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Suggested Citation:"I. INTRODUCTION." National Academies of Sciences, Engineering, and Medicine. 2021. Joint Development Agreements Using FTA Funds or FTA-Funded Assets. Washington, DC: The National Academies Press. doi: 10.17226/26268.
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Suggested Citation:"I. INTRODUCTION." National Academies of Sciences, Engineering, and Medicine. 2021. Joint Development Agreements Using FTA Funds or FTA-Funded Assets. Washington, DC: The National Academies Press. doi: 10.17226/26268.
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Suggested Citation:"I. INTRODUCTION." National Academies of Sciences, Engineering, and Medicine. 2021. Joint Development Agreements Using FTA Funds or FTA-Funded Assets. Washington, DC: The National Academies Press. doi: 10.17226/26268.
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Suggested Citation:"I. INTRODUCTION." National Academies of Sciences, Engineering, and Medicine. 2021. Joint Development Agreements Using FTA Funds or FTA-Funded Assets. Washington, DC: The National Academies Press. doi: 10.17226/26268.
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Suggested Citation:"I. INTRODUCTION." National Academies of Sciences, Engineering, and Medicine. 2021. Joint Development Agreements Using FTA Funds or FTA-Funded Assets. Washington, DC: The National Academies Press. doi: 10.17226/26268.
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Suggested Citation:"I. INTRODUCTION." National Academies of Sciences, Engineering, and Medicine. 2021. Joint Development Agreements Using FTA Funds or FTA-Funded Assets. Washington, DC: The National Academies Press. doi: 10.17226/26268.
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Suggested Citation:"I. INTRODUCTION." National Academies of Sciences, Engineering, and Medicine. 2021. Joint Development Agreements Using FTA Funds or FTA-Funded Assets. Washington, DC: The National Academies Press. doi: 10.17226/26268.
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Suggested Citation:"I. INTRODUCTION." National Academies of Sciences, Engineering, and Medicine. 2021. Joint Development Agreements Using FTA Funds or FTA-Funded Assets. Washington, DC: The National Academies Press. doi: 10.17226/26268.
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TCRP LRD 56 3 JOINT DEVELOPMENT AGREEMENTS USING FTA FUNDS OR FTA-FUNDED ASSETS Christopher Kane, McDuffie Nichols, Eric Peterson, and Sarah G. Richards, AECOM, Washington, DC I. INTRODUCTION A. Scope of Digest This digest serves as an update to TCRP LRD 12: The Zoning and Real Estate Implications of Transit-Oriented Development (TCRP LRD 12)1, and TCRP LRD 36: Transit-Oriented and Joint Development: Case Studies and Legal Issues (TCRP LRD 36)2, and identifies the legislative, regulatory, and legal changes that have occurred at the federal level since the publication of TCRP LRD 36. The overall intent of this digest is to clarify the Fed- eral Transit Administration (FTA) assisted joint development (JD) process and attempt to separate public perception (and misperception) from reality. This digest includes a comprehen- sive update on existing literature about the subject, identifies the role the FTA plays in the concurrence and funding process, and presents the timelines grantees should follow to receive FTA concurrence on JD agreements.  The digest also summarizes the results of FTA grantees that have undertaken transit-oriented development/joint develop- ment (TOD/JD) projects, and a survey that was undertaken as part of the TCRP Research Report 224: Guide to Joint Develop- ment for Public Transportation Agencies,3 identifying key issues and lessons learned by those agencies during the TOD/JD process. These agencies were also asked to identify issues that became apparent post-development that were not adequately addressed in the initial agreement. The digest also identifies other federal and state agencies that may provide funding for transit oriented and/or JD projects, and their role in the approval and funding processes.  The appendices outline other legal provisions and require- ments applicable to the TOD/JD process, and include examples primarily from the Washington Metropolitan Area Transit Authority (WMATA) of model agreements, and model provi- sions for TOD/JD agreements between entities embarking on the process using FTA funds and/or FTA-funded assets. Appen- 1 S. Mark White, TCRP LRD 12: The Zoning and Real Estate Impli- cations of Transit-Oriented Development, Transportation Research Board, National Academies of Sciences, Engineering, and Medicine, Washington, D.C., 1999. 2 John L. Renne, Keith Bartholomew, Patrick Wontor, TCRP LRD 36: Transit Oriented and Joint Development: Case Studies and Legal Issues, Transportation Research Board, National Academies of Sciences, Engineering, and Medicine, Washington, D.C., 2011. 3 Allen S. Raine, James Gast, Robert Cervera, Dena Belzer, Todd J. Poole, TCRP Research Report 224: Guide to Joint Development for Public Transportation Agencies, Transportation Research Board, National Academies of Sciences, Engineering, and Medicine, Washington, D.C., 2021. dix A includes multiple case studies of TOD/JD projects to pro- vide the reader with a better understanding of how these proj- ects often play out in “real time,” and to illustrate key takeaways and lessons learned from the process. This digest is intended to be specific to TOD/JD projects using FTA funds and/or FTA-funded assets. Many transit agen- cies embark on TOD/JD projects using sources of funds other than those granted by the FTA. Those projects fall outside of the scope of this digest. B. Research Approach 1. Methodology The research methodology undertaken to produce this digest began with a review of TCRP LRD 12 and TCRP LRD 36, and undertakes a comprehensive literature review of other articles, research papers and materials, including federal, state, and local laws, regulations, and guides that inform the TOD/JD process. Fifteen transit agencies were interviewed, and the takeaways from interviews with transit agencies that were FTA grantees and have or are contemplating pursuing TOD/JD projects about their experience and/or consideration were documented. Based on these interviews and additional research, case studies out- lining recent JD projects pursued by stakeholder agencies were conducted, and key takeaways/best practices documented. Finally, model provisions that grantees and developers may wish to include in future agreements were reviewed. The model provisions selected as those most relevant and applicable to a wide variety of transit agencies/authorities are included in the Appendix D. 2. Literature Summary As noted in TCRP LRD 36, in the late 1990s and early 2000s, several books made a link between TOD and sustainability and smart growth. Many provide an international focus on the importance of integrated land-use planning with high-quality mass transit systems. In the United States, this recognition came later. TOD is now recognized as a critical element in the plan- ning, development, and execution of transit projects. Recent legislation, including the Fixing America’s Surface Transporta- tion Act (FAST Act)4, was designed to streamline the approval processes for new transportation projects, focus more on safety, and establish new programs to advance critical freight projects. The FAST Act also allocated critical funding for public transit. 4 Pub. L. No. 114-94, 129 Stat. 1312 (2015).

