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Guide to Joint Development for Public Transportation Agencies (2021)

Chapter: Chapter 6 - Joint Development and FTA

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Suggested Citation:"Chapter 6 - Joint Development and FTA." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 6 - Joint Development and FTA." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 6 - Joint Development and FTA." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 6 - Joint Development and FTA." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 6 - Joint Development and FTA." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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79   6.1 Introduction and Summary of Best Practices The four preceding chapters addressed, in sequence, the typical stages of the transit agency JD process. At this point, the organization of the guide pivots to a series of three chapters addressing topics that cut across those stages. These topics involve the state of JD and opportunities to enhance it through the evolution and expansion of best practice. This chapter addresses the federal side of JD. FTA policy broadly sup- ports JD, to maximize the utility of FTA-assisted transit assets. However, as noted previously in Chapter 1, JD specifically involving FTA land or jurisdiction, while routine for some agencies, is only a subset of JD across the country. Where FTA involvement does arise, their procedural require- ments, the alternative ways of engaging them, and the costs and benefits of doing so are changing. This chapter is designed as a resource for transit agencies that have already worked with FTA on JD projects or have potential opportunities to do so. It begins with a discussion of when and how FTA jurisdiction arises in the first place. The remaining sections address the substance of the FTA’s Joint Development Guidance and related policies; the interaction of FTA policy with the stages of the transit agency JD process; and the expanding opportunities to use the FTA/JD mechanism.1 The responsibility of determining whether FTA jurisdiction applies, and of reviewing JD proposals when it does, is delegated to the 10 FTA Regional Administrators. An overarching best practice for any transit agency is to contact its FTA Regional Office in the early stages of creating a JD program or initiating a specific JD project. 6.2 FTA Jurisdiction When is FTA involved in a JD project? FTA jurisdiction arises when either of two conditions is present (as shown in Figure 32): • There is a pre-existing FTA real property interest in the site, by virtue of its having been acquired or improved with FTA funding assistance. • New FTA funding is being sought for a JD project or for the JD components of a new FTA-assisted transit project. C H A P T E R 6 Joint Development and FTA Joint Development and FTA 1. Pursue JD on property where FTA has an interest, including FTA-funded park & ride lots and construction staging areas. 2. Where possible, use the financially favorable FTA-Assisted Joint Devel- opment method of approval and conveyance. 3. Align the FTA process with the transit agency’s planning, solicitation, and implementation stages. 4. Plan new FTA-funded corridors with an eye toward FTA-Assisted Joint Development as part of the project. Hub stations Sister public agencies Adjacent owners JD and value capture New corridors Non-station assetsLand value Parking Affordable housing Economics of Joint Development Chapter 7 Chapter 6 Chapter 8 Joint Development Horizon Joint Development and FTA

80 Guide to Joint Development for Public Transportation Agencies With respect to the first condition, a pre-existing FTA real property interest must be accounted for, consistent with law and FTA policy. There are two methods of doing so: securing FTA approval of the project as an FTA-Assisted Joint Development (FTA/JD), or disposing of the site as excess property and settling the associated obligation to FTA. These alternatives are explained in Section 6.3. The extent to which transit real estate was originally acquired or improved with FTA funds varies among transit systems and may vary among corridors within a single system as well. In the transit agency survey conducted for this guide, 21 of the 29 U.S. public transit agencies reported that most of their operating real estate (in WMATA’s case, all of it) has a prior FTA interest. Eight agencies reported less extensive FTA involvement: five described a mixed condi- tion, in which some real estate has an FTA interest and some does not, while three reported that most of their real estate does not carry an FTA interest. The agencies with less extensive FTA interests include, among others, three of the largest and oldest subway systems in the United States and three major commuter rail systems. Many of the corridors or stations that lack FTA-assisted real property were built before today’s FTA capital programs existed. Whatever the historic reason, if a transit agency is contemplating JD on real estate with no pre-existing FTA interest, there is no FTA jurisdiction unless the second condition applies: pursuit of new FTA funding. Because FTA has no source of funding specifically dedicated to JD, the “funding trigger” seldom occurs. Between 2014 and 2019, FTA approved 17 JD projects, all of which involved a prior FTA real property interest rather than the use of new FTA funding.2 Nonetheless, the mechanism is available, and all of FTA’s capital programs can be used for JD. The Holyoke Transportation Center in Massachusetts, approved in 2007 and described in Chapter 8, is a good example, and potential future opportunities are discussed later in this chapter. 6.3 FTA Joint Development Policy The following discussion summarizes the basics of current FTA/JD policy. Unless otherwise indicated, it is based on the FTA’s Joint Development Guidance (2020) and its predecessors.3 A more detailed analysis of the key federal documents can be found in Appendix F. Figure 32. FTA joint development jurisdiction.

