E6-4441. Supplemental Request for Comments on Issues Relating to “Joint Development” of Intercity Bus and Intercity Rail Stations and Terminals and Extension of Comment Period

AGENCY:

Federal Transit Administration (FTA), DOT.

ACTION:

Solicitation of comment; Extension of comment period.

SUMMARY:

The Safe, Accountable, Flexible, Efficient Transportation Equity Act of 2005: A Legacy for Users (SAFETEA-LU) enacted certain amendments to the definition of the term “capital project” as used in 49 U.S.C. 5301 et seq. (Federal Transit Law) relating to “joint development” activities by recipients of Federal funds under Federal Transit Law. In order to assist the Federal Transit Administration (FTA) in developing a proposed guidance document concerning the implementation of such amendments, FTA published a proposed guidance document on January 31, 2006 (71 FR 5107). Since publication of that document, FTA identified several other issues on which we would like to receive public input, and, thus, we are extending the comment period for an additional thirty days. Also, please be advised that the previously published guidance on joint development will not operate as interim or final guidance for FTA unless and until otherwise stated by FTA, in writing.

DATES:

Comments should be received on or before April 27, 2006. Late filed comments will be considered to the extent practicable.

ADDRESSES:

You may submit comments [identified by DOT DMS Docket Number FTA-2006-23511] by any of the following methods:

Web Site: http://dms.dot.gov. Follow the instructions for submitting comments on the DOT electronic docket site.

Fax: [phone].

Mail: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, PL-401, Washington, DC 20590-0001.

Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, D.C., between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

Instructions: You must include the agency name (Federal Transit Administration) and the docket number (FTA-2006-23511). You should submit two copies of your comments if you submit them by mail. If you wish to receive confirmation that FTA received your comments, you must include a self-addressed stamped postcard. Note that all comments received will be posted without change to the Department's Docket Management System (DMS) Web site located at http://dms.dot.gov. This means that if your comment includes any personal identifying information, such information will be made available to users of DMS.

FOR FURTHER INFORMATION CONTACT:

For program questions, please contact Robert Tuccillo at [phone]. For legal questions, please contact Jayme Blakesley at [phone]. The principal office of FTA is located at 400 Seventh Street, SW., Washington, DC 20590-0001. Office hours are from 8:30 a.m. to 5 p.m., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

Federal Transit Law has included joint development authority since the Federal Public Transportation Act of 1978. In the Transportation Equity Act for the 21st Century, the joint development authority was incorporated into the definition of a public transportation “capital project” at 49 U.S.C. 5302(a)(1)(G). This made joint development activities eligible for reimbursement under formula and discretionary public transportation grant programs.

New Authority

SAFETEA-LU adds intercity bus and rail stations and terminals to the joint development authority and exempts such facilities from the prohibition on funding the construction of commercial, revenue-producing facilities.

As amended by SAFETEA-LU, the definition of “capital project” provides, in pertinent part, as follows:

(1) Capital project.—The term “capital project” means a project for—

(G) a public transportation improvement that enhances economic development or incorporates private investment, including commercial and residential development, pedestrian and bicycle access to a public transportation facility, construction, renovation, and improvement of intercity bus and intercity rail stations and terminals and the renovation and improvement of historic transportation facilities, because the improvement enhances the effectiveness of a public transportation project and is related physically or functionally to that public transportation project, or establishes new or enhanced coordination between public transportation and other transportation, and provides a fair share of revenue for public transportation that will be used for public transportation—

(i) including property acquisition, demolition of existing structures, site preparation, utilities, building foundations, walkways, open space, safety and security equipment and facilities (including lighting, surveillance and related intelligent transportation system applications), facilities that incorporate community services such as daycare or health care, and a capital project for, and improving, equipment or a facility for an intermodal transfer facility or transportation mall, except that a person making an agreement to occupy space in a facility under this subparagraph shall pay a reasonable share of the costs of the facility through rental payments and other means; and

(ii) excluding construction of a commercial revenue-producing facility (other than an intercity bus station or terminal) or a part of a public facility not related to public transportation . * * * [emphasis added]

FTA proposes to implement the joint development authority by providing guidance in Appendix A to Circular 9300.1A (Capital Program: Grant Application Instructions) and in Appendix B to Circulars 5010.1C and 9030.1C (Grants Management Guidelines and Urbanized Area Formula Program: Grant Application Instructions). In addition to the proposed guidance document published on January 31, 2005, and before issuing the appendices for public comment in accordance with 49 U.S.C. 5334(l), FTA is soliciting additional comment on the issues identified below and we invite those reviewing this document to bring to our attention issues we might not have identified, due to state law or local share issues that may affect how this new authority can be implemented.