4 TCRP LRD 56 TOD is primarily implemented in areas when regional or local governments utilize land use planning, zoning laws, changes to building codes, and other tools at their disposal to encourage its development. When a TOD coincides with a federally funded transit project, the FTA may provide financial assistance, technical assistance, training, and other resources to complement the regional or local TOD. Transit adjacent development. TCRP LRD 36 defines TAD as “development that is physically near transit, [but] it fails to capitalize upon its proximity . . . to promote transit riding. A TAD lacks any functional connectivity to transit—whether in terms of land-use composition, means of station access, or site design.”11 TADs tend to be “more suburban, with lower densities, a dominance of surface parking and auto-centric design, limited pedestrian and bicycle access, more single-family homes, and industrial and segregated land uses.”12 This is not a commonly used term; TOD tends to be the more common nomenclature for what might technically be considered a TAD.13 Transit joint development. TCRP LRD 36 discusses the concept of TJD as an implied “quid pro quo between the public sector (usually a transit agency) and a developer. . . four condi- tions are necessary for TJD: a healthy local real estate market, an entrepreneurial public agency, coordination across agen- cies, and the recognition that the benefits of TOD extend be- yond generating revenues.”14 “Joint development” is the more common usage of this term. The FTA’s website notes that “joint devel opment is a form of value capture, as a transit agency cap- tures some of the economic value created by its transit system and uses the funds to help finance expenses.”15 FTA C 7050.1B defines JD as “a public transportation project that integrally relates to, and often co-locates with commercial, residential, mixed-use, or other non-transit development. JD may include partnerships for public or private development asso ciated with any mode of transit system that is being im- proved through new construction, renovation, or extension. JD may also include intermodal facilities, intercity bus and rail facilities, transit malls, or historic transportation facilities.”16 The circular incorporates the statutory interpretation FTA made in its 2007 guidance on the eligibility of JD projects under federal transit law.17 Per the eligibility criteria set forth at 49 U.S.C. § 5302(3)(G), a new JD project must do the following to be eli- gible for FTA funding or use of FTA-assisted project property: 11 TCRP LRD 36 at 3, quoting TCRP RRD 52, p. 5. 12 Id. at 4. 13 See, e.g., FTA C 7050.1B. 14 TCRP LRD 36 at 4. 15 Federal Transit Administration Joint Development website, avail- able at, https://www.transit.dot.gov/JointDevelopment. 16 FTA C 7050.1B at I-3. 17 Notice of Final Agency Guidance on the Eligibility of Joint Devel- opment Improvement Under Federal Transit Law, 77 Fed. Reg. 5788 (Feb. 7, 2007). FTA Circular on Joint Development 7050.1B5 provides the most current guidance for FTA-assisted JD. This circular incorporates provisions of the FAST Act and advances the goals of 49 U.S.C. § 53156 by informing FTA recipients of opportunities for private sector participation in public transportation projects.70F In addition to efforts by the FTA to educate grantee agen- cies and developers about the potential for, and the process to undertake TOD/JD projects, many universities and a variety of non-governmental organizations have published guidelines and offered workshops, webinars, and other technical assis- tance in navigating the JD process. These include Smart Growth America, Living Cities, and multiple regional metropolitan planning organizations (MPOs) across the country. This digest also incorporates the findings and inputs from other TCRP ini- tiatives not previously mentioned that precede and parallel this digest, including TCRP RRD 52.8 a. Defining TOD, Transit Adjacent Development (TAD), Transit Joint Development (TJD), and JD Transit oriented development. FTA describes TOD as devel opment that “includes a mix of commercial, residen- tial, office and entertainment centered around or located near a transit station. Dense, walkable, mixed-use development near transit attracts people and adds to vibrant, connected communities.”9  Successful TOD depends on access and density around the transit station. Convenient access to transit can spur growth and development, while density allows for a popula- tion sizable enough to support a mass transit system. Focusing growth around transit stations capitalizes on public investments in transit and provides many benefits, including: • Increased ridership and associated revenue gains for transit systems; • Incorporation of public and private sector engagement and investment; • Revitalization of neighborhoods; • A larger supply of affordable housing; • Economic returns to surrounding landowners and businesses; • Congestion relief and associated environmental benefits; and • Improved safety for pedestrians and cyclists through non- motorized infrastructure.10 5 Federal Transit Administration Guide on Joint Development, August 25, 2014, Rev. 2, August 14, 2020. (FTA C 7050.1B). 6 49 U.S.C. § 5315, Private sector participation. (2020). 7 See also, Federal Transit Administration, Transit Oriented Devel- opment, https://www.transit.dot.gov/TOD, last updated April 11, 2019. 8 Robert Cervero, Christopher Ferrell, Steven Murphy, TCRP RRD 52: Transit-Oriented Development and Joint Development in the United States: A Literature Review, Transportation Research Board, National Academies of Sciences, Engineering, and Medicine, Washington, D.C., 2002 (hereinafter TCRP RRD 52). 9 Federal Transit Administration, Transit Oriented Development, https://www.transit.dot.gov/TOD, last updated April 11, 2019. 10 Id.