Joint Development and FTA 81   How FTA-Assisted Joint Development Works FTA-Assisted Joint Development is in part a regulatory construct, but at its core are two financial benefits: the ability of the transit agency to retain 100% of the lease or sale proceeds, and the potential opportunity, particularly in new projects, to use FTA funding to support eligible JD costs. Conveyance of property and retention of income. At the core of any on-site JD project is the conveyance of transit agency property, or the rights to develop it, to the development entity. For property acquired or improved with FTA funds, the challenge is how to structure the conveyance in a way that is advantageous to the goals of the project while consistent with applicable federal law and regulations. Since its first JD guidance issued in 1997, FTA has treated approved JD projects as distinct from traditional dispositions of property. • An FTA/JD is legally defined not as a property disposition but as part of the underlying transit project. • The JD proceeds from the lease or sale are retained in full by the transit agency for its discre- tionary use on virtually any capital or operating expenditure. This provision differs from nor- mal federal practice (the “Common Grant Rule”), which requires that when federally funded property is disposed of, the underlying federal interest must be repaid. • The FTA real property interest is never extinguished, even if the property is leased to the developer for an extended term or sold outright. The on-going FTA interest requires that the transit agency maintain “satisfactory continuing control of the property for its originally authorized purpose”—a construct that applies to all FTA-funded property but requires specialized application when the property is to be conveyed and developed. FTA’s concerns include assurance that the JD as agreed to by the transit agency and FTA (and thereby consid- ered part of the authorized transit project) will actually be implemented and that the agency’s control over the use of the site cannot be interrupted by a future transfer or assignment. When the JD project is integrated with or close to the station, FTA is also concerned with construc- tion period impacts on the transit facility and on-going access for maintenance and safety. Satisfactory continuing control can be achieved through a variety of legal mechanisms in the lease, deed, accompanying easements, or recorded covenants. • For projects involving long-term ground leases, satisfactory continuing control also affects the issue of subordination—that is, any provision that would place the JD lender ahead of the transit agency should the developer default on its financing or lease payments. While many transit agencies and other public landlords avoid fully subordinated ground leases and this guide considers such avoidance a best practice, there are a variety of partial subordination mechanisms in the market. The FTA’s guidance on JD does not rule out subordination, but in all cases the FTA interest must be reasonably protected. Use of FTA funds. The provisions listed above apply to all FTA/JD projects, whether they are based on a pre-existing FTA real property interest, new FTA funding, or both. In cases involving new FTA funding, the key question (other than availability) involves eligibility. Aside from traditional transit components, how can FTA funds be used? The eligible uses, established and amended by Congress over time, include: • Land acquisition, demolition, and site work for JD (which need not be on or immediately adjacent to the transit facility); • Design, engineering, environmental work, real estate packaging, and other predevelopment professional services; • Shared foundations, including substructures for air rights decks; • On a case-by-case basis, shared utilities or parking; • Open space, walkways, lighting, and pedestrian/bicycle connections; • Facilities housing community services, such as daycare centers or health clinics;

