Transfer of Federally Assisted Real Estate
b. Federally Assisted Construction of Joint Development
Improvements
c. National Environmental Policy Act
V. Real Property
VI. Applicability of Third Party Contracting Requirements
VII. Satisfactory Continuing Control
VIII. Eligibility Procedures
Appendix A--Joint Development Checklist
Appendix B--Certificate of Compliance
I. Eligibility Criteria
a. Definition of ``Capital Project''
Federal transit law defines a ``capital project'' for joint
development as follows:
A public transportation improvement that enhances economic
development or incorporates private investment, including commercial
and residential development, pedestrian and bicycle access to a
public transportation facility, construction, renovation, and
improvement of intercity bus and intercity rail stations and
terminals, and the renovation and improvement of historic
transportation facilities, because the improvement enhances the
effectiveness of a public transportation project and is related
physically or functionally to that public transportation project, or
establishes new or enhanced coordination between public
transportation and other transportation, and provides a fair share
of revenue for public transportation that will be used for public
transportation.
49 U.S.C. 5302(a)(1)(G).
This definition establishes the following criteria for determining
whether a joint development improvement is eligible for funding
pursuant to a program established under Federal transit law: The public
transportation improvement must (i) Enhance economic development or
incorporate private investment; (ii)(a) Enhance the effectiveness of a
public transportation project and relate physically or functionally to
that public transportation project, or (b) establish new or enhanced
coordination between public transportation and other transportation;
and (iii) provide a fair share of revenue for public transportation
that will be used for public transportation. In addition, a person
making an agreement to occupy space in a facility under this
subparagraph shall pay a reasonable share of the costs of the facility
through rental payments and other means. 49 U.S.C. 5302(a)(1)(G)(i).
Joint development improvements shall be eligible for FTA funding if
they satisfy the criteria set forth above, and do not fall within the
exclusion detailed at 49 U.S.C. 5302(a)(1)(G)(ii), which excludes the
construction of a commercial revenue-producing facility (other than an
intercity bus station or terminal) or a part of a public facility not
related to public transportation.
b. ``Enhances Economic Development or Incorporates Private Investment''
As noted above, it is a threshold requirement for Federal funding
of a public transportation improvement as joint development that such
improvement either (i) Enhance economic development or (ii) incorporate
private investment.\1\
---------------------------------------------------------------------------
\1\ In accordance with the statute's use of the disjunctive
``or,'' rather than the conjunctive ``and,'' FTA shall determine
that a transportation improvement satisfies the threshold
requirement for funding as joint development if the transportation
improvement either (i) Enhances economic development or (ii)
incorporates private investment (the disjunctive), and shall not
require that the transportation improvement satisfy each of (i) and
(ii) (the conjunctive).
---------------------------------------------------------------------------
i. ``Enhances Economic Development''
This criterion requires that a joint development improvement
enhance economic development. A grantee may satisfy this criterion by
demonstrating that the joint development improvement will add value to
privately- or publicly funded economic development activity occurring
in close proximity to a public transportation facility.
ii. ``Incorporates Private Investment''
Any joint development improvement that incorporates private
investment shall satisfy this criterion. Private investment need not be
monetary; it may take the form of cash, real property, or other benefit
to be generated initially or over the life of the joint development
improvements. FTA shall not set a monetary threshold for private
investment. Rather, the amount and form of private investment shall be
negotiated by the parties to the joint development improvement.
c. ``Enhances the Effectiveness of a Public Transportation Project''
Any reasonable forecast of joint development impacts that enhance
the effectiveness of a public transportation project shall satisfy this
criterion. These impacts may include, but are not limited to, any of
the following: Increased ridership, shortened travel times, and
lessened or deferred transit operating or capital costs.
d. ``Related Physically or Functionally''
The disjunctive requirement of physical ``or'' functional
relationship provides that a joint development improvement may be built
separately from, but in functional relationship to, a public
transportation project. Therefore, a joint development improvement
satisfies this element if it is related physically or functionally to a
public transportation project.
i. ``Physically Related''
A joint development improvement is ``physically related'' to a
public transportation project if it provides a direct physical
connection to public transportation services or facilities.
Illustrative, but not exhaustive, examples of physical relationships
include (i) Projects built within or adjacent to public transportation
facilities and (ii) projects using air rights over public
transportation facilities.
ii. ``Functionally Related''
A joint development improvement is ``functionally related'' to a
public transportation project if by activity and use, with or without a
direct physical connection, it (i) Enhances the use of, connectivity
with or access to public transportation; or (ii) provides a
transportation-related service (such as, but not limited to, remote
baggage handling or shared ticketing) or community services (such as
daycare or health care) to the public. Considerations include a
reduction in travel time between the joint development project and the
public transportation facility, reasonable access between the joint
development project and the public transportation facility, and
increased trip generation rates
[[Page 5791]]
resulting from the relationship between the joint development project
and the public transportation facility.
While the functional relationship test of activity and use permits
the use of FTA funds for joint development improvements located outside
the structural envelope of a public transportation project, and may
extend across an intervening street, major thoroughfare or unrelated
property, functional relationships should not extend beyond the
distance most people can be expected to safely and conveniently walk to
use the transit service (in certain cases, for example, within a radius
of 1,500 feet around the center of the public transportation project).
e. ``Establishes New or Enhanced Coordination Between Public
Transportation and Other Transportation'' \2\
---------------------------------------------------------------------------
\2\ Subsection (e), ``New or Enhanced Coordination,'' explains
the second method for complying with a disjunctive requirement. As
explained in section (I)(d) of this document, a joint development
improvement may satisfy this requirement by (i) Relating physically
or functionally to a public transportation project or (ii)
establishing new or enhanced coordination between public
transportation and other transportation.
---------------------------------------------------------------------------
Any reasonable forecast of joint development impacts that establish
new or enhanced coordination between public transportation and other
transportation shall satisfy this criterion. FTA shall accept any
reasonably supported judgment of new or enhanced coordination from the
project sponsor.
i. ``New or Enhanced Coordination''
To establish new or enhanced coordination, a joint development
improvement must create or enhance the physical or functional
connections between public transportation and other transportation.\3\
---------------------------------------------------------------------------
\3\ This requirement is similar to, but not the same as, the
requirement of physical or functional relationship described at
subsection (d)(i) and (ii). The two are distinct, disjunctive
requirements, but they share common criteria. A project could
satisfy both requirements, but need only satisfy one to qualify for
funding as a joint development improvement. Visualized as such, the
disjunctive requirement would appear as a Venn diagram--separate
requirements with overlapping criteria.
---------------------------------------------------------------------------
Examples of physical connections that establish new or enhanced
coordination include, but are not limited to, proximate or shared
ticket counters, termini, park-and-ride lots, taxicab bays, passenger
drop-off points, waiting areas, bicycle paths and sidewalks connecting
public transportation to other transportation facilities. Projects that
shorten the distance between public transportation termini and other
transportation shall be presumed to enhance coordination.
Examples of functional connections that establish new or enhanced
coordination include, but are not limited to, shared or coordinated
signage, schedules, and ticketing.
ii. ``Public Transportation''
Section 5307(a)(7) of Title 49 defines ``public transportation'' as
transportation by a conveyance that provides regular and continuing
general or special transportation to the public, but does not include
schoolbus, charter, or intercity bus transportation or intercity
passenger rail transportation provided by the entity described in
chapter 243 \4\ (or a successor to such entity).''
---------------------------------------------------------------------------
\4\ National Railroad Passenger Corporation (``Amtrak'').
