[Code of Federal Regulations]
[Title 49, Volume 7]
[Revised as of October 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 49CFR639.23]

[Page 58]
 
                        TITLE 49--TRANSPORTATION
 
CHAPTER VI--FEDERAL TRANSIT ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
 
PART 639_CAPITAL LEASES--Table of Contents
 
                      Subpart C_Cost-Effectiveness
 
Sec.  639.23  Calculation of purchase or construction cost.

    (a) For purposes of this subpart, the purchase or construction cost 
of a capital asset is--
    (1) The estimated cost to purchase or construct the asset; plus
    (2) Ancillary costs such as delivery and installation; plus
    (3) The net present value of the estimated future cost to provide 
any other service or benefit requested by the applicant in its proposal 
to obtain the capital asset.
    (b) The estimated cost to purchase or construct must be--
    (1) Reasonable;
    (2) Based on realistic current market conditions; and
    (3) Based on the expected useful life of the asset in mass 
transportation service, as indicated in paragraph (c) of this section.
    (c) For purposes of this part, the expected useful life of a revenue 
vehicle is the useful life which is established by FTA for recipients of 
Federal assistance under FTA's Circulars for section 9 recipients. For 
assets other than revenue vehicles, the applicant is responsible for 
establishing a reasonable expected useful life. If the recipient does 
not intend to use the capital asset it is proposing to obtain by lease 
in mass transportation service for its entire expected useful life, when 
calculating the purchase cost, the recipient must calculate the fair 
market value of the asset as of the date the lease will terminate 
pursuant to Guidelines found in section 108(b) of part II Standard Terms 
and Conditions for valuation of property withdrawn from transit use 
before the end of its useful life and subtract that amount from the 
purchase price. The resulting amount is the purchase price for purposes 
of this rule.