82 Guide to Joint Development for Public Transportation Agencies • Renovation of historic transportation facilities and construction or renovation of intermodal transportation facilities and intercity bus or rail stations; and • As of 2015, construction of space for commercial uses. FTA Approval criteria. The requirements for FTA concurrence have evolved over time from both a procedural and a substantive standpoint. In general, the requirements have become simpler and less prescriptive. To be approved as an FTA/JD, a project must meet four statu- tory tests: (i) enhances economic development or incorporates private investment, such as commercial and residential development; (ii) (a) enhances the effectiveness of public transportation and is related physically or functionally to public transportation; or (b) establishes new or enhanced coordination between public transportation and other transportation; (iii) provides a fair share of revenue that will be used for public transportation; and (iv) provides that a person making an agreement to occupy space in a facility constructed under this paragraph shall pay a fair share of the costs of the facility through rental payments and other means. FTA’s Joint Development Guidance provides detailed instructions on how to address these tests. The one that has proven most challenging over the years is the third—the “fair share of revenue.” As of 2020, the guidance for this test has been changed to eliminate any threshold definition, leaving the determination of what constitutes a “fair share of revenue” (i.e., the appropriate financial terms for the lease, sale, or equity share) to be negotiated by the transit agency. Moreover, the analysis and documentation required to comply with that threshold have been eliminated as well. The transit agency is now required simply to report to FTA the amount and sources of revenue it will receive from the JD transaction, describe the “reason- able” analysis by which the amount was determined, and commit to use those revenues for transit purposes. Finally, it should be noted that FTA recognizes two additional joint use concepts: incidental use and shared use. These are somewhat similar to FTA/JD in that they do not affect the under- lying status of the station or facility as a transit project, and the revenue generated is retained by the grantee; but these concepts are simpler and narrower in definition.4 (A key concep- tual difference is that FTA/JD, is by definition, an FTA-assisted capital project or part of one, while the others are limited, non-transit uses added to a facility and not interfering with it.) An incidental use can be added at any time with FTA concurrence; a shared use must be proposed and approved at the time of the applicable FTA grant. Instances of incidental or shared use may also fit within the general definition of JD used in this guide, but in FTA terminology they are distinct from FTA-Assisted Joint Development. Crosscutting Requirements When a project is federally funded, an array of legal requirements applicable to any federally- funded project comes into play. These are known collectively as crosscutting requirements, and their applicability to a project must be carefully researched and vetted by counsel for both parties. The FTA’s guidance on JD provides an overview of this issue, centered on a basic difference between FTA/JD projects triggered by new FTA funding, on the one hand, and those triggered only by a prior FTA real property interest, on the other. Broadly speaking: • If a project involves new FTA funding for JD, a long list of federal crosscutting requirements is applicable, including the MPO planning process; a suite of federal environmental require- ments, including among others the National Environmental Policy Act (NEPA), Section 4f,

Joint Development and FTA 83   and Section 106 Historic Review; federal procurement law; Buy America and U.S. Cargo Pref- erence; seismic and energy analyses; federal prevailing wage and other labor protection laws; federal civil rights law; the Uniform Relocation Act; and federal lobbying rules. (It should be noted that some of these policies are subject to similar, parallel state laws that may apply regardless of federal jurisdiction.) • By contrast, if the project involves only the use of real property with a prior FTA interest, the crosscutting requirements are generally limited to standard federal language addressing non-discrimination, conflicts of interest, debarment, and suspension. • The most demanding of the crosscutting requirements is often NEPA, at least in those instances where an Environmental Impact Statement or Environmental Assessment may be required. The FTA’s Joint Development Guidance provides a tabular summary of how NEPA applies in different project circumstances; this issue is so significant and the table so descriptive that it is reproduced below as Table 6. The bottom line: JD projects receiving FTA funding, or integral JD Project Description Approach to NEPA Proposed joint development (regardless of FTA assistance) would occur concurrently as part of a greater FTA-assisted project, without independent utility from the transit project. The joint development would be evaluated as part of the larger, FTA-assisted project in a single NEPA evaluation. Proposed [JD] is known and would be (1) co- located with the FTA-assisted project or (2) the FTA-assisted project is being designed to accommodate the future non-transit development that would occur at some time in the future after the FTA-assisted project is operational. To the extent that information about the proposed joint development is known and is reasonably foreseeable, it should be covered in the NEPA evaluation of the larger FTA- assisted project. Joint development was unanticipated at the time of the environmental review of the FTA-assisted project. However, the [JD] would be co-located with the FTA-assisted transit project and is identified during construction of the FTA-assisted project. The FTA Regional Office would need to conduct a reevaluation of its NEPA finding to determine if supplemental and public environmental review of the change in the FTA-assisted project and setting is necessary. Acquisition of real property with FTA-assistance for joint development with the development of an FTA-assisted transit project occurring in the future. Early acquisition of real property for the purposes of joint development that would be associated with a future FTA-assisted capital project would not be permitted (because it would be considered impermissible segmentation under NEPA) unless the property meets the definition of right-of-way for the purpose of corridor preservation. A NEPA review would be required for real property acquisition using FTA funds. Acquisition of real property for the purposes of a joint development project with independent utility from an FTA capital project would be covered in its own NEPA evaluation. Proposed joint development on real property acquired and developed with FTA assistance for a different transit purpose. The original FTA grant for the acquisition and development of the property has closed and the construction funded If FTA is not funding the actual joint development and is not otherwise involved in project decisions, then an FTA NEPA evaluation would not be necessary. by the original grant is completed. FTA, Joint Development Guidance (Circular 7050.1B, p. V-2). Table 6. FTA summary of NEPA jurisdiction.