---------------------------------------------------------------------------
iii. ``Other Transportation''
FTA interprets the term ``other transportation,'' as used in 49
U.S.C. 5307(a)(1)(G), to mean all forms of transportation that are not
public transportation, including, but not limited to, airplane, school
bus, charter bus, sightseeing vehicle, intercity bus and rail,
automobile, taxicab, bicycle and pedestrian transportation.
f. ``Provides a Fair Share of Revenue for Public Transportation That
Will Be Used for Public Transportation''
The third criterion for determining whether a joint development
improvement is eligible for funding pursuant to a program established
under Federal transit law is that the improvement ``provides a fair
share of revenue for public transportation that will be used for public
transportation.'' \5\ 49 U.S.C. 5302(a)(1)(G). FTA will not define the
term ``fair share of revenue,'' nor will it set a monetary threshold.
What is a fair share of revenue, and what form it should take,\6\ shall
be negotiated between the parties involved in the joint development
improvement. The only requirements are: (i) That the recipient's Board
of Directors (or similar governing body) determines, following
reasonable investigation, that the terms and conditions of the joint
development improvement (including, without limitation, the share of
revenues for public transportation which shall be provided thereunder)
are commercially reasonable and fair to the recipient; and (ii) that
such revenue shall be used for public transportation. This enhances the
ability of a public transportation provider to negotiate for financial
benefits in exchange for the benefits it will convey through the joint
development improvement.
---------------------------------------------------------------------------
\5\ This criterion should not be confused with the requirement
of 49 U.S.C. 5302(a)(1)(G)(i) that ``a person making an agreement to
occupy space in a facility under this subparagraph shall pay a
reasonable share of the costs of the facility through rental
payments and other means.''
\6\ For example, ``fair share of revenue'' need not be a direct
payment of revenue by an intercity bus provider to a transit agency
but may take the form of an increase in revenues received by a
transit agency, whether in its capacity as landlord or otherwise, as
a result of enhanced passenger traffic created by the service of a
jointly developed facility by an intercity bus provider, provided
that the transit agency and intercity bus provider together
designate and report to FTA the source of such ``fair share of
revenue.'' FTA grantees shall expend the ``fair share of revenue''
in accordance with the common grant rule of 49 CFR 18.1-18.52.
---------------------------------------------------------------------------
g. ``Reasonable Share of the Costs of the Facility''
While not a criterion to determine eligibility, as noted above, it
is nonetheless required that any ``person making an agreement to occupy
space in a facility under [49 U.S.C. 5302(a)(1)(G)] shall pay a
reasonable share of the costs of the facility through rental payments
and other means.'' FTA shall not require a specific valuation
methodology and shall accept any reasonable valuation methodology used
by the grantee to determine a reasonable share of the costs of the
facility.
II. Eligible Activities
Subject to the eligibility criteria detailed at section I above,
joint development improvements expressly include the following:
Commercial and residential development;
pedestrian and bicycle access to a public transportation
facility;
construction, renovation, and improvement of intercity bus
and intercity rail stations and terminals; and
renovation and improvement of historic transportation
facilities.
49 U.S.C. 5302(a)(1)(G). These and other joint development improvements
will be eligible for FTA funding if they satisfy the criteria set forth
above, and do not fall within the exclusion detailed at 49 U.S.C.
5302(a)(1)(G)(ii), which excludes the construction of a commercial
revenue-producing facility (other than an intercity bus station or
terminal) or a part of a public facility not related to public
transportation.\7\
---------------------------------------------------------------------------
\7\ Many aspects of commercial and residential development will
be excluded by 49 U.S.C. 5302(a)(1)(G)(ii), which makes ineligible
for FTA financial assistance the ``construction of a commercial
revenue-producing facility (other than an intercity bus station or
terminal) or a part of a public facility not related to public
transportation.'' It is important to note, however, that commercial
and residential development is not excluded wholesale. For example,
space in an FTA-funded facility may be made available for commercial
revenue-producing activities and for connections to revenue
producing activities. Similarly, non-commercial, non-revenue-
producing aspects of commercial and residential developments may be
eligible for FTA financial assistance, subject to the criteria
detailed at section (I).
---------------------------------------------------------------------------
[[Page 5792]]
Costs related to a joint development improvement are only eligible
for Federal transit funding pursuant to a budget contained in an
approved grant. FTA cannot approve funding for costs associated with a
joint development improvement that are not contained in an approved
grant budget. FTA Regional Administrators approve joint development
proposals as part of the grant approval process.
Eligible costs for joint development improvements include, but are
not limited to, the following:
a. Real Estate Acquisition, including the acquisition of real
property and structures thereon; \8\
---------------------------------------------------------------------------
\8\ Note that certain costs in connection with real estate
acquisition (such as costs associated with eminent domain and
relocation assistance) shall be eligible, as provided by the
respective statutes and regulations.
---------------------------------------------------------------------------
a. Demolition of Existing Structures;
b. Site Preparation;
c. Building Foundations, including substructure improvements for
buildings constructed over transit facilities;
d. Utilities, including utility relocation and construction;
e. Walkways, including bicycle lanes and pedestrian connections and
access links between public transportation services and related
development;
f. Open Space, including site amenities and related streetscape
improvements such as street furniture and landscaping;
g. Safety and Security Equipment and Facilities, including
lighting, surveillance and related intelligent transportation
applications;
h. Construction, renovation, and improvement of intercity bus and
intercity rail stations and terminals;
i. Facilities that Incorporate Community Services, such as daycare
or health care;
j. Capital Project, and Equipment, for an Intermodal Transfer
Facility or Transportation Mall, including acquisition of facilities
and equipment, roadbeds, tracks and bus ramps, pedestrian concourses,
loading shelters, parking facilities, park-and-ride services,
improvements of existing bus or rail transit terminals, stations, major
transfer points, and shelters as well as other facilities directly
related to the linking of public transportation facilities with other
modes of transportation;
k. Furniture, Fixtures and Equipment (FFE), Transportation-related
FFE are eligible costs in all cases. However, due to the exclusion of
commercial revenue-producing facilities (other than an intercity bus
station or terminal) and public facilities not related to public
transportation at 49 U.S.C. 5302(a)(1)(G)(ii), FFE related to
commercial revenue-producing facilities (other than an intercity bus
station or terminal) or public facilities not related to public
transportation are considered ineligible. FFE related to an intercity
bus station or terminal are eligible costs;
l. Parking, including parking improvements with a public
transportation justification and use or an intercity bus or intercity
rail justification and use in connection with joint development; and
m. Project Development Activities, including design, engineering,
construction cost estimating, environmental analysis, real estate
packaging and financial projections (operating income and expenses,
debt service and cash flow analysis), and negotiations to secure
financing and tenants;
n. Professional Services, including reasonable and necessary costs
incurred to hire professionals to prepare or perform items a through n
above, or to assist the grantee in reviewing the same.
III. Ineligible Activities
a. Construction of a Commercial Revenue-Producing Facility or Part of a
Public Facility Not Related to Public Transportation
Eligible costs do not include construction of commercial revenue
producing facilities (other than an intercity bus station or terminal)
or part of a public facility not related to public transportation.