TCRP LRD 56 5 c) Please describe the process. Were there aspects that worked well? Not so well? Did you feel the process was straightforward? Confusing? d) Has your agency undertaken projects on FTA-assisted property through a process other than FTA Joint Development review (for example, by disposing of the land as surplus property)? If so, please describe. Question 25 sought to identify the extent of the FTA’s in- volvement in the agency’s current operating real estate portfolio. Twenty of the 30 U.S. agencies surveyed responded that most of their operating real estate has some kind of FTA interest. Eight of the remaining responding agencies responded that less than 75 percent of their real estate is FTA-assisted, including three of the largest and oldest subway systems, and three major com- muter rail systems. Question 26 of the survey asked about the agency’s experi- ence with FTA-assisted JD. In the cases where FTA jurisdiction applies only through the use of land previously acquired with FTA funds (which was by far the most common case in the agencies surveyed), the agency can negotiate with the FTA to process the land conveyance as an “FTA-assisted joint develop- ment project,” or as a traditional disposition of “excess” prop- erty. With an FTA/JD concurrence, the proceeds of the ground lease or sale are considered program income and can remain with the transit agency for use in the agencies transit program, with few restrictions. With a disposition of excess property, the FTA interest must be repaid from the proceeds of the real estate transaction. In many cases, the proceeds corresponding to the FTA interest are retained by the transit agency for use in a dif- ferent FTA-eligible capital project. Question 26 also asked the U.S. agencies responding to the survey which method they generally prefer to pursue, and why. Twelve agencies reported having used the FTA model for most or all of their FTA jurisdiction projects, and most spoke positively about their experience with the process and the FTA regional staff they interacted with. There were some concerns expressed about timeliness and delays. There was one comment about finding the process confusing. Four agencies reported having used both the FTA/JD and excess disposition methods for different projects, or having used the disposition method before, but being open to the FTA/JD method going forward. One of these agencies described a case- by-case approach to deciding jointly with FTA about which method made sense for a given project. Five agencies reported that they have generally used the disposition method and have avoided the FTA/JD process. In some cases, while their reasons may have been historic or incidental, at least three of these agen- cies stated a strong preference for avoiding the process due to their perception of it as cumbersome, time-consuming, and/or intrusive, largely due to the FTA’s requirements for justifying fair market value. c. Trends Favoring FTA-Assisted JD Agreements Although related in purpose, JD and TOD being con structed by a single (usually private or not-for-profit) entity differ in sev- eral ways. In the JD process, the transit agency is an active part- • Create an economic benefit by enhancing economic devel- opment or incorporating private investment; • Provide a public transportation benefit by either: (a) en- hancing the effectiveness of public transportation and relat ing physically or functionally to public transportation, or (b) establishing new or enhanced coordination between public transportation and other transportation; • Provide a fair share of the produced revenue for public transportation; and • Provide that a person occupying space at a facility con- structed with FTA funds must pay a fair share of the costs of the facility through rental payments or other means.18 b. Transit Agency Survey Methodology, Inputs and Results As part of the TCRP Research Report 224: Guide to Joint Development for Public Transportation Agencies19 study, three distinct, comprehensive surveys were conducted of different types organizations involved in JD: transit agencies, local gov- ernments, and private-sector entities. The transit agency survey was conducted in 2019 and involved 32 transit agencies (30 U.S. and 2 Canadian agencies), 18 local government jurisdictions, and 17 private-sector developers and investors. In the reporting of the information collected, individual respondents are never identified, and their agencies or corporations are identified by name only with respect to information that is already publicly available. The full results of the survey are detailed in the full study. However, for the purposes of this digest, only the infor- mation considered relevant to the TOD/JD process when using FTA funds and/or FTA-funded assets is summarized. The survey conducted as part of the study for the TCRP Re- search Report 224 had two questions for transit agencies relating to FTA involvement in the JD process (questions 25 and 26 of the survey): Question 25: Degree of FTA Involvement:  In general, if a transit agency proposes a Joint Development project on land that was ac- quired or improved with FTA assistance, or to use FTA funds to construct certain aspects of the Joint Development project, then the project requires FTA review and approval under the provisions of FTA’s current Joint Development Guide (Circular 7050 1A).20 a) Was most of your agency’s operating real estate (stations, park-and- ride lots, maintenance yards, etc.) acquired or improved with FTA assistance? Some of your real estate (which service modes or cor- ridors)? None of it? Question 26: Experience with FTA on Joint Development projects:  a) Has your agency interacted with FTA about one or more actual or proposed Joint Development projects? If yes, about how many? b) Did FTA approve the project(s)? 18 FTA C 7050.1B at II-3. 19 Allen S. Raine, James Gast, Robert Cervera, Dena Belzer, Todd J. Poole, TCRP Research Report 224: Guide to Joint Development for Public Transportation Agencies, Transit Cooperative Research Program, Trans- portation Research Board, National Academies of Science, Engineer- ing, and Medicine of Washington, D.C. 2021. 20 Note: The study for TCRP Research Report 224 (2021) was con- ducted prior to the issuance of the superseding FTA Circular 7050.1B.