1. Interpretation of “Capital Project”

FTA proposes to interpret the definition and operation of the term “capital project” set forth at 49 U.S.C. 5302(a)(1)(G) with respect to “construction, renovation and improvement of intercity bus and intercity rail stations and terminals” as follows: To be eligible for funding pursuant to a program established by Federal Transit Law, the “construction, renovation and improvement of intercity bus and intercity rail stations and terminals” must be “a public transportation improvement” that (A) “enhances economic development or incorporates private investment” and (B) that either (i) “enhances the effectiveness of a public transportation project and relates physically or functionally to that public transportation project” or (ii) “establishes new or enhanced coordination between public transportation and other transportation.” FTA requests comment on the above interpretation of 49 U.S.C. 5302(a)(1)(G).

2. “Enhances Economic Development or Incorporates Private Development”

As noted above, it is a threshold requirement for Federal funding of “construction, renovation and improvement of intercity bus and intercity rail stations and terminals” that such construction, renovation and improvement enhance economic development or incorporate private investment. FTA invites recommendations of criteria by which FTA may determine whether the construction, renovation and improvement of an intercity bus or intercity rail station or terminal enhance economic development or incorporate private investment.

3. “Enhances the Effectiveness of Public Transportation Project”

The construction, renovation and improvement of intercity bus and intercity rail stations and terminals may receive Federal funding if, among other things, such construction, renovation and improvement “enhances the effectiveness of a public transportation project.” FTA invites recommendations of criteria by which FTA may determine whether the construction, renovation and improvement of an intercity bus or intercity rail station or terminal “enhances the effectiveness of a public transportation project.”

4. The Meaning of “Related Physically or Functionally”

The construction, renovation and improvement of intercity bus and intercity rail stations and terminals may receive Federal funding if, among other things, such construction, renovation and improvement are “related physically or functionally” to a public transportation project. Based on the implementation of this authority over the last twenty years, FTA has construed “related physically or functionally” to require, as a threshold matter, that such construction, renovation and improvement be located on land used for a transit purpose. Within this framework, FTA has previously preferred projects where the joint development was fully integrated into the overall structural envelope of the public transportation project, thus ensuring a physical relationship.

However, the addition of intercity bus and train stations to the definition of a public transportation capital project raises some questions regarding functional relationship. The disjunctive requirement of physical “or” functional relation suggests that such a facility could be built separately from—but in functional relation to—a public transportation facility and located on land not used for a transit purpose, so long as such facility bore a functional relation to public transportation. FTA invites recommendations of criteria by which FTA may determine whether the construction, renovation and improvement of an intercity bus and intercity rail station or terminal relate “functionally” to a public transportation project. In particular, FTA solicits examples of joint development projects that are functionally related to a public transportation facility without being physically related (that is, without being contiguous or structurally integrated). In addition, FTA invites responses to the following related questions:

• Should FTA consider any other indicators of functional relationship, such as facility design, presence or function of pedestrian improvements?
• May the functional relationship extend across an intervening street, major thoroughfare or unrelated property? For example, is a public transportation facility on one side of the street still functionally related to an intercity bus station on the opposite side of the street?
• What is sufficient to establish a functional relationship that does not involve physical proximity to and/or physical connection to a public transportation facility? Please provide examples that illustrate such a relationship.
• If FTA determines that a free-standing facility is functionally related to a public transportation facility or system, how should it determine the amount of parking that is an eligible cost?

5. Meaning of “New or Enhanced Coordination between Public Transportation and Other Transportation”

A joint development project may be eligible for Federal funding if, among other things, it establishes “new or enhanced coordination between public transportation and other transportation.” FTA invites recommendations of criteria by which FTA may determine whether the construction, renovation and improvement of an intercity bus or intercity rail station or terminal establishes “new or enhanced coordination between public transportation and other transportation.” In addition, FTA invites responses to the following related questions:

• Is there a minimum or basic standard to estimate “new or enhanced coordination”? That is, by what metric should the new or enhanced coordination be assessed—increased trips, increases in certain kinds of trips, revenue generated or revenue shared?
• What level of public transportation service should there be with which the joint development project might establish “new or enhanced coordination”? Is an hourly scheduled service bus stop sufficient, or does it require at least a main line route or terminal?
• FTA seeks practical, recent examples of new or enhanced coordination between public transportation and other transportation, particularly where multiple modes are involved, such as public transportation with intercity rail and/or bus, or airports, or taxi.