IV. Federal Requirements
FTA's Master Agreement contains the standard terms and conditions
governing the administration of a project supported with Federal
assistance awarded by FTA through a grant agreement or cooperative
agreement with the recipient, or supported by FTA through a
Transportation Infrastructure (TIFIA) Loan, loan guarantee, or line of
credit with the recipient. Not every provision of the Master Agreement
will apply to every project for which FTA provides Federal assistance
through a grant agreement or cooperative agreement. The type of
project, the Federal laws and regulations authorizing Federal
assistance for the project, and the legal status of the recipient as a
State or local government, private non profit entity, or private for
profit entity will determine which Federal laws, regulations, and
directives apply. Federal laws, regulations, and directives that do not
apply will not be enforced. The recipient shall comply with all
applicable Federal laws, regulations, and directives, except to the
extent that FTA determines otherwise in writing. Any violation of a
Federal law, regulation, or directive applicable to the recipient or
its project may result in penalties to the violating party. Applicable
crosscutting requirements likely to apply to joint development
improvements include, but are not limited to, the following:
a. Ground Lease or Transfer of Federally Assisted Real Estate
If the joint development improvement involves a ground lease or
transfer of federally-funded real estate and there is no Federal
assistance for new improvements, then the following requirements apply
to the lessee or transferee and must be incorporated into the lease or
the conveyance instrument:
i. language found at 49 CFR 26.7 binding the lessee or transferee
not to discriminate based on race, color, national origin, or sex;
ii. language found at 49 CFR 27.7; 27.9(b) and 37 binding the
lessee or transferee not to discriminate based on disability and
binding the same to compliance with the Americans with Disabilities Act
with regard to any improvements constructed; and
iii. language contained in FTA's Master Agreement, updated annually
in October, particularly relating to conflicts of interest and
debarment and suspension.
b. Federally Assisted Construction of Joint Development Improvements
If the construction of improvements is also federally assisted,
then the following requirements will apply and must be incorporated
into the lease or the conveyance or encumbrance instrument:
iv. Buy America--language making it clear that the steel, iron, and
manufactured goods used in the joint development project are produced
in the United States, as described in 49 U.S.C. 5323(j) and 49 CFR 661;
v. Planning and Environmental Analysis--language making it clear
that the grantee must comply with, and the joint development project is
subject to the requirements of:
1. The FHWA/FTA metropolitan and statewide planning regulations at
23 CFR 450;
2. The National Environmental Policy Act of 1969 (NEPA), as
amended, 42 U.S.C. 4321 et seq.;
[[Page 5793]]
3. Executive Order No. 12898, ``Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations,'' 59 FR 7629, Feb. 16, 1994;
4. FTA statutory requirements on environmental matters at 49 U.S.C.
5324(b); Council on Environmental Quality regulations on compliance
with the NEPA, 40 CFR 1500 et seq.;
5. FHWA/FTA regulations, ``Environmental Impact and Related
Procedures,'' 23 CFR 771;
6. Section 106 of the National Historic Preservation Act, 16 U.S.C.
470f, involving historic and archaeological preservation; Advisory
Council on Historic Preservation regulations on compliance with Sec.
106, ``Protection of Historic and Cultural Properties,'' 36 CFR 800;
and
7. Restrictions on the use of certain publicly owned lands and
historic resources, unless the FTA makes the specific findings required
by 49 U.S.C. 303.
vi. Cargo Preference--language making it clear that items imported
from abroad and used in the joint development improvements were shipped
predominantly on U.S.-flag ships and that the project complies with 46
CFR 381, to the extent these regulations apply to the joint
development;
vii. Seismic Safety--language certifying that a structure conforms
to seismic safety standards, as contained in 49 CFR 41;
viii. Energy Assessments--Language making it clear that the
transferee(s) or joint developer agrees to perform a mandatory, energy
assessment as prescribed by 23 CFR 771 and 42 U.S.C. 8373(b)(1) for any
buildings constructed, reconstructed or modified with FTA assistance.
The assessment shall be incorporated into the Environmental Impact
Statement or Environmental Assessment, if the project has one;
otherwise the assessment shall be provided with the application for FTA
assistance;
ix. Lobbying--49 CFR 20;
x. Labor Protection--Language making it clear that the transferee
or joint developer will adhere to labor protection requirements
applying to Federal projects, such as Davis-Bacon--49 U.S.C. Sec.
5333(a) and 40 U.S.C. 3141 et seq., and 29 CFR 5; Copeland ``Anti-
Kickback'' Act as amended, 18 U.S.C. 874 and 29 CFR 3; and Contract
Work Hours and Safety Standards Act, 40 U.S.C. 3701 et seq., and 29 CFR
5 and at 40 U.S.C. 3704; as well as 49 U.S.C. 5333(b) concerning
protection of transit employees;
xi. Civil Rights Requirements--49 U.S.C. 5332 and DOT implementing
regulations at 49 CFR 21 (effecting Title VI of the Civil Rights Act of
1964), 49 CFR 26 (participation by Disadvantaged Business Enterprises
in DOT financial assistance programs) and 49 CFR 27 and 37
(respectively, nondiscrimination on the basis of disability in programs
or activities receiving Federal financial assistance and transportation
services for individuals with disabilities);
xii. Program Fraud--grantees agree to comply with Program Fraud
Civil Remedies Act of 1986, as amended, 31 U.S.C. 3801 et seq. and 49
CFR 31. Penalties may apply for noncompliance;
xiii. Language making it clear that the level of Federal
participation in the joint development improvement provides no U.S.
Government obligation to third parties in the project; and
xiv. Uniform Relocation--If the federally-funded site to be
improved is occupied by other than the grantee and the occupant is
displaced, the transferee(s) or joint developer must comply with 42
U.S.C. 4601 et seq. and the regulations at 49 CFR 24.
c. National Environmental Policy Act (NEPA)
In any instance in which FTA determines that NEPA applies to the
joint development improvement, the level of environmental analysis will
depend upon the complexity of the project and its likely impacts. In
some instances, minimal review will be necessary, in which case FTA may
issue a Categorical Exclusion. Generally, however, joint development
activities that portend significant environmental impacts will
necessitate the preparation of an Environmental Assessment or an
Environmental Impact Statement. FTA is available to provide guidance on
the environmental review process. See generally the FTA Environmental
Impact and Related Procedures at 23 CFR 771.
V. Real Property
Real property acquired by a grantee or subgrantee pursuant to 49
U.S.C. 5302(a)(1)(G) shall be governed by 49 U.S.C. 5334(h), as
amended, and subject to the obligations and conditions set forth in 49
CFR 18.31 as amended, which require the grantee or subgrantee to
request disposition instructions from FTA whenever real property is no
longer needed for the originally authorized purpose.\9\
---------------------------------------------------------------------------
\9\ FTA shall rely on the parties to joint development
transactions, including, notably, transit agencies, to determine the
appropriate use and disposition of real property used in joint
development improvements, so long as such disposition and use
complies with applicable statutes and duly promulgated regulations
of FTA. For example, FTA shall no longer apply, and shall not
require its grantees to apply, its administratively-derived test of
``highest and best transit use'' (or any other tests) for
determining the value of real property used in FTA-funded joint
development improvements, including the disposition of real property
connected to a joint development improvement. In the past, FTA
relied on 49 CFR 18.25(g) as its authority for requiring (and
determining in its discretion) the ``highest and best transit use''
of such property. No such requirement is expressly authorized or
required by 49 CFR 18.25(g), however.
---------------------------------------------------------------------------
VI. Applicability of Third Party Contracting Requirements
FTA's third party contracting requirements, which appear in FTA
Circular 4220.1E, have limited applicability to joint development
projects. As described on page 12 of Circular 4220.1E, the third-party
contracting requirements must apply to the federally funded
construction aspects of joint development. With regard to revenue
contracts as defined in the circular, FTA will work with grantees on a
case-by-case basis to craft approaches that satisfy the statutory and
regulatory requirements while preserving the benefits of this
innovative contracting strategy to the maximum possible extent.