6 TCRP LRD 56 • Site preparation; • Utilities, including utility relocation and construction; • Building foundations, including substructure improve- ments for buildings constructed over transit facilities; • Walkways, including bicycle lanes and pedestrian connec- tions and access links between public transportation ser- vices and related development; • Pedestrian and bicycle access to a public transportation facility; • Construction, renovation, and improvement of intercity bus and intercity rail stations and terminals; • Renovation and improvement of historic transportation facilities; • Open space, including site amenities and related streetscape improvements such as functional landscaping and streetscaping; • Safety and security equipment and facilities (including lighting, surveillance, and related intelligent transportation system applications); • Facilities that incorporate community services such as day- care and health care; • A capital project for, and improving, equipment or a facility for an intermodal transfer facility or transportation mall; • Construction of space for commercial uses; • 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, parking facilities, park-and-ride services, improvements to existing bus or rail transit termi- nals, stations, major transfer points, and shelters as well as other facilities directly related to the linking of public trans- portation facilities with other modes of transportation; • Transportation-related furniture, fixtures, and equipment (FFE) are eligible costs in all cases; • Parking improvements with a public transportation justi- fication and use, or with an intercity bus or intercity rail justification and use, in connection with JD; • Project development activities, including design, engineer- ing, 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; and • Professional services, including reasonable and necessary costs incurred to hire professionals to prepare or perform the activities described above, or to assist the project spon- sor in reviewing the same. This broad eligibility can result in dynamic, mixed-use spaces with retail or community services, all closely connected to existing or planned transit facilities, in addition to the rev- enue- and cost-sharing arrangements of benefit to transit agen- cies. If the construction of the JD is also assisted by FTA, other regulations apply, including: ner, contributing to and benefiting from the development of real estate around its system. In non-JD TOD, the transit agency may benefit indirectly, but is not necessarily a partner that contrib- utes to or shares in the direct proceeds from the devel opment. A private developer can undertake a TOD project on private land that is close to or adjacent to a transit system with minimal re- quired involvement from the transit operator. The use of federal funds is another key difference between non-JD TOD and JD projects. In general, FTA funds may not be used for private, non-J TOD construction, but FTA funds and other assistance can be used for TOD planning in conjunc- tion with transit projects. FTA offers these resources through the Pilot Program for TOD Planning,21 the TOD Technical Assistance Initiative,22 and the National Transit Institute’s TOD courses.23 Furthermore, The United States Department of Trans- portation (U. S. DOT) Build America Bureau offers oppor- tunities to finance construction of certain elements of TOD projects through the Transportation Infrastructure Finance and Innovation Act (TIFIA)24 and the Railroad Rehabilitation and Improvement Financing (RRIF) loan programs.25 FTA funds can be invested into JD in two ways. These funds can be directly spent on certain capital costs associated with JD. Some of these activities are included in the various definitions of capital project as defined at 49 U.S.C. § 5302(3). Activities not designated under 49 U.S.C. § 5302(3)(G) (joint develop- ment) must be associated with a project that has been identi- fied through the transportation planning process. In order to be eligible for FTA assistance, all capital projects, JD and non-JD related, must be identified through the transportation planning process. FTA C 7050.1B provides a list of common eligible capi- tal expenses.26 In general, property acquired with FTA funds can be: • Sold or leased to a developer to build residential, commer- cial, or mixed-use development, and • Used as collateral for debt financing of development activi- ties or used in other innovative financing arrangements. FTA capital funding can be used for:  • Property acquisition, and the relocation of residents and businesses; • Demolition of existing structures; 21 Federal Transit Administration, Pilot Program for Transit- Oriented Development Planning – Section 20005(b), https://www. transit.dot.gov/TODPilot. 22 Federal Transit Administration, Transit-Oriented Assistance, https://www.transit.dot.gov/TOD/technicalassistance. 23 See, e.g., Rutgers/National Transit Institute, Transit-Oriented Devel- opment, https://www.ntionline.com/transit-oriented-development. 24 23 U.S.C. §§ 601-610 (2020). 25 See, U.S. Department of Transportation, Railroad Rehabilitation and Improvement Financing (RRIF), https://www.transportation.gov/ buildamerica/financing/rrif/railroad-rehabilitation-improvement- financing-rrif. 26 See, FTA C 7050.1B at III-7 and III-8.