84 Guide to Joint Development for Public Transportation Agencies to an FTA-assisted transit project, are likely to require NEPA review. But if an FTA/JD project involves a pre-existing real property interest only, with no new funding, NEPA review does not apply. The “Excess Disposition” Alternative As an alternative to the FTA/JD process described above, a transit agency seeking to convey an FTA-assisted parcel to a developer may do so by declaring the property excess (“no longer needed for any transit purpose”) and disposing of it. This typically means selling it outright to the developer, thereby extinguishing the FTA interest. (Note again, by contrast, that selling an FTA-assisted property through the FTA/JD process is not a disposition and does not extinguish the FTA interest.) In an excess property disposition, the special provisions governing FTA/JD projects do not apply. FTA’s interest in the property must be either repaid outright or transferred, with FTA approval, to another eligible capital project (or, if circumstances allow, to other costs on the same capital project). Under certain conditions, the parcel may also be transferred to another public agency for public use (see FTA’s Award Management Circular, 2018).5 By transferring the FTA interest to another capital project, rather than “writing FTA a check,” the transit agency is able to retain a portion of the land sale proceeds. The value of FTA’s interest in the property is calculated by multiplying the FTA funding share of the original project by the parcel’s current market value. In the example, a parcel is sold for $1,000,000. It was originally acquired as part of an “80-20” FTA-assisted transit project; thus, the current FTA property interest is valued at $800,000. Transferring that value to another capital project reduces the total gross cost of the receiving project, in FTA’s calculus, by that same amount. The reduction is then allocated between FTA and the transit agency according to their funding shares of the new project, reducing the dollar obligation of each. In the example, if the new project has a “50-50” FTA-local funding split, the transit agency would save $400,000, in addition to keeping its own $200,000 share of the land sale proceeds. By contrast, if the parcel were conveyed through an FTA/JD project, the transit agency would keep the entire $1,000,000 sale price.6 An excess disposition resulting in development of the affected parcel, with net benefits to the transit agency, plainly falls within the general definition of JD used in this guide and would be recognized as such in the TOD/JD community. However, such transactions fall outside the specific, statute-based construct of FTA-Assisted Joint Development. Transit agencies with large portfolios and extensive JD experience readily navigate this distinction, but for agencies newly contemplating JD, particularly if most of their real estate is FTA-assisted, it is important to understand the legal and conceptual distinction and the pros and cons of each method. Figure 33 summarizes the salient points of each. Pros and cons. The principal advantage of the FTA/JD model is that the transit agency keeps the entire proceeds of the property conveyance, rather than the pro-rata por- tion it retains in an excess disposition. Moreover, because the FTA/JD model lends itself to long-term leases or equity transactions with downstream participation, while excess Example: Transfer of FTA interest Parcel to Be Sold Sale price: $1,000,000 Original FTA funding: 80–20 Local share of sale: $200,000: Transit agency keeps FTA share of sale: $800,000: transferred to new project FTA Share Transferred to: A $4,000,000 transit project Gross cost reduced to $3,200,000 FTA funding: 50–50 New FTA grant reduced by $400,000 Local match reduced by $400,000 Transit Agency Bottom Line Keep $200,000 Save $400,000 Net gain from sale: $600,000