If a contract between a grantee and a third party involving a joint
development project is not a construction contract or a revenue
contract as defined by Circular 4220.1E, then such contract is not
covered by FTA's third party contracting requirements. Paragraph 7.n.
of Circular 4220.1E defines ``revenue contracts'' as ``those third
party contracts whose primary purpose is to either generate revenues in
connection with a transit related activity or to create business
opportunities utilizing an FTA funded asset.''
Revenue contracts in joint development projects that do not meet
this primary purpose test are not covered by the third party
contracting requirements. For example, third party contracts to manage,
operate, and/or maintain intercity bus or intercity rail terminals that
are part of FTA-funded joint development projects or tenancy agreements
with third party intercity bus or intercity rail operators are not
covered revenue contracts. The primary purpose of such contracts is to
carry out the congressional intent to give grantees the flexibility to
integrate intercity rail and intercity bus terminals and their related
services into FTA-funded joint development projects.
Even in situations not covered by the third party contracting
requirements, FTA generally favors full and open
[[Page 5794]]
competition. However, where the third party contracting requirements
are not involved, FTA leaves it to the full discretion of the grantees
to determine the appropriate extent and nature of competition, if any,
for such contracts. For example, in cases involving management of
intercity bus or rail terminals or tenancy agreements in those
terminals, FTA recognizes that given the unique nature of the national
intercity rail and bus systems, a competitive procurement process for
such contracts may not be appropriate.
VII. Satisfactory Continuing Control
For purposes of this guidance and the Certificate of Compliance,
``satisfactory continuing control'' shall not mean complete operating
or managerial control of a joint development facility. In determining
whether ``satisfactory continuing control'' with respect to a joint
development capital project is maintained, the project sponsor and FTA
shall consider, as a primary factor, whether the project sponsor has
the right and power to direct that such project shall be used for
activities eligible for funding under Federal transit law.
VIII. Eligibility Procedures
Before becoming eligible for FTA funding, a joint development
improvement must be approved by the FTA Regional Administrator, or his
designee, responsible for the project sponsor's locality. Only FTA
grantees may sponsor a joint development improvement. The project
sponsor may submit a joint development proposal at any time. FTA
approval shall be contingent upon the project sponsor certifying that
the joint development improvement conforms to the criteria set forth
above and that the project conforms to the requirements of the common
grant rule found at 49 CFR 18.31.
There are two methods for seeking approval for a joint development
project: (i) If the joint development improvement conforms to the
specifics of the Certificate of Compliance, then the project sponsor
may expedite FTA approval by executing the Certificate of Compliance
and submitting it to FTA along with a completed Joint Development
Checklist and a Joint Development Agreement; or (ii) if the joint
development improvement will deviate from the specifics of the
Certificate of Compliance, then the project sponsor must substitute an
``alternative certification,'' which certification shall include an
explanation of compliance with 49 U.S.C. 5302(a)(1)(G) and 49 CFR 18.
In all cases, the project sponsor must submit a completed Joint
Development Checklist, a proposed Joint Development Agreement, and
either (i) An executed Certificate of Compliance or (ii) an alternative
certification. By submitting a completed Joint Development Checklist,
the project sponsor shall certify that the proposed joint development
improvement conforms to the criteria of 49 U.S.C. 5302(a)(1)(G) as
outlined above. By signing the Certificate of Compliance, the project
sponsor shall certify, among other things, that the proposed joint
development improvement conforms to the requirements of 49 CFR 18.31.
An alternative certification must explain compliance with 49 U.S.C.
5302(a)(1)(G) and 49 CFR 18 together with supporting documentation, in
each case in form and substance satisfactory to FTA in its reasonable
discretion. The FTA Regional Administrator, or his designee, shall
approve all proposals that meet the criteria described herein. Like all
projects funded by FTA, joint development improvements are subject to
the applicable crosscutting requirements.
The Joint Development Checklist and Certificate of Compliance are
attached hereto as Appendix A and B respectively.
Appendix A--Joint Development Checklist
BILLING CODE 4910-57-P
[[Page 5795]]
[GRAPHIC] [TIFF OMITTED] TN07FE07.016
BILLING CODE 4910-57-C
[[Page 5796]]
APPENDIX B--CERTIFICATE OF COMPLIANCE:
Certificate of Compliance
Effective as of the date hereof, the undersigned hereby
certifies and covenants to the Federal Transit Administration
(``FTA'') as follows:
1. Title. Subject to the obligations and conditions set forth in
49 CFR 18.31, as amended, title to real property acquired under a
grant or subgrant for FTA Project Number------, [insert project
title here] (the ``Project''), shall vest in the undersigned or
subgrantee thereof (collectively or individually, as the case may
be, the ``Grantee'').
2. Use. Except as otherwise provided by Federal statutes, real
property shall only be used for the originally authorized purposes
(which may include Joint Development purposes that generate program
income, both during and after the award period and used to support
public transportation activities) as long as needed for such
purposes, and that the Grantee shall not dispose of or encumber its
title or other interests.
3. Disposition. When real property acquired with funds provided
by FTA for the Project is no longer needed for the purpose
originally authorized by FTA, the Grantee shall request disposition
instructions from FTA and shall agree that, unless otherwise
authorized by FTA, such disposition shall be made in accordance with
applicable law, including without limitation 49 U.S.C. 5334(h) and
49 CFR 18.31.
4. Federal Interest. The Federal Government retains a Federal
interest in any real property, equipment, and supplies financed with
Federal assistance (``Project Property'') until, and to the extent
that, the Federal Government relinquishes its Federal interest in
such Project Property.
5. Incidental Use. Any incidental use of Project Property, as
determined by FTA, shall not exceed that permitted under applicable
Federal laws, regulations, and directives, including the
requirements of FTA's Master Agreement.
6. Encumbrance of Project Property. The Grantee covenants to FTA
as follows:
a. Written Transactions. The Grantee agrees that it will not
execute any transfer of title to the Project Property or enter into
an instrument legally binding on the Grantee that would encumber
Federal Interest in the Project Property.
b. Oral Transactions. The Grantee agrees that it will not
obligate itself in any manner to any third party with respect to
Project Property.
7. Notice to Joint Development Partner. The undersigned has
delivered to the Joint Development Partner a duly executed copy of
this certificate, dated as of the date hereof, receipt of which has
been acknowledged by the Joint Development Partner in writing to the
undersigned on or before the date of execution of the Joint
Development Agreement.
8. Other Actions. The Grantee (a) Agrees that it will not take
any action that encumbers the Federal Interest in the Project
Property and (b) hereby affirms that each of its representations and
warranties set forth in the Master Agreement is true and correct in
all material respects as of the date hereof. The Grantee agrees that
nothing herein shall supersede, amend, modify or otherwise affect
the provisions, terms or conditions set forth in the Master
Agreement.
9. Definitions.
a. ``FTA'' shall have the meaning provided in the preamble of
this certificate.
b. ``Grantee'' shall have the meaning provided in section (1) of
this certificate.
c. ``Joint Development'' shall mean a capital project as defined
by 49 U.S.C. 5302(a)(1)(G) that is eligible for funding pursuant to
the terms and conditions set forth in [insert new Joint Development
circular number].
d. ``Joint Development Partner'' shall mean the entity with
which the Project Sponsor has partnered, through a Joint Development
Agreement, to construct a joint development improvement pursuant to
49 U.S.C. 5302(a)(1)(G).
e. ``Master Agreement'' shall mean that certain Master Agreement
by and between FTA and the Grantee, as authorized by 49 U.S.C. 53,
Title 23, United States Code (Highways), the National Capital
Transportation Act of 1969, as amended, the Safe, Accountable,
Flexible, Efficient Transportation Equity Act: A Legacy for Users,
the Transportation Equity Act for the 21st Century, as amended, or
other Federal laws that FTA administers, as the same may be lawfully
revised, superseded or supplemented from time to time.
f. ``Project'' shall have the meaning provided in section (1) of
this certificate.
g. ``Project Property'' shall have the meaning provided in
section (4) of this certificate.
