Joint DevelopmentMay 20, 2014

Jayme L. Blakesley

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Outline1. Introduction2. FTA’s joint development policy3. Criteria for all federally supported joint

developments4. Grant-funded joint development5. Joint development on federally funded real property

a. Acquisitionb. Usec. Conveyance for a purpose other than dispositiond. Disposition

6. Discussion

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Definitions• Joint development: A public

transportation project that is integrally related to and often co-located with commercial, residential, or mixed used development.

• FTA can support joint development– (1) Through a grant– (2) By concurring in the use of FTA-

funded real property for joint development

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FTA’s Joint Development Policy

• FTA’s policy is to maximize the utility of FTA-funded projects and encourage joint development:– Program income/value capture– Shared costs– Efficient land use– Economic development– Transit enhancement

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Framework for Analyzing a Proposed Joint Development1. Eligibility issues associated with

either the use of FTA grant funds or the use of program income towards a capital project

2. Issues associated with the acquisition, use, and disposition of real property that was, or will be, purchased using FTA funds

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Grant-Assisted JD• There is no pool of grant funds specifically

for JD. JD is a kind of “capital project”.• FTA has several funding programs that

can be used for capital projects (e.g., urban formula, New Starts, seniors, bus formula).

• Grant funds must be used for purposes compatible with the program under which they are awarded.

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Grant-Assisted JD• To qualify as a “capital project”, a joint

development must satisfy four criteria:1. Enhance economic development or

incorporate private investment;2. Enhance the effectiveness of public

transportation OR enhance coordination between public transportation and other transportation;

3. Provide a fair share of revenue for transit; and4. Occupants must pay a fair share of costs of

the facility.

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Grant-Assisted JD• Economic benefit– Enhance economic development, or …• Joint development must add value to

economic activity occurring in close proximity to a public transportation facility

–…incorporates private investment• Need not be monetary.• Investment can include, e.g., real property,

commercial or residential development, or some other benefit.• Must be meaningful.

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Grant-Assisted JD• Public transportation benefit– Either

• Enhances effectiveness of a public transportation project, and …– Increased ridership, shortened travel times, wayfinding,

deferred or reduced operating or capital costs, improved access to public transportation

• … is related physically or functionally to that public transportation project;

– OR• Creates new or enhanced coordination between

public transportation and other transportation

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Grant-Assisted JD • Fair share of revenue– TBD in final JD Circular

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Grant-Assisted JD• Fair share of costs– Paid by a person occupying space in a JD– Rent or other means– Recipients have flexibility– Value of agreement must equal the

costs of operating and maintaining the leased space

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Grant-Assisted JD• Eligible activities– Construction of space for commercial

uses• Ineligible activities– Outfitting of a commercial space (other

than for an intercity bus or rail terminal)– Public facilities not related to public

transportation

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Grant-Assisted JD• Federal requirements apply to grant-

funded projects– Environmental (NEPA, section 4(f), envtl.

justice)*– Labor (Davis-Bacon, section 13(c), PLAs)– Buy America– Historic preservation (NHPA, section 4(f))– Procurement (Buy America, competition)– Et cetera

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Town of Secaucus v. U.S. Department of

Transportation• Town of Secaucus v. U.S. Department of Transportation, 79 F.3d 1139 (3rd Cir. 1995).

• FTA may fund capital projects that include “building foundations” for “commercial and residential development” that is incorporated into a public transportation project.

• Statutory history

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Real Property• Acquisition• Use• Conveyance for purposes of JD (not

disposition)• Disposition

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Real Property• Definitions of use, incidental/shared

use,

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Real Property: Acquisition• Uniform Assistance and Real Property

Acquisition Policies Act• Real Estate Acquisition Management

Plan (RAMP)• WMATA question: Discuss FTA’s

requirements for timing of real property appraisals. Elapsed time between JDA and real property closing date.

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Real Property: Use• Authorized uses• Incidental uses• Shared uses• Unallowable uses

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Real Property: Use• FTA retains a “federal interest” in how

property it has financed is used.• An asset acquired with an FTA grant

must be used according to the terms of the grant: the “originally authorized purpose”.

• JD (i.e., a project that satisfies the four criteria above) is an authorized purpose.

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Real Property: Use• FTA’s concurrence is required for incidental or shared

uses of property.• Incidental use:

– The authorized use of real property for a limited non-transit purpose that does not interfere with the property’s transit purpose.

– Examples: after-hours parking for nearby establishments, advertising, newsstand in a station, air rights

• Shared use:– When a party other than the transit provider occupies a

facility and pays for its pro rata share of construction, maintenance, and operation costs. Must be declared and approved at time of grant award.

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Real Property: Use• Incidental Use and Shared Use

distinguished– Incidental: Parking is exclusively for

transit customers until 6:00 p.m. and becomes available to the public in the evening. No interference with transit purpose. Can be approved after construction.

– Shared: Parking situated between a transit station and retail is available to transit and retail customers at all times without segregation. Must be approved before grant award.

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Real Property: Use• Discussion Point: • What is FTA’s position on cost-

sharing arrangements such as shared parking.?

• Does FTA encourage or discourage these arrangements?

• Advice for how to structure such arrangements?

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Real Property: Conveyance• By default, OMB’s Common Rule for

grants prevents recipients from conveying an interest in grant property.

• For authorized uses or incidental uses, FTA may permit a recipient to convey an interest in federally funded property.

• Generally, any kind of interest can be conveyed. Lien, fee, easement, lease, etc.

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Real Property: Conveyance• FTA must be satisfied that the federal

interest will be adequately protected.• The grant recipient protects the

federal interest by maintaining “satisfactory continuing control”.– Retain an easement– Lease conditions– Reverter clause– Etc.

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Real Property: Disposition• Disposition occurs when property is

no longer needed for the grant’s originally authorized purpose– Extinguishes the federal interest–May or may not involve a sale or other

conveyance

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Real Property: Disposition• Common Rule disposition methods:– Grantee retains title; compensates federal share

based on FMV– Grantee sells property (“highest possible return”);

compensates federal share based on sale proceeds– Federal agency takes title or directs grantee to

convey to third party; grantee is compensated its share of FMV

• Special FTA authority:– Grantee may convey to a local government authority

for a non-transit public use; must remain in public use for >5 years; public benefit must outweigh federal interest in liquidation value

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Real Property: Disposition• Discussion Point: • Are the proceeds from the sale of

FTA-funded real property considered program income?

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Discussion• Questions?

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Contact Information• Jayme Blakesley,

Acting Assistant Chief Counsel for General Law– Jayme.Blakesley@dot.gov– (202) 366-0304

Federal Transit Administration

www.fta.dot.gov