Joint Development and FTA 85   dispositions are almost always outright sales, the transit agency’s commercial negotiating flexibility may be greater in the former. (As noted previously, FTA/JD may also be achieved through outright sale, if the agency and developer find that mutually advantageous.) Although it requires an appraisal, a review appraisal, and settlement of the FTA interest, excess disposition is often perceived as entailing less “process” than FTA/JD (see Section 6.4). Excess disposition avoids the issue of crosscutting federal requirements; however, as noted previ- ously, in FTA/JD projects involving only a prior FTA real property interest, the applicability of crosscutting requirements is minimal anyway and this difference between the two alterna- tives effectively disappears. Where applicable, the FTA/JD process can be highly advantageous from the transit agency perspective, because of its superior financial terms and transactional flexibility. In the survey of transit agencies undertaken for this guide, a variety of practices emerged: • A plurality (13) of the 29 U.S. public agencies reported that they normally use the FTA/JD process. • Five reported that they sometimes or always prefer excess property disposition. Their reasons included a perception that the FTA/JD process is time-consuming and bureaucratic and that the business terms negotiated by the transit agency might be rejected by FTA. These responses suggest that the elimination (as of 2020) of the threshold “fair share of revenue” definition and its associated documentation will ameliorate these concerns. • Four reported having used both the FTA/JD and excess disposition methods for different projects, choosing on a case-by-case basis in consultation with FTA. • The remaining seven agencies have not undertaken any projects with FTA jurisdiction, either because they have not yet advanced any JD projects or because their real estate is mostly non-FTA assisted. Figure 33. FTA-Assisted Joint Development and disposition of excess property.

86 Guide to Joint Development for Public Transportation Agencies 6.4 Transit Agencies and Joint Development Processes The process by which a transit agency vets a proposed FTA/JD project with region staff and eventually submits it for review and approval is set forth in FTA’s Joint Development Guidance (C-7050.1B), particularly Section VI. If a transit agency wishes to declare a proposed develop- ment parcel excess property and dispose of it by sale, that process is set forth in FTA’s Award Management Circular (C-5010.1E). Table  7 is organized around the four sequential stages of a transit agency’s JD process, as described in Chapters 2 to 5 of this guide. For each stage, the corresponding formal or infor- mal stages of the FTA process are identified, so that the two can be effectively aligned. Note that, in the case of an FTA/JD project, FTA encourages a preliminary review before the JDA is set in stone, but generally requires a board-approved final version for formal submission and review. 6.5 Expanding Opportunities The benefits of undertaking FTA-Assisted Joint Development can be significant, as shown in Figure 34. Moreover, if an FTA real property interest exists, JD is impossible without FTA involvement, either through a formal FTA/JD project or through an FTA-approved excess prop- erty disposition. Transit agencies, particularly those new to JD, should not see FTA jurisdiction as a barrier. Two changes in FTA policy were intended to encourage further JD activity. One has already been described—the simplification of the “fair share of revenue” test and elimination of its analytic and documentary requirements. The other is the evolution of FTA policy on the conversion of park & ride lots to JD sites. There is also the potential for FTA/JD based on the use of new funding. While rare today, such opportunities could arise for two reasons: • The use of ancillary funding sources such as Transportation Infrastructure Finance and Innovation Act (TIFIA) loans, Railroad Rehabilitation & Improvement Financing (RRIF) loans, and flex funds; and • The increasing attention of transit agencies to potential JD opportunities when planning new corridors and extensions. Park & Ride Lots The economic and transactional aspects of repurposing surface park & ride lots as JD sites are addressed in Chapter 7, as is a best practice approach to determining how much of the existing parking capacity to replace. The other key to planning such projects is to understand FTA policy where applicable. Since the 2014 version of FTA’s Joint Development Guidance, it has been explicit FTA policy that park & ride lots originally acquired and improved with FTA funds can be, and frequently are, converted to JD. Moreover, the lot’s original parking capacity does not have to be replaced on a 1:1 basis. The transit agency may determine the appropriate replacement ratio, as many now do, on a case-by-case basis, taking into account the overall projected outcome with respect to transit ridership and revenue. FTA specifies three considerations, which are commonly satisfied: • The conversion must benefit public transportation by enhancing it (normally through increased ridership and fare receipts) or creating better coordination between transit and other forms of transportation.