10. No Estoppel. The undersigned agrees that acceptance of this
Certificate of Compliance by FTA shall not estop the Federal
government from initiating or conducting, and shall not be used as a
defense to any investigation, audit or inquiry by the Federal
government following approval by FTA of the project.
III. Response to Comments Received
On September 12, 2006, FTA published in the Federal Register a
Notice of Proposed Agency Guidance and Request for Comments on the
Eligibility of Joint Development Improvements under Federal Transit
Law (notice of proposed guidance) (71 FR 53745). In its notice of
proposed guidance, FTA interpreted the definition and operation of
the term ``capital project'' as defined at 49 U.S.C. Sec.
5302(a)(1)(G), and as amended by Section 3003(a) of the Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy
for Users (SAFETEA-LU). The text of FTA's notice of proposed
guidance included sections on (I) Eligibility criteria, including
(a) The definition of a ``capital project,'' and the criteria for
determining whether a joint development improvement (b) ``enhances
economic development or incorporates private investment,'' (c)
``enhances the effectiveness of a public transportation project,''
(d) is ``related physically or functionally,'' (e) ``establishes new
or enhanced coordination between public transportation and other
transportation,'' (f) ``provides a fair share of revenue for public
transportation that will be used for public transportation,'' and
(g) contributes a ``reasonable share of the costs of the facility'';
(II) eligible activities; (III) ineligible activities; (IV) Federal
requirements; (V) eligibility procedures; (VI) real property; (VII)
the applicability of third party contracting requirements; (VIII)
certificate of compliance; and (IX) satisfactory continuing control.
Fourteen parties submitted comments in response to FTA's
September 12, 2006, notice of proposed guidance. FTA hereby responds
to these comments by topic and in the following order: (a) Notice of
Proposed Guidance Generally; (b) Definition of Capital Project; (c)
Eligibility Criteria; (d) Eligible/Ineligible Activities; (e)
Eligibility Procedures; (f) Real Property; (g) Third Party
Contracting; (h) Certificate of Compliance; (i) Satisfactory
Continuing Control; and (j) Miscellaneous.
(a) Notice of Proposed Guidance Generally
The intended purpose of FTA's notice of proposed guidance was to
ensure maximum benefit to the people who ride public transportation,
to FTA grantees that choose to sponsor joint development
improvements (the project sponsor), and to their joint development
partners by (i) Affording FTA grantees maximum flexibility within
the law to work with the private sector and others for purposes of
joint development, (ii) generally deferring to the decisions of the
project sponsor, negotiating and contracting at arm's length with
third parties, to utilize Federal Transit funds and program income
for joint development purposes, and (iii) promoting transit-oriented
development, subject to the broad parameters set forth therein.
FTA received fourteen general comments. Nine commenters praised
FTA's notice of proposed guidance. Two commenters asked FTA to
clarify the scope and purpose of its proposed guidance, particularly
whether FTA intends its final guidance to supplement or replace its
prior guidance. One commenter encouraged FTA to place emphasis on
joint development in its New Starts rating process. Another
commenter suggested that FTA view local grantees as partners and not
as adversaries. One commenter stated that the proposed guidance is
inconsistent with regulation inasmuch as it compares fixed
facilities with rolling stock.
FTA Response: FTA is pleased by the number of commenters that
support and praise its Proposed Guidance. FTA appended its past
guidance on the eligibility of joint development to its Circulars
5010.1, 9300.1 and 9030.1, guidance for new Major Capital
Investments, Grants Management, and Formula Capital Grants,
respectively. FTA intends to publish this Final Guidance as a stand-
alone circular titled ``The Eligibility of Joint Development
Improvements under Federal Transit Law.'' This Final Guidance shall
replace FTA's existing guidance on joint development, currently
located at FTA Circulars 5010.1, 9300.1 and 9030.1. FTA is uncertain
why the commenter viewed its proposed guidance as adversarial to FTA
grantees, particularly since FTA's stated purpose is to afford
grantees maximum
[[Page 5797]]
flexibility within the law to work with the private sector and
others for purposes of joint development. Similarly, FTA is unsure
how its guidance is inconsistent, as the commenter did not identify
the inconsistent comparisons between fixed facilities and rolling
stock. Rather, the commenter stated that ``FTA has nearly eliminated
the ability to generate revenue from rolling stock.'' FTA is unclear
how it has eliminated the grantee's ability to generate revenue from
rolling stock. Moreover, the comment is beyond the scope of this
guidance, which speaks to joint development improvements, not
rolling stock.
(b) Definition of Capital Project
SAFETEA-LU enacted certain amendments to the definition of the
term ``capital project'' as used in 49 U.S.C. 5302(a)(1)(G) relating
to ``joint development'' activities by recipients of Federal funds
under 49 U.S.C. 5301 et seq. (Federal transit law). In its notice of
proposed guidance, FTA interpreted the definition and operation of
these terms. Nine parties submitted comments on this topic. Seven
commenters believe that FTA correctly interpreted the definition and
operation of the terms ``capital project'' and ``joint development''
relating to 49 U.S.C. 5302(a)(1)(G). One commenter suggested that
FTA use the statutory definition of joint development rather than
attempting to create a new definition for this guidance. This same
commenter asked FTA to define the term ``historic transportation
properties.'' Another commenter asked FTA for clear definitions of
``joint development,'' ``joint development activity,'' ``joint
development project,'' and ``joint development improvement.'' This
same commenter inquired whether joint development is limited to
development that includes a functionally required element of the
transit facility, or encompasses development on federally assisted
land, transferred by lease or sale, within walking distance of a
transit stop that may only provide increased ridership for the
transit agency.
FTA Response: To the commenter that suggested FTA use the
statutory definition of the term ``joint development,'' FTA responds
by stating that it interprets the term ``joint development'' to mean
any public transportation project, improvement or enhancement
eligible for Federal transit funding pursuant to 49 U.S.C.
5302(a)(1)(G), a subsection of the statutory definition of ``capital
project.'' FTA's use of the term joint development in this guidance
document refers to the type of capital project defined at 49 U.S.C.
5302(a)(1)(G). FTA will not define the term ``historic
transportation properties'' in this final Agency guidance. For
information on historic properties, FTA refers the commenter to the
National Historic Preservation Act located at 16 U.S.C. 470 et seq.
Finally, joint development improvements are not limited to
development that includes a functionally required element of the
transit project. Any joint development improvement must, however,
satisfy the statutory criteria at 49 U.S.C. 5302(a)(1)(G) to be
eligible for funding pursuant to a program established under Federal
transit law. This Circular seeks to afford FTA grantees maximum
flexibility within the law to work with the private sector and
others for purposes of joint development, and FTA generally will
defer to the decisions of the project sponsor, negotiating and
contracting at arm's length with third parties, to utilize Federal
transit funds and program income for joint development purposes.
(c) Eligibility Criteria
Section 5302(a)(1)(G) of Title 49 establishes the following
criteria for determining whether a joint development improvement is
eligible for funding pursuant to a program established under Federal
transit law: The public transportation improvement must (i) Enhance
economic development or incorporate private investment; (ii)(a)
Enhance the effectiveness of a public transportation project and
relate physically or functionally to that public transportation
project, or (b) establish new or enhanced coordination between
public transportation and other transportation; and (iii) provide a
fair share of revenue for public transportation that will be used
for public transportation. In addition, a person making an agreement
to occupy space in a facility under this subparagraph shall pay a
reasonable share of the costs of the facility through rental
payments and other means. FTA interpreted these criteria in its
notice of proposed guidance, and will respond to comments criterion-
by-criterion, in the order outlined above.