TCRP LRD 56 7 acceptance of Smart Growth principles.31  The title of a recent article in the Journal of Transport and Land Use asks, “Are Millennials Moving to More Urbanized and Transit-Oriented Counties?”32 The author, Devajyoti Deka, finds that “by living and traveling sustainably, millennials are planting the seeds of an urban renaissance,”33 and exhibit preferences for places with “…a greater share of urban population, higher dwelling den- sity, and a greater share of mass transit and walking trips.”34 Accord ing to the Pew Research Center, millennials are poised to surpass baby boomers as America’s largest generation, so their preferences will have a huge impact on the market for TOD in the coming years.35 In 2015, The Urban Land Institute (ULI) conducted a com- prehensive survey on Americans views on housing, transpor- tation, and community structure, entitled America in 2015: A ULI Survey of Views on Housing, Transportation, and Commu- nity, which found that a third of Americans believe that “having public transit is a high or top priority, with more low-income people sharing this view.”36 Because low-income households are less likely to have access to a vehicle, many of them depend on public transportation to get to and from work, school, and other daily/weekly destinations. As nationwide shortages of afford able housing in urban areas worsen, finding a way to integrate afford- able housing into transit-oriented development will become even more critical. The Federal Reserve Bank of Atlanta notes that “TODs are becoming a more common way to increase the stock of affordable housing.”37 The article goes on to state that, as the shortage of affordable housing worsens in the U.S., “federal and local transit agencies have taken a more comprehensive ap- proach in tying funding criteria to combined transportation and housing strategies.”38  ULI’s 2016 report, Active Transportation and Real Estate: The Next Frontier, notes that “transit-oriented development has be- come a common term in the lexicon of real estate and transpor- tation officials…this trend reflects the desire of people around the world to live in places where driving an automobile is just one of a number of safe, convenient, and affordable transpor- 31 Transit Oriented Development Institute (home page), http:// www.tod.org. 32 Devajyoti Deka, Are millennials moving to more urbanized and transit-oriented counties?, The Journal of Transportation and Land Use, vol. 11, no. 1 (2018), pp 443-461. 33 Id. at 443. (Abstract). 34 Id. at 444. 35 Richard Fry, Millennials Overtake Baby Boomers as America’s Largest Generation, Pew Research Center, Fact Tank, April 28, 2020, https://www.pewresearch.org/fact-tank/2020/04/28/millennials- overtake-baby-boomers-as-americas-largest-generation/. 36 Urban Land Institute, America in 2015: A ULI Survey of Views on Housing, Transportation, and Community, June 2015), p.4, https://uli. org/wp-content/uploads/ULI-Documents/America-in-2015.pdf. 37 Charles Davidson, The Affordable Housing Shortage: Can Transit- Oriented Development Play a Role?, Federal Reserve Bank of Atlanta, June 8, 2018, https://www.frbatlanta.org/economy-matters/regional- economics/2018/06/08/the-affordable-housing-shortage-can-transit- oriented-development-play-a-role. 38 Id. • 49 U.S.C. § 5323(j) and 49 CFR part 661 “Buy American” requirements - steel, iron, and manufactured goods used in the federally assisted project must be produced in the United States • A Planning and Environmental Analysis must be con- ducted in concurrence with all NEPA, FHWA, and FTA requirements, Section 106 of the National Historic Preser- vation Act. • 46 CFR part 381 Cargo Preference requirements • 49 CFR part 41 Seismic Safety requirements • Energy assessments, as prescribed by 23 CFR part 771 and 42 U.S.C. § 8373(b)(1) for any buildings constructed, recon- structed or modified with FTA assistance • 49 CFR part 20 Lobbying provisions and restrictions • All federal labor protection requirements applying to fed- eral projects • All federal civil rights requirements, including 49 U.S.C. § 5332 and U. S. DOT implementing regulations at 49 CFR part 21 (Effectuation of Title VI of the Civil Rights Act of 1964), 49 CFR part 26 (Participation by Disadvantaged Busi- ness Enterprises in U. S. DOT Financial Assistance Pro- grams) and 49 C.F.R. parts 27, 37, 38, and 39 (respectively, Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance, Transpor- tation Services for Individuals with Disabilities, Accessibility Specifications for Transportation Vehicles, and Transporta- tion for Individuals with Disabilities: Passenger Vessels) • Uniform Relocation – if the site to be improved is occupied by anyone other than the project sponsor, and the occupant is displaced, the transferee(s) or JD partner must comply with Executive Order 13406,27 the Uniform Relocation Assistance and Real Property Acquisition Policies for Fed- eral and Federally Assisted Programs,28 and the regulations at 49 CFR, part 24.29 FTA funding can also be used to acquire real property and assets as part of a JD endeavor. Given the legislative and regula- tory trends addressing the use of JD agreements, it appears that increasingly, additional flexibility is afforded developers and transit agencies wishing to utilize these agreements.30 d. Market Trends Favoring Joint TOD According to the Transit Oriented Development Institute, factors driving the increasing popularity of TOD include nation- wide struggles with traffic congestion in urban areas, a grow- ing desire for a more “walkable lifestyle, . . . changes in family structures” (the rise in single households, as well as the growing numbers of “empty nesters”), and increasing national support/ 27 Protecting the Property Rights of the American People, Exec. Order No. 13406, 71 Fed. Reg. 36,973 (June 28, 2006). 28 42 U.S.C. §§ 4601-4655 (2020). 29 For a more detailed discussion, see FTA C 7050.1B at V-5 thru V-7. 30 Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally-Assisted Programs, See also, Notice: Joint Development: Proposed Updated Circular, 84 Fed. Reg. 16,339 (April 18, 2019) (Summary).

