[Federal Register Volume 71, Number 176 (Tuesday, September 12, 2006)]
[Notices]
[Pages 53745-53752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-15022]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No: FTA-2006-23511]


Notice of Proposed Agency Guidance and Request for Comments on 
the Eligibility of Joint Development Improvements Under Federal Transit 
Law

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of proposed guidance with request for comment.

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SUMMARY: The Federal Transit Administration (FTA) seeks public comment 
on the following proposed guidance on joint development capital 
projects funded by the Federal Transit Administration. 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. 
5302(a)(1)(G) relating to ``joint development'' activities by 
recipients of Federal funds under 49 U.S.C. 5301 et seq. (Federal 
Transit Law). The Federal Transit Administration (FTA) proposes to 
adopt the following guidance in accordance with the procedures for 
notice and an opportunity for the public to comment set forth at 49 
U.S.C. 5334(l) and FTA's Notice of Final Policy Statement for 
Implementation of Notice and Comment Procedures for Documents Imposing 
``Binding Obligations,'' as published in the Federal Register on June 
5, 2006. The following proposed guidance seeks to ensure maximum 
benefit to the people who ride public transportation, to FTA grantees 
that choose to sponsor joint development improvements (the project 
sponsor), and to their joint development partners by (i) Affording FTA 
grantees maximum flexibility within the law to work with the private 
sector and others for purposes of joint development, (ii) generally 
deferring to the decisions of the project sponsor, negotiating and 
contracting at arm's length with third parties, to utilize Federal 
Transit funds and program income for joint development purposes, and 
(iii) promoting transit-oriented

[[Page 53746]]

development, subject to the broad parameters set forth herein.

DATES: Comments must be received by October 12, 2006. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: To ensure your comments are not entered more than once into 
the DOT Docket, please identify your submissions by the following 
docket number: FTA-2006-23511. Please make your submissions by only one 
of the following means:
     Web site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site.
     Web Site: http://dms.dot.gov. Follow the online 
instructions for making submissions to the DOT electronic docket site.
     Fax: 1-202-493-2478.
     U.S. Post or Express Mail: Docket Management System, U.S. 
Department of Transportation, 400 Seventh Street, SW., Nassif Building, 
Room PL-401, Washington, DC 20590-001.
     Hand Delivery: To the Docket Management System; Room PL-
401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., 
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal Holidays.
    Instructions: All submissions must make reference to the ``Federal 
Transit Administration'' and include the docket number for this notice 
set forth above. Due to security procedures in effect since October 
2001 regarding mail deliveries, mail received through the U.S. Postal 
Service may be subject to delays. Parties making submissions responsive 
to this notice should consider using an express mail firm to ensure the 
prompt filing of any submissions not filed electronically or by hand. 
Note that all submissions received, including any personal information 
therein, will be posted without change or alteration to http://dms.dot.gov.
    Docket: For access to the DOT docket to read materials relating to 
this notice, please go to http://dms.dot.gov at any time or to the 
Docket Management System.

FOR FURTHER INFORMATION CONTACT: For program questions, please contact 
Robert Tuccillo at (202) 366-4050. For legal questions, please contact 
Jayme Blakesley at (202) 366-0304. 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 6 p.m., Monday through Friday, except 
Federal holidays.

SUPPLEMENTARY INFORMATION:

Statement of Policy

    Through this guidance, FTA interprets the definition and operation 
of the term ``capital project'' as defined at 49 U.S.C. 5302(a)(1)(G), 
and as amended by Section 3003(a) of the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (``SAFETEA-
LU''). This amendment permits FTA to issue public transportation grants 
``for the construction, renovation, and improvement of intercity bus 
and intercity rail stations and terminals,'' including the 
construction, renovation, and improvement of commercial revenue-
producing intercity bus stations or terminals. In doing so, it modifies 
the underlying policy of joint development improvements, and therefore 
enhances the ability of FTA grantees to work with the private sector 
and others for purposes of joint development. To ensure maximum benefit 
to the people who ride public transportation, to FTA grantees that 
choose to sponsor joint development improvements (the ``project 
sponsor''), and to their joint development partners, the following 
guidance (i) seeks to afford FTA grantees maximum flexibility within 
the law to work with the private sector and others for purposes of 
joint development, (ii) generally will defer to the decisions of the 
project sponsor, negotiating and contracting at arm's length with third 
parties, to utilize Federal transit funds and program income for joint 
development purposes, and (iii) aims to promote transit-oriented 
development, subject to the broad parameters set forth herein.