(i) Enhances Economic Development or Incorporates Private Investment
In its notice of proposed guidance, FTA described the threshold
requirement for Federal funding of a joint development improvement--
that such improvement either enhance economic development or
incorporate private investment. In accordance with the statute's use
of the disjunctive ``or,'' rather than the conjunctive ``and,'' the
notice of proposed guidance states that FTA shall determine that a
transportation improvement satisfies the threshold requirement for
funding as joint development if the transportation improvement
either (i) Enhances economic development or (ii) incorporates
private investment (the disjunctive), and shall not require that the
transportation improvement satisfy each of (i) and (ii) (the
conjunctive). FTA received three comments on this requirement, with
one party offering two comments. All three comments favor FTA's
description of the threshold requirement for Federal funding of a
joint development improvement--that such improvement either enhance
economic development or incorporate private investment. Two
commenters agreed with FTA's reading of the eligibility requirements
as disjunctive. The other commenter applauded FTA for not setting
any monetary thresholds or providing limiting definitions of private
investments.
(ii)(a) Enhances the Effectiveness of a Public Transportation Project
and Relates Physically or Functionally to That Public Transportation
Project
FTA received two comments on this criterion generally. Both
commenters suggested that FTA specifically note in the Guidelines
that if an intercity bus terminal or other facility meets the new or
enhanced coordination test it does not have to meet the physically
or functionally related test.
FTA received four comments on the criterion that a joint
development improvement enhance the effectiveness of a public
transportation project. One party agreed with FTA's determination
that any reasonable forecast of joint development impacts that
enhance the effectiveness of a public transportation project shall
satisfy this criterion. Another party disagreed, commenting that
FTA's use of the term ``reasonable'' as the standard for evaluating
this criterion may lead to an inconsistent evaluation of projects. A
third party recommended that FTA make clear in section I of its
guidance that a project sponsor's reliance on the past results of
similarly situated projects is sufficient to form the basis of a
reasonable forecast of joint development impacts that enhance the
effectiveness of a public transportation project shall satisfy this
criterion. Another commenter asked FTA to provide an additional
explanation under section I(c) that would guide FTA staff to
eliminate the presumed requirement for one-to-one replacement of
park and ride spaces.
FTA received ten comments on the criterion that a joint
development improvement relate physically or functionally to a
public transportation project. One commenter agreed that the
functional relationship can be shown by activity or use, and agreed
with how FTA defined these terms, but recommended that FTA
specifically note in the guidance that if an intercity bus terminal
or other facility meets the new or enhanced coordination test, it
does not have to meet the physically or functionally related test.
One commenter asked whether an intercity facility located miles away
from a local transit center would satisfy this criterion; and
recommended that in order for any intercity bus facility to receive
Federal assistance, it should satisfy both requirements [physically
and functionally related] in addition to being subject to a local
grantee. This same commenter recommended that these facilities
should not be separated by a major or busy street. Another commenter
stated that a joint development improvement can be functionally
related even if it is across a major thoroughfare or unrelated
property from public transportation as long as it is within walking
distance of the public transportation facility. One commenter
suggested that there needs to be a strong functional relationship
when there is no physical connection to a transit facility; that
project sponsors should be required to commit to ensuring the
functional connection by providing a clear connection for users; and
that funding may be contingent upon a shuttle service connecting the
joint development to a transit facility. In its notice of proposed
guidance, FTA used 1500 feet around the center of a public
transportation project as an example of the distance that most
people can be expected to safely and conveniently walk to use the
transit service. Four commenters expressed concern that
[[Page 5798]]
1500 feet is too short a distance, and worry that it may become the
de facto limitation, despite being clearly labeled as an example.
One of these commenters agreed that functional relationships should
not extend beyond the distance most people can be expected to safely
and conveniently walk to use the transit service.
FTA Response: FTA directs the commenters to section I(a) of this
final agency guidance, which indicates that if a joint development
improvement satisfies the criterion of enhancing the effectiveness
of a public transportation project and relates physically or
functionally to that public transportation project, it need not
establish new or enhanced coordination between public transportation
and other transportation. The disjunctive nature of this criterion
is also apparent in the box labeled ``Public Transportation
Benefit'' on the Joint Development Checklist.
FTA responds to the commenter that questioned FTA's use of the
term ``reasonable'' by reminding the commenter that through this
guidance FTA seeks to afford FTA grantees maximum flexibility within
the law to work with the private sector and others for purposes of
joint development, and generally defers to the decisions of the
project sponsor, negotiating and contracting at arm's length with
third parties. Successful joint development improvements necessitate
this flexibility.
FTA cannot state with certainty that a project sponsor's
reliance on the past results of similarly situated projects is
sufficient to form the basis of a reasonable forecast of joint
development impacts that enhance the effectiveness of a public
transportation project shall satisfy this criterion. Although past
results may not be sufficient in all cases, FTA encourages project
sponsors to utilize such results when forecasting joint development
impacts that enhance the effectiveness of a public transportation.
Any reasonable forecast shall satisfy this criterion.
In response to the comments on the requirement that a joint
development improvement be physically or functionally related to a
public transportation project, FTA reemphasizes the following
points, each of which is addressed in section I(d) of this final
agency guidance: A joint development improvement is ``physically
related'' to a public transportation project only if it provides a
direct physical connection to public transportation services or
facilities. A joint development improvement is ``functionally
related'' to a public transportation project if by activity and use,
with or without a direct physical connection, it (i) Enhances the
use of, connectivity with or access to public transportation; or
(ii) provides a transportation-related service or community service
to the public. While the functional relationship test of activity
and use permits the use of FTA funds for joint development
improvements located outside the structural envelope of a public
transportation project, and may extend across an intervening street,
major thoroughfare or unrelated property, functional relationships
should not extend beyond the distance most people can be expected to
safely and conveniently walk to use the transit service (in certain
cases, for example, within a radius of 1,500 feet around the center
of the public transportation project). In all cases, an intercity
facility located miles away from a public transportation project
will not have a direct physical connection to that project because
several miles is beyond the distance most people can be expected to
safely and conveniently walk to use the public transportation
project. FTA notes, however, that the distance most people can be
expected to safely and conveniently walk to use the public
transportation project may extend across an intervening street,
major thoroughfare or unrelated property. FTA also notes that it
intends its statement regarding the radius of 1,500 feet around the
center of a public transportation project to be an example of a
distance that is, in certain cases, within the distance most people
can be expected to safely and conveniently walk to use transit
service. It is an example, not the rule.
Regarding one-to-one replacement of park and ride spaces, FTA
believes the commenter was referring to language in FTA Circular C
5010.1C that describes a joint development transfer where a transit
operator transfers land from a park-and-ride lot to a developer; the
developer plans to construct residential units and retail space on
this land; but because the development will generate more transit
trips and more non-fare revenue than the displaced parking spaces
provided, the transit operator is not required to replace the
parking spaces on a one-to-one basis. Although this example is not
contained in this final Agency guidance, the commenter is correct--
FTA does not require a grantee to replace parking spaces on a one-
to-one basis if those spaces are used for joint development purposes
and using them for such purposes will not reduce the number of
public transportation trips to and from that station.