8 TCRP LRD 56 tiple factors, including a steep increase in the number of office workers teleworking, the crowding inherent on highly utilized public transportation systems, and the sharp increases in un- employment resulting from the pandemic.46 The future of public transit, once the pandemic is under control, is uncertain. How- ever, if past trends are any indication, the demand for public transit will stabilize, and continue to increase into the future as cities continue to densify. e. TCRP LRD 36 The purpose of TCRP LRD 36 47 is to provide an update to TCRP LRD 12,48 and to provide case studies and present legal questions to guide transit agencies. TCRP LRD 36 traces the evolution and use of transit-oriented development and JD pro- grams, policies, and built projects, along with the academic and professional literature that was published since TCRP LRD 12 in January 1999. TCRP LRD 36 also contains the results of a comprehensive survey of adopted federal, state and regional statutory and regu- latory programs promoting or facilitating TOD and JD, a review of related case law, and a series of case studies that illustrated important legal issues that demonstrated how TOD extends be- yond laws, financial mechanisms, and public-private contracts. The major conclusion of TCRP LRD 36 was that, while the con- structs of TOD and JD instruments are important to their suc- cess, “a more basic foundation at the root of every successful project was the leadership from the public, nonprofit and pri- vate sectors.”49  f. TCRP LRD 12 (1999) TCRP LRD 12, like TCRP LRD 36, was designed to provide insight into the operating practices and legal elements of spe- cific problems in transportation agencies. More specifically, because the intermodal approach to surface transportation re- quires a partnership between transit and other transportation modes of transportation, partnership must be formed and made to work well. The author’s approach to this digest was to look at transpor- tation as the most vital “segment of a community’s infrastruc- ture” with extreme “influence on land use patterns” and form, and “rate of growth, . . . transportation mode use for work and nonwork interurban travel.”50 Since the mid-1950s and the en- 46 “COVID-19 Trends Impacting the Future of Transportation Planning and Research,” National Academies, TRB Blog, September 8, 2020), https://www.nationalacademies.org/trb/blog/covid-19-trends- impacting-the-future-of-transportation-planning-and-research. 47 John L. Renne, Keith Bartholomew, Patrick Wontor, TCRP LRD 36: Transit-Oriented and Joint Development: Case Studies and Legal Issues, Transportation Research Board, National Academies of Sciences, Engineering, and Medicine, Washington, D.C., 2011. 48 S. Mark White, TCRP LRD 12: The Zoning and Real Estate Impli- cations of Transit-Oriented Development, Transportation Research Board, National Academies of Sciences, Engineering, and Medicine, Washington, D.C., 1999. 49 TCRP LRD 36, p.3. 50 Id. at 3. tation options.”39 More recently, according to ULI’s Emerging Trends in Real Estate®:  United States and Canada, 2020, “where governments are addressing supply issues, they are also find- ing ways to benefit more directly by pursuing transit-oriented development. While transit agencies have traditionally empha- sized delivering infrastructure to the public without focusing on ways to subsidize the costs, they are now doing more to capture some of the new value created.”40 Particularly in an uncertain political climate, where the value of funding public transpor- tation is often called into question, having additional revenue streams to support mass transit is critical for many agencies. In the “Markets to Watch”41 section of the ULI 2020 Emerging Trends report, the Institute also makes note of opportunities for TOD in the Austin and Washington, D.C. metro areas. There is clearly a growing interest in TOD in large and medi- um-sized metro areas across the U.S. for a variety of reasons, al- though a shortage in housing supply and an increase in demand for walkable, mixed-use development appear to be the main drivers. The costs associated with acquiring land and build- ing large-scale developments are also increasing, however – according to ULI’s 2020 Emerging Trends report, construction, material, and land costs, along with approval processes, were rated as the “top development issues in 2020.”42  This makes the availability of FTA funding for JD projects even more critical. In their 2016 study “Developers’ Perspectives on Transit- Oriented Development” conducted by Andrew Guthrie and Yingling Fan,43 the authors conducted interviews with 24 resi- dential and commercial developers in the Twin Cities region of Minnesota. Based on these interviews, their recommenda- tions for promoting successful TOD partnerships with private sector developers include: “reforming zoning and development regulations, broadening the focus of TOD to include frequent bus routes,” and “providing greater certainty of future transit improvements.”44 They also make recommendations for pro- moting affordable housing development as part of the JTD process, including “pursuing affordable-by-design solutions and engaging with affordable housing specialists.”45 Making the JD process as straightforward and transparent as possible is critical to incentivizing private investment and stakeholder buy-in.  The 2020 coronavirus pandemic has seriously impacted the demand for public transportation in the short-term due to mul- 39 Urban Land Institute, Active Transportation and Real Estate: The Next Frontier, March 2016, p. 12, https://uli.org/wp-content/uploads/ ULI-Documents/Active-Transportation-and-Real-Estate-The-Next- Frontier.pdf. 40 Urban Land Institute, Emerging Trends in Real Estate®: United States and Canada 2020, (Urban Land Institute, August 2019), https:// ulidigitalmarketing.blob.core.windows.net/emergingtrendspdfs/ ET2020FallMeeting.pdf. 41 Id. at 23-47. 42 Id. at 81. 43 Andrew Guthrie and Yingling Fan, Developers’ Perspectives on Transit-Oriented Development, Transport Policy, Vol. 51, (October 2016), pp. 103-114. 44 Id. 45 Id.