Joint Development and FTA 87   Transit Agency Joint Development Stage FTA-Assisted Joint Development Disposition of Excess Property Creating a Joint Development Program Informally discuss the JD program with FTA Region. In creating inventory of potential JD sites, “flag” all sites with FTA real property interest. Planning a Joint Development Project If the site has a pre-existing FTA real property interest: Research applicable requirements in FTA JD Guidance Circular and FTA Award Management Circular; determine whether FTA/JD or excess property disposition is preferred. If FTA/JD is preferred: Determine method of conveyance (lease, sale, equity contribution). Determine requirements for satisfactory continuing control. Discuss project informally with FTA Region. If excess disposition is preferred: Request disposition instructions from FTA. Choosing a Developer Comply with FTA provisions for competitive selection (required if new FTA funding; strongly encouraged if prior FTA real property interest). Comply with FTA provisions for competitive selection (required to generate best obtainable value for FTA interest). Executing a Joint Development Project Informal FTA review, prior to (or early in) negotiation of JD Agreement: • Submit draft of JD Project Request Form* Formal FTA review, when terms of JD Agreement are agreed by parties and approved by board: • Submit JD Project Request Form and a yet-to-be executed copy of JD Agreement and supporting documents. FTA Region reviews for: • compliance with four statutory eligibility criteria; • satisfactory continuing control and protection of federal interest; • compliance with guidance relative to replacing park & ride; and • eligible use of FTA funds (if applicable). Regional Administrator approves, rejects, or requests modifications. Obtain FTA Region concurrence in disposition of parcel and transfer of FTA interest to another capital project (or same project if eligible). *https://www.transit.dot.gov/funding/funding-finance-resources/joint-development/joint-development-project- request-form-0. Table 7. Step by step—transit agencies and joint development processes.

88 Guide to Joint Development for Public Transportation Agencies • If the original FTA funding grant relied on the capacity of the lot in question to achieve a specific ridership level, FTA would have to concur that the grant conditions would not be breached. • If the surface parking improvements (the paving, lighting, or other parking lot infrastructure, but not the underlying land acquisition) have any remaining useful life, the corresponding FTA interest must be taken into account. FTA Funding Sources There is no FTA capital funding source specifically dedicated to JD. However, all of FTA’s capital grant programs can be used for JD as part of an otherwise eligible project. This includes New Starts, Small Starts, and Core Capacity projects under the Capital Improvement Grant program, Section 5307 formula grants, and more specialized programs like Bus & Bus Facilities. This broad applicability also includes “flex funds” (FHWA funds transferred to a transit agency by a state or MPO, becoming FTA grant funds for all practical purposes). Because traditional transit capital needs rely on these programs, it is difficult for agencies to use them for JD. None- theless, in locations where transit capital projects and potential JD interface and could share costs, opportunities may arise. The TIFIA program expands the reach of federal grant programs by offering direct loans, loan guarantees, and lines of credit to public sponsors, including transit agencies. The pro- ceeds of these loans can be used for virtually any project that would be eligible for an FTA capital program. These include transit projects, for which TIFIA loans are an established method of generating the non-FTA share of project costs. As a result of changes included in the FAST Act of 2015, TIFIA can finance construction of certain FTA-eligible JD com- ponents as well as improvement of public infrastructure within walking distance of, and Figure 34. FTA-Assisted Joint Development projects.