(b) Establishes New or Enhanced Coordination Between Public
Transportation and Other Transportation
FTA received three comments on the criterion that a joint
development improvement establish new or enhanced coordination
between public transportation and other transportation. One
commenter agreed that a public transportation improvement need only
satisfy one of the criteria [(i) Enhance the effectiveness of a
public transportation project and relate physically or functionally,
or (ii) establish new or enhanced coordination between public
transportation and other transportation]. Another commenter
suggested that FTA specifically note in its guidance that if an
intercity bus terminal or other facility meets the ``new or enhanced
coordination'' test it does not have to meet the ``physically or
functionally related'' test. One commenter identified an error in
the paragraph beginning with Examples of physical connections* * *''
where the phrase ``connection public transportation to non-
transportation facilities'' should have read ``connecting public
transportation to other transportation facilities.''
FTA Response: FTA directs the commenter to section I(d) and
footnote 2 at section I(e), which explain that a joint development
improvement may satisfy this requirement by (i) Relating physically
or functionally to a public transportation project or (ii)
establishing new or enhanced coordination between public
transportation and other transportation.
FTA has corrected the error noted by the commenter and changed
``non-transportation facilities'' to ``other transportation
facilities.''
(iii) Fair Share of Revenue for Public Transportation That Will Be Used
for Public Transportation
In its notice of proposed guidance, FTA described the third
criterion for determining whether a joint development improvement is
eligible for funding pursuant to a program established under Federal
transit law--that the improvement provide a fair share of revenue
for public transportation that will be used for public
transportation. Thirteen parties commented on this criterion. Four
parties agree with FTA's position that what is a fair share of
revenue, and what form it should take, shall be negotiated between
the parties involved in the joint development improvement. One party
stated that this position is ``entirely consistent with good
business practices and good stewardship.'' Another party suggested
that the fair share return should not rely solely upon an estimate
of ridership increases, and recommended that FTA require that the
fair share of revenue take the form of a cash income revenue stream
to the grantee from its joint development partner or the project.
Another commenter recommended that FTA explicitly state that the
revenue stream that flows to a transit agency from a joint
development project is not ``program income'' for purposes of 49 CFR
18. Six parties objected to the requirement that the project sponsor
obtain a written opinion of counsel or other advisor (or FTA's
agreement) that the share of revenue to public transportation is
fair. These commenters noted that such decisions are more
appropriate when coming from a transit agency official, questioned
the effectiveness of an opinion of counsel, suggested that the
certification be provided by a financial or real estate
professional, and believe that this requirement adds nothing to the
analysis. One commenter asked FTA to clarify the term ``other
advisor.''
FTA Response: As stated in this guidance document, FTA will not
define the term ``fair share of revenue,'' nor will it set a
monetary threshold. What is a fair share of revenue, and what form
it should take shall be negotiated between the parties involved in
the joint development improvement. FTA will not require that a fair
share of revenue rely on ridership estimates, nor will it state that
the fair share of revenue is not program income. Income generated
through joint development activities is considered program income,
as defined at 49 CFR 18.25, and described in Section 19 of FTA's
Master Agreement, which states that an appropriate use of project
property ``may include joint development purposes that generate
program income, both during and after the award period and used to
support public transportation activities.'' FTA Master Agreement
MA(13), 10-01-2006.
Due to comments overwhelmingly opposed to language in the
proposed guidance, FTA
[[Page 5799]]
has eliminated from this final guidance the requirement that the
project sponsor obtain a written opinion of counsel or other advisor
(or FTA's agreement) that the share of revenue to public
transportation is fair. Instead, and consistent with the policy
principles embodied in this guidance, FTA shall defer to the
decision of the project sponsor, negotiating and contracting at
arm's length with third parties, to determine what is a fair share
of revenue. The only requirements are: (i) That the recipient's
Board of Directors (or similar governing body) determines, following
reasonable investigation, that the terms and conditions of the joint
development improvement (including, without limitation, the share of
revenues for public transportation which shall be provided
thereunder) are commercially reasonable and fair to the recipient;
and (ii) that such revenue shall be used for public transportation.
FTA has eliminated the term ``other advisor'' from this guidance
document.
(iv) Pays a Reasonable Share of the Costs of the Facility
While not a criterion to determine eligibility of a joint
development improvement, Federal transit law requires that any
person making an agreement to occupy space in a facility under 49
U.S.C. 5302(a)(1)(G) shall pay a reasonable share of the costs of
the facility through rental payments and other means. FTA received
three comments on this requirement, with one party commenting twice.
The first commenter recommended that an intercity carrier should
directly compensate a local grantee for the intercity provider's
incremental costs because the local taxpayers would be unfairly
subsidizing a private company at the cost of regular bus service,
and that ticket sales generated from intercity bus passengers should
not factor into an intercity provider's reimbursement or rent. The
second commenter expressed concern that this requirement may be
confused with the eligibility criterion that a joint development
improvement provide a fair share of revenue for public
transportation that will be used for public transportation.
FTA Response: The Agency shall rely on the statutory language,
which requires that any ``person making an agreement to occupy space
in a facility under [49 U.S.C. 5302(a)(1)(G)] shall pay a reasonable
share of the costs of the facility through rental payments and other
means.''
Recognizing the concern raised by the second commenter--that an
inattentive reader may confuse the phrases ``reasonable share of the
costs of the facility'' and ``a fair share of revenue for public
transportation''--FTA included the following statement in its notice
of proposed guidance: ``This criterion should not be confused with
the requirement of 49 U.S.C. Sec. 5302(a)(1)(G)(i) that `a person
making an agreement to occupy space in a facility under this
subparagraph shall pay a reasonable share of the costs of the
facility through rental payments and other means.' ''
(d) Eligible/Ineligible Activities
In its notice of proposed guidance, FTA describes activities
that are eligible and ineligible uses of Federal transit funds for
joint development purposes. FTA received six comments on eligible
and ineligible activities. Two commenters asked FTA to clarify
footnote 7, which notes that space in an FTA-funded facility may be
made available for certain commercial revenue-producing activities
and for connections to revenue producing activities despite
statutory language making ineligible for FTA financial assistance
the construction of a commercial revenue-producing facility (other
than an intercity bus station or terminal) or part of a public
facility not related to public transportation. These commenters were
concerned that by eliminating some descriptive portions of earlier
drafts FTA may have inadvertently constricted local flexibility by
reducing the description of ineligible activities to the
construction of commercial revenue producing facilities. Two
commenters noted a typographical error in the list of eligible
costs--the phrase ``construction, renovation and improvement of bus
and intercity rail stations and terminals'' should read
``construction, renovation and improvement of intercity bus and
intercity rail stations and terminals.'' Five parties submitted
comments on the eligibility of furniture, fixtures and equipment
(FFE). Two parties commented that FFE related to an intercity bus
station or terminal should not be an eligible cost. Two parties
expressed the opposite conclusion. These commenters recommended that
FTA add a statement that ``the furniture, fixtures and equipment of
intercity bus stations and terminals are eligible costs.'' Another
party recommended that only items jointly used by the grantee and
intercity passengers should be eligible for FTA funding, and that
FFE used solely by the intercity operator should not be eligible.
Yet another commenter suggested that FTA continue its existing
practice of excluding FFE for tenant activities from its capital
project cost and funding calculations, regardless of whether the
tenant is a daycare center, interstate transportation provider, or
purely commercial tenant, and recommended that tenant activities
should be required to provide all finishes necessary to take
advantage of their tenancy.