6. Requirements Regarding “Satisfactory Continuing Control”

The law provides significant flexibility to public transportation grantees to encumber their federally supported assets for public transportation purposes, with prior FTA approval. Sections 5307(d)(1)(B) and 5309(c)(1)(B) of Title 49 require that the grantee has or will have (or certify that it has or will have) “satisfactory continuing control over the use of the equipment [and/or] facilities. * * *” FTA has allowed public transportation grantees to transfer the title to their federally-funded rolling stock to facilitate lease financing or to transfer real property to a third party to facilitate a joint development, again, with prior FTA approval. In addition, FTA invites responses to the following related questions:

• In the case of an intercity bus or rail terminal, how should the grantee demonstrate satisfactory continuing control?
• If FTA allows a free-standing intercity bus terminal to be built with FTA funds, should FTA record its interest in the real estate as allowed for in the Master Agreement? Should the grantee? If no interest is recorded, how and who will be responsible for monitoring future encumbrances of the asset as required by the common grant rule?
• Once an intercity bus or rail terminal is constructed with FTA funds, should the grantee or the intercity bus or rail operator control the quality of maintenance, the hours of facility operations, or the manner of functional relationship to public transportation?

7. Requirements Regarding Maintenance

Section 5309(c)(1) of Title 49 provides that “[t]he Secretary may not approve a grant for a project under [49 U.S.C. 5309] unless the Secretary determines that * * * the applicant has, or will have the capability and willingness to maintain the equipment or facilities.” Similarly, 49 U.S.C. 5307(d) provides that “[a] recipient may receive a grant in a fiscal year only if * * * the recipient, within the time the Secretary prescribes, submits a final program of projects prepared under subsection (c) of [49 U.S.C. 5307] and a certification for that fiscal year that the recipient * * * will maintain equipment and facilities. * * *” FTA invites recommendations of criteria by which FTA may determine whether a recipient has the capability and willingness to maintain (or that the recipient will maintain) the construction, renovation and improvement of an intercity bus and intercity rail stations and terminals funded pursuant to 49 U.S.C. 5309(c)(1) or 49 U.S.C. 5307(d). FTA also invites comment on to what degree, if any, FTA should investigate the quality of certification by a recipient that it “will maintain equipment and facilities” pursuant to 49 U.S.C. 5307(d)(1)(C), given that in most cases the recipient will be a public body such as a transit authority. In addition, FTA invites responses to the following related questions:

• Once an intercity bus or rail terminal or station is constructed with FTA funds, what should be the permissible use of program income generated by the intercity bus or rail terminal or station? Should FTA allow program income to be used for debt service, return on investment of any private person financing the facility, or operation and maintenance costs, with excess revenues used for purposes allowable under Federal Transit Law?
• Should FTA ensure that there is an enforceable maintenance agreement between the transit authority and private company as a pre-requisite to grant approval?
• Do transit authorities have funding and legal authority to assume the maintenance responsibility for private facilities?

8. Rules Concerning Cessation of Use of a Federally-Funded Intercity Bus or Rail Terminal or Station for Purposes Allowable Under Federal Transit Law

The construction of an intercity bus or rail terminal with Federal grant funds establishes a “Federal Interest” in the resulting project, such that the project is governed by the real estate disposition requirements of the common grant rule at 49 CFR 18.31 and Circular 5010.1C, as well as by disposition rules at 49 U.S.C. 5334(h) and the common grant rule set forth at 49 CFR 18.32. (See also Section 19 of the Master Agreement.) If the property ceases to be used for a public transportation purpose, including an intercity bus or rail purpose, then the property may be disposed of as “excess property.” In such instance, the grantee or sub-grantee must request disposition instructions from the granting agency. These instructions may include requiring a pro-rata return of disposition proceeds to the U.S. Treasury, or the grantee may be allowed to apply the proceeds to reduce the net capital cost of a future public transportation project. The property may also be transferred to another public use with prior FTA approval, without having to return the Federal investment. In addition, FTA invites responses to the following related questions:

• How should this provision be implemented for intercity bus or rail terminal projects undertaken on land not owned by the public transportation agency?
• On what basis might non-transportation joint development activities be considered in this context, particularly with regard to the generation of program income and joint development transfer of real property? FTA seeks practical examples of intercity bus or rail terminal reuse, after cessation of intercity service.

9. Eligibility of Furniture, Fixtures and Equipment as a “Capital Project”

Generally, FTA has funded transportation-related furniture, fixture, and equipment (FFE) as eligible costs for public transportation projects. FFE related to community services and private, profit-making activities has never been considered eligible, even in the context of joint development. For example, when FTA provided funding for the Linden Center day care in central Ohio, this did not extend to lighting fixtures, tables, chairs, blackboards, or other items required for the day care, even though many of these items were permanently affixed or built into the facility. These items were paid for by the tenant. FTA is considering applying this same standard to intercity bus and rail terminals that are qualified as public transportation capital projects. Because, to date, these items are not considered eligible for Federal funding, they have also not been previously allowed as local match for Federal grant dollars. In addition, FTA invites responses to the following related question:

• How should FTA treat FFE related to lunch counters, vending kiosks, and miscellaneous retail activities, such as those found in many intercity bus and rail terminals?

Issued on the 22nd day of March, 2006.

Sandra K. Bushue,

Deputy Administrator.