Joint Development and FTA 89   accessible to, a fixed guideway transit facility, passenger rail station, intercity bus station, or intermodal facility.7 New Corridors and Extensions Some of the rail transit lines built in the United States since the 1980s were planned in a way that provided limited opportunities for JD (or, in some cases, for TOD in general). This resulted from the choice of alignment as well as a predisposition to minimize right-of-way acquisition. Today, as discussed in Chapter 8, many transit agencies planning new or extended rail corri- dors have adopted a different approach, taking TOD/JD opportunities into account in evaluating alignments, station locations, and right-of-way decisions. This strategy could lead to increased interest in FTA/JD. For example, land acquisition for construction staging areas as part of an FTA-assisted transit project can be located so as to opti- mize its utility for JD once construction is completed. The same is true of land acquisition for surface park & ride. Moreover, FTA funds can be used to acquire land explicitly for JD, although few transit agency enabling acts allow such acquisitions. When JD is to occur on transit property at or in close proximity to a station, FTA funds can be used for the extensive list of eligible JD costs outlined earlier. These cost items can be part of the original grant agreement or added subsequently. Moreover, in FTA’s highly competitive evaluation of proposed New Starts projects, FTA- eligible JD costs are treated as enrichments for purposes of calculating the cost/benefit ratio, a key project justification criterion. Enrichments, while reimbursable by FTA, are not counted in determining total project cost. This avoids having JD expenditures inadvertently weaken the project’s cost/benefit standing. In the words of FTA’s program guidance: “FTA hopes that the [enrichment] credit will encourage sponsors to undertake joint development efforts as part of New Starts projects; few to date have included joint development-related costs.”8 It should be remembered that when FTA funds a capital project, regardless of its percentage share, all of the project’s funding becomes federalized, subject to FTA rules and requirements. As transit project sponsors become more conscious of JD and their funding sources diversify, the occurrence of JD in FTA-assisted capital projects may become more frequent. Endnotes 1. A companion study (TCRP J-05, Topic 18-04) is directed specifically at the FTA/JD process, focusing on (i) the structure and terms of joint development agreements on FTA/JD projects and (ii) strategies for encour- aging the use of the FTA/JD process rather than the excess property disposition alternative. 2. FTA interview and Joint Development: Partnering to Build Complete Communities (https://www.transit. dot.gov/sites/fta.dot.gov/files/docs/funding/funding-finance-resources/joint-development/64731/ joint-development-brochure.pdf). 3. The current FTA Joint Development Guidance (Circular 7050.1B, 2020) is at: https://www.transit.dot.gov/sites/ fta.dot.gov/files/2020-08/Joint-Development-Circular-C-7050-1B.pdf. The predecessor versions include the 1997 FTA JD Policy, the 1998 FTA JD Appendix, the 2007 FTA JD Guidance, the 2014 FTA JD Circular, and the 2016 FTA JD Circular. These are regulatory documents. The statutory provisions underlying them are found in the Surface Transportation Reauthorization laws known as ISTEA (1991), TEA-21 (1998), SAFETEA-LU (2005), MAP-21 (2012), and the FAST Act (2015). Appendix F of this Guide provides web links to all of these source documents. 4. These terms are discussed in both the FTA Joint Development Guidance and the FTA Award Manage- ment Circular: https://www.transit.dot.gov/sites/fta.dot.gov/files/2020-08/Joint-Development-Circular- C-7050-1B.pdf and https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/regulations-and-guidance/ fta-circulars/58051/5010-1e-circular-award-management-requirements-7-16-18.pdf, respectively.

90 Guide to Joint Development for Public Transportation Agencies 5. https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/regulations-and-guidance/fta-circulars/58051/ 5010-1e-circular-award-management-requirements-7-16-18.pdf. 6. The sample analysis assumes that the “local match” is provided entirely by the transit agency. To the extent that this is not the case (i.e., if some or all of the match comes from other state, regional, or local sources), the savings gained by reducing the net cost of the “receiving” project are shared accordingly. 7. A TIFIA program guide is available at https://cms7.dot.gov/sites/dot.gov/files/docs/policy-initiatives/ programs-and-services/tifia/Bureau%20Credit%20Programs%20Guide_March_2017.pdf. 8. See the Capital Investment Grants Program Guidance at: https://www.transit.dot.gov/sites/fta.dot.gov/ files/docs/FAST_Updated_Interim_Policy_Guidance_June%20_2016.pdf. New Starts is the category of larger new or extended corridor projects under the Capital Investment Grants program.

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Joint development is real estate development that occurs on transit agency property or through some other type of development transaction to which the transit agency is a party.

The TRB Transit Cooperative Research Program's TCRP Research Report 224: Guide to Joint Development for Public Transportation Agencies is designed to expand the successful use of joint development in North American transit systems—in the volume and variety of projects undertaken, the diversity of transit agencies participating, and the quality of outcomes achieved.

Supplemental to the report is TCRP Web-Only Document 73:Guide to Joint Development for Public Transportation Agencies: Appendices, the Executive Summary, and a long version presentation and a short version presentation of "Guide to Joint Development for Public Transportation Agencies."

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