FTA Response: Footnote 7 is not intended to constrict local
flexibility. Rather, FTA's intention is that this guidance
generally, and footnote 7 in particular, afford grantees maximum
flexibility within the law to work with the private sector and
others for purposes of joint development. For this reason, footnote
7 notes that FTA does not interpret the statutory language at 49
U.S.C. 5302(a)(1)(G)(ii) as excluding the use of FTA funds for joint
development purposes related to commercial and residential
development. For example, space in an FTA-funded facility may be
made available for commercial revenue-producing activities and for
connections to revenue producing activities. Similarly, non-
commercial, non-revenue-producing aspects of commercial and
residential developments may be eligible for FTA financial
assistance, subject to the criteria detailed at section I. Moreover,
section II of this final guidance states that, subject to the
eligibility criteria of 49 U.S.C. 5302(a)(1)(G), joint development
improvements expressly include commercial and residential
development.
In response to the many comments on the eligibility of
furniture, fixtures and equipment (FFE), FTA refers the commenters
to the statutory language at 49 U.S.C. 5302(a)(1)(G)(ii), which
excepts an intercity bus station or terminal from the exclusion of
commercial revenue-producing facilities and public facilities not
related to public transportation. This statutory exception requires
FTA to treat intercity bus stations or terminals like public
transportation-related FFE, which are eligible costs in all cases.
FTA has corrected the typographical error from section II(i) of
the notice of proposed agency guidance to correspond with the
statutory language at 49 CFR 5302(a)(1)(G). The language in question
now reads as follows: ``construction, renovation and improvement of
intercity bus and intercity rail stations and terminals.''
(e) Eligibility Procedures
Before becoming eligible for FTA funding, a joint development
improvement must be approved by the FTA Regional Administrator, or
his designee, responsible for the project sponsor's locality. In its
notice of proposed guidance, FTA outlined two methods for seeking
approval for a joint development project and introduced two forms to
be used in the approval process--the Joint Development Checklist and
Certificate of Compliance. FTA received sixteen comments on its
proposed eligibility procedures, with some parties submitting
multiple comments. Four commenters asked FTA to clarify its use of
the term ``expedited review.'' Two commenters favor the Joint
Development Checklist. One of these commenters stated that the
proposed checklist will streamline the joint development approval
process because it is less proscriptive than the previous iteration
and allows grantees maximum flexibility to satisfy the joint
development requirements. The other commenter believes that the
Joint Development Checklist brings clarity to the approval process.
This same commenter, however, stated that risk and uncertainty are
created by requiring a partnership to commit the resources necessary
to plan and design a project to the level of detail required and
recommended breaking the project approval process into three stages.
One party commented that the eligibility procedures outlined in
FTA's proposed guidance do not provide certainty or eliminate time
delays. Another commenter recommended that FTA develop a single
point of focus for all that is needed to review and approve any
joint development project.
FTA Response: FTA modified its eligibility procedures based, in
part, on the comments summarized above. Language clarifying the
methods by which FTA shall approve a joint development project can
be found at section VIII of this final guidance. In summary, there
are two methods for seeking approval for a joint development
project: (i) If the joint development improvement conforms to the
specifics of the Certificate of Compliance, then the project sponsor
may expedite FTA approval by executing the Certificate of Compliance
and submitting it to FTA along with a completed Joint Development
Checklist and a Joint Development
[[Page 5800]]
Agreement; or (ii) if the joint development improvement will deviate
from the specifics of the Certificate of Compliance, then the
project sponsor must substitute an ``alternative certification,''
which certification shall include an explanation of compliance with
49 U.S.C. 5302(a)(1)(G) and 49 CFR 18. In all cases, the project
sponsor must submit a completed Joint Development Checklist, a
proposed Joint Development Agreement, and either (i) An executed
Certificate of Compliance or (ii) an alternative certification.
(f) Real Property
Real property acquired by a grantee or subgrantee pursuant to 49
U.S.C. 5302(a)(1)(G) shall be governed by 49 U.S.C. 5334(h), as
amended, and subject to the obligations and conditions set forth in
49 CFR 18.31, as amended, which require the grantee or subgrantee to
request disposition instructions from FTA whenever real property is
no longer needed for the originally authorized purpose. FTA received
eleven comments on its discussion of real property. Three commenters
asked FTA to clarify its discussion of 49 CFR 18.31 as it applies to
property used for joint development purposes. Two commenters agree
with FTA's decision to no longer apply its administratively-derived
test of ``highest and best transit use'' (or any other tests) for
determining the value of real property used in FTA-funded joint
development improvements, including the disposition of real property
connected to a joint development improvement. Five commenters
expressed concern that language in FTA's proposed guidance would
discourage fee simple transfers of real property acquired with
federal assistance within a joint development project, and suggest
that FTA add to its guidance language from the FTA Master Agreement
with regard to the transfer of real property as an alternative to
leasing.
Response: FTA responds to the commenters that expressed concern
about 49 CFR 18.31 by explaining that part 18.31 contains property
management standards applicable to all real property acquired using
Federal transit funds. Real property used for joint development
purposes is not exempt from the requirements of 49 CFR 18.31. This
guidance document references FTA's master Agreement at section IV,
Federal Requirements. Section 19 of FTA's Master Agreement sets
forth FTA's requirements on the use of real property, equipment, and
supplies.
(g) Third Party Contracting
In its notice of proposed guidance, FTA explains the
applicability of third party contracting requirements to joint
development improvements made eligible by 49 U.S.C. 5302(a)(1)(G).
All three comments support FTA's explanation of these requirements.
(h) Certificate of Compliance
FTA received eight comments on its proposed Certificate of
Compliance, with some parties submitting multiple comments. Two
parties favor the Certificate of Compliance inasmuch as it expedites
FTA's review. Another party discourages the additional requirements
added when the agency self-certifies. Four parties asked that FTA
modify the Certificate of Compliance to allow for the transfers
envisioned in other sections of the guidance. One commenter noted
that the definition of ``grantee'' refers to section (2) of the
certificate rather than section (1).
FTA Response: FTA encourages the commenters that asked FTA to
modify the Certificate of Compliance to note that a project sponsor
may substitute an ``alternative certificate,'' which may provide for
transfers other than fee simple, if the joint development
improvement will deviate from the specifics of the Certificate of
Compliance. A project sponsor may expedite FTA approval if the joint
development improvement conforms to the Certificate of Compliance.
FTA has corrected paragraph (9)(b) of the Certificate of
Compliance. It now states that ``grantee'' shall have the meaning
provided in section (1) of this certificate.
(i) Satisfactory Continuing Control
In its notice of proposed guidance, FTA noted the applicability
of the term ``satisfactory continuing control'' to this guidance and
the Certificate of Compliance. FTA received ten comments on this
topic. Four commenters favor the applicability of the term
``satisfactory continuing control'' outlined by FTA in its notice of
proposed guidance. Six commenters asked FTA to clarify its guidance
with respect to the disposition of property, including means by
which a grantee may maintain satisfactory continuing control through
deed restrictions or other enforceable means.
FTA Response: Please see section (f) above for a discussion on
the disposition of real property.
(j) Miscellaneous
One commenter noted that footnote 5 incorrectly cited 49 U.S.C.
Sec. 5302(a)(1)(G)(ii) and suggested that the correct citation is
49 U.S.C. 5302(a)(1)(G)(i). This same commenter suggested that FTA
substitute ``section (I)'' for ``section (II)'' in the first
paragraph of section II and at the end of footnote 7.
FTA Response: FTA has corrected both errors in this final Agency
guidance.
FTA hereby publishes the text of its final guidance on the
eligibility of joint development improvements under Federal transit
law.
Issued on the 1st day of February, 2007.
James S. Simpson,
Administrator.
[FR Doc. E7-1977 Filed 2-6-07; 8:45 am]
BILLING CODE 4910-57-P