TCRP LRD 56 9 associated with undertaking development in the transit corridor and to obtain financial benefits related to construction and operation of the transit system and other public facilities.56 Regardless of the form it takes, joint development is a pairing of pub- lic and private resources to achieve a project that will benefit both sectors. Joint development also includes a value capture connotation in which the public sector attempts to recoup some of the real estate– related monetary benefits that result from public investments. Reve- nues derived from joint development can be used by the public sector to (1) offset the original transit system real estate and  capital costs, (2) guarantee provision of desired public amenities, and (3) finance a  portion of the transit investment and/or help to pay for ongoing operating costs of the transit system. Joint development approaches typically include techniques that capitalize on real property assets that are acquired in the course of transit system development. Examples include those involving property taxes or assessments and excess land acquisition such as land and air rights leasing, negotiated private- sector investments in property and transit station capital costs, con- nection fees for direction tie-ins to transit stations, and concessions at transit stations. Some states include a proportionality requirement in joint development deals.”57 Although TCRP LRD 12 was written over 20 years ago, most of its points and observations are still relevant. JD regulation is still highly local in nature, and its ultimate goal is to allow private capital to be used to benefit both private and public in- terests, allowing public interests to capture value from private investment that might not otherwise be realized. g. Statutory/Regulatory Laws, Regulations, and Guidance At the federal level, chapter 53 of Title 49, U.S. Code is the primary statute that governs the regulations and guidance of the Federal Transit Administration. Regarding JD, 49 U.S.C. § 5302 (3)(G) provides the definition of eligible JD improvements as reflected in FTA C 7050.1B. This guidance addresses the use of revenue generated from a JD, and all aspects of funding, asset management, and other considerations that transit agencies and their current and potential stakeholders need to consider in pursuing JD opportunities.  3. FTA Guidance Circulars on JD Beginning with FTA C 7050.1, issued August 25, 2014, FTA has provided guidance on JD for transit agencies undertaking JD projects that involve FTA assistance, and/or that are being developed on FTA-assisted real property, with the intent of im- proving coordination between the public and private sector, and between public and other forms of transportation for JD. The circulars: • Define the term “joint development;” • Explain how a JD project can qualify for FTA assistance; • Describe the legal requirements applicable to the acquisi- tion, use, and disposition of real property acquired with FTA assistance; 56 Id. at 9. 57 Id. at 10. actment of the Federal-Aid Highway Act of 1956,51 automobiles have increasingly become the preferred modal choice, having a detrimental impact on public transportation, and creating multiple other social, environmental and economic concerns. In turn, these impacts have prompted changes in federal leg- islation designed to encourage shifts in urban travel from the automobile to public transit52 These legislative changes have, in turn, prompted calls for “a return to mixed-use villages and centers that promote pedestrian and transit travel; the so-called ‘new urbanists’, now referred to as “transit-oriented develop- ment (TOD).”53 The author noted that, “TOD is designed to increase pedes- trian utilization of streets, sidewalks, and other transportation facilities. TODs, as a form of neotraditional development, are not just an attempt to encourage greater utilization of public transit. TODs also reflect a new approach to suburban devel- opment that encourages a greater variety of uses and archi- tectural design than the monotonous, single-use suburban subdivision.”54 Furthermore, [T]raditional land use controls have proven inadequate to relieve the long-term and regional congestion of automobile traffic. Although large-lot zoning reduces traffic on local streets, it produces a land use pattern that is difficult to serve with public transit. Free parking en- courages automobile travel. Single-use zoning creates a spatial imbal- ance between jobs and housing that tends to discourage pedestrian activity. Accordingly, many communities have turned to more inno- vative land use controls to combat congestion…while TOD regula- tions guide development within a transit station area or corridor, communities may use ancillary regulations to guide growth in these areas and to create procedures for implementing transit-supportive land use policies. Transfers of development rights (TDRs), clustering, concurrency, and urban growth boundaries (UGBs) may be used to shape regional land use patterns by directing growth into compact urban centers and nodes. Ancillary procedures are also needed to provide a vehicle for development approval and to ensure that pub- lic land private-sector obligations are fulfilled. Specific plans provide the link between the community’s comprehensive land use plan and implementing regulations. Development agreements protect private development rights while providing contractually for the enforce- ment of transit regulations. Joint development and capital improve- ments programs (CIPs) provide a structural framework for financing and constructing the infrastructure needed.55 As of 1999, most of the regulations and ordinances govern- ing these activities and programs were local in nature, including JD agreements: While jurisdiction for regulating development in areas subject to a TOD typically resides with the local government, the transit agency may use joint development to alleviate the actual or perceived risks 51 Pub. L. 84-627, 70 Stat. 374 (1956). 52 See e.g., Intermodal Surface Transportation Efficiency Act of 1991, Pub. L. No. 102-240, 105 Stat. 1914; Clean Air Amendments of 1989, Pub. L. 101-549, 104 Stat. 2399 (1990). 53 TCRP LRD 12, p.4. (citation omitted). 54 Id. at 4. 55 Id. at 5.