Proposed Guidance Text

I. Eligibility Criteria

a. Definition of ``Capital Project''
    Federal Transit Law defines a ``capital project'' for joint 
development as follows:

    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.

49 U.S.C. 5302(a)(1)(G).
    This definition establishes the following criteria for determining 
whether a joint development improvement is eligible for funding 
pursuant to a program established under 49 U.S.C. 5301 et seq. (the 
``Federal Transit Law''): The public transportation improvement must 
(i) Enhance economic development or incorporate private investment; 
(ii)(a) Enhance the effectiveness of a public transportation project 
and relates physically or functionally to that public transportation 
project, or (b) establish new or enhanced coordination between public 
transportation and other transportation; and (iii) provide a fair share 
of revenue for public transportation that will be used for public 
transportation. In addition, 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. 49 U.S.C. 5302(a)(1)(G)(i).
    Joint development improvements will be eligible for FTA funding 
only if they satisfy the criteria set forth above, and do not fall 
within the exclusion detailed at 49 U.S.C. 5302(a)(1)(G)(ii), which 
excludes the 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.
b. ``Enhances Economic Development or Incorporates Private Investment''
    As noted above, it is a threshold requirement for Federal funding 
of a public transportation improvement as joint development that such 
improvement either (i) Enhance economic development or (ii) incorporate 
private investment.\1\
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    \1\ In accordance with the statute's use of the disjunctive 
``or,'' rather than the conjunctive ``and,'' FTA shall determine 
that a transportation improvement satisfies the threshold 
requirement for funding as joint development if the transportation 
improvement either (i) Enhances economic development or (ii) 
incorporates private investment (the disjunctive), and shall not 
require that the transportation improvement satisfy each of (i) and 
(ii) (the conjunctive).
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i. ``Enhances Economic Development''
    This criterion requires that a joint development improvement 
enhance economic development. A grantee may satisfy this criterion by 
demonstrating that the joint development improvement will add value to 
privately-or publicly-funded economic development activity occurring in 
close proximity to a public transportation facility.

[[Page 53747]]

ii. ``Incorporates Private Investment''
    Any joint development improvement that incorporates private 
investment will satisfy this criterion. Private investment need not be 
monetary; it may take the form of cash, real property, or other benefit 
to be generated initially or over the life of the joint development 
improvements. FTA will not set a monetary threshold. The amount and 
form of private investment shall be negotiated by the parties to the 
joint development improvement.
c. ``Enhances the Effectiveness of a Public Transportation Project''
    Any reasonable forecast of joint development impacts that enhance 
the effectiveness of a public transportation project will satisfy this 
criterion. These impacts may include, but are not limited to, any of 
the following: increased ridership, shortened travel times, and 
lessened or deferred transit operating or capital costs.
d. ``Related Physically or Functionally''
    The disjunctive requirement of physical ``or'' functional 
relationship provides that a joint development improvement may be built 
separately from, but in functional relationship to, a public 
transportation project. Therefore, a joint development improvement 
satisfies this element if it is related physically or functionally to a 
public transportation project.
i. ``Physically Related''
    A joint development improvement is ``physically related'' to a 
public transportation project if it provides a direct physical 
connection to public transportation services or facilities. 
Illustrative, but not exhaustive, examples of physical relationships 
include (i) projects built within or adjacent to public transportation 
facilities and (ii) projects using air rights over public 
transportation facilities.
ii. ``Functionally Related''
    A joint development improvement is ``functionally related'' to a 
public transportation project if by activity and use, with or