10 TCRP LRD 56 creasing “flexibility for project sponsors to pursue joint devel- opment projects, reduce FTA oversight of joint development agreements negotiated between project sponsors and their part- ners, streamline FTA’S project eligibility review process,”60 and clarifies multiple items that users found somewhat confusing in the previous circular. The updated circular includes: FTA C 7050.1B consolidates all of the existing FTA guidance on JD, and supersedes any FTA guidance on JD contained in other sources, including:  • Notice on Final Agency Guidance on the Eligibility of Joint Development Improvements Under Federal Transit Law (72 FR 5788, Feb. 7, 2007); • Policy on Transit Joint Development (62 FR 12266, Mar. 14, 1997); • FTA C 5010.1D, Grant Management Requirements; • FTA C 4220.1F, Third-Party Contracting Guidance; • FTA C 9030.1E, Urbanized Area Formula Program: Pro- gram Guidance and Application Instructions; • FTA C 8100.1D, Program Guidance for Metropolitan Plan- ning and State Planning and Research Grant Programs; • FTA C 9300.1B, Capital Investment Program Guidance and Application Instructions;  • FTA C 9040.1G, Non-Urbanized Area Formula Program Guidance and Grant Application Instructions; and • FTA C 7050.1B changes to FTA C 7050.1A include an ad- justment to the provisions in the previously published cir- culars concerning “fair share of revenue”, “submission and review process, and “technical and conforming changes.”61 4. Planning for TOD and JD Chapter III of FTA C 7050.1B addresses FTA assistance for planning and capital projects. Under 49 U.S.C. § 5305, FTA makes available support for planning activities that support JD. The specifics of this program are outlined in FTA C 8100.1D, Program Guidance for Metropolitan Planning and State Plan- ning and Research Program Grants (Sept. 10, 2018). In general, these planning grants are available to assist states, transportation authorities of the states, metropolitan planning organizations, local government authorities, and transit agen- cies with preparing transportation plans and programs, plan- ning, engineering, designing, and evaluating a public transpor- tation project and conducting technical studies related to public transportation in addition to other statutorily eligible activities. JD planning activities may also be eligible for assistance from other federal agencies including the U.S. Department of Hous- ing and Urban Development (HUD), the U.S. Environmental Protection Agency (EPA), the U.S. Department of Commerce, the U.S. Department of Agriculture, and the U.S. Department of Health and Human Services.  60 FTA Notice of Issuance of Final Circular: Guidance on Joint Development, 85 Fed. Reg. 49715 (Aug. 14, 2020). 61 See, FTA Notice of Issuance of Final Circular: Guidance on Joint Development, 85 Fed. Reg. 49715-17 (Aug. 14, 2020). • Outline the most common crosscutting requirements ap- plicable to FTA- assisted projects, including FTA-assisted JD; and • Describe FTA’s process for reviewing a JD project proposal. The circulars include: • An explanation of the JD policy updated to apply to current conditions; • An explanation of exactly how JD projects qualify for FTA assistance; • A discussion of the legal requirements applicable to the acquisition, use, and disposition of real property acquired with FTA assistance; • An outline of the most common crosscutting requirements applicable to FTA-assisted JD projects; • A more detailed description of FTA’s process for reviewing JD project requests; • A clear list of criteria that the FTA uses to determine which JD projects are eligible for FTA funding or use of FTA- assisted property. These include: o Enhance economic development or incorporate private investment; o Enhance the effectiveness of public transportation and be related physically or functionally to public transpor- tation, or establish new or enhanced coordination be- tween public transportation and other transportation; o Provide a fair share of revenue that will be used for pub- lic transportation; and o Provide that a person occupying space in a facility con- structed with FTA funds must pay a fair share of the costs of the facility through rental payments or other means. a. FTA C 7050.1 (2014) FTA C 7050.1 (2014) issued August 25, 2014, incorporated provisions of the Moving Ahead for Progress in the 21st Cen- tury Act (MAP-21),58  advanced the goals of 49 U.S.C. 5315 by informing FTA recipients of opportunities for private sector participation in public transportation projects, and included the most current guidance for the federal public transportation program. b. FTA C 7050.1A (2016) FTA C 7050.1A, issued December 29, 2016, incorporated relevant provisions of the Fixing America’s Surface Transporta- tion (FAST) Act59, while carrying forward the goals of the pre- ceding circular. c. FTA C 7050.1B (2020) FTA C 7050.1B, issued August 14, 2020, carries forward the goals of the preceding circulars with the specific purpose of in- 58 Pub. L. 112-141, 126 Stat. 405 90 (2012). 59 Pub. L. 114-94, 129 Stat. 1312 (2015), See Joint Development Updated Circular, 81 Fed. Reg. 96199 (Dec. 29, 2016).

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In the United States, transit oriented development (TOD) is now recognized as a critical element in the planning, development, and execution of transit projects. Recent legislation has been designed to streamline the approval processes for new transportation projects, focus more on safety, and establish new programs to advance critical freight projects.

The TRB Transit Cooperative Research Program's TCRP Legal Research Digest 56: Joint Development Agreements Using FTA Funds or FTA-Funded Assets aims to clarify the Federal Transit Administration (FTA) assisted joint development process and attempts to separate public perceptions (and misperceptions) about TOD from reality. It is an update to TCRP Legal Research Digest 12:The Zoning and Real Estate Implications of Transit-Oriented Development.

Appendix C incudes sample model agreement forms, developed from Washington Area Transit Authority’s Office of Real Estate and Station Planning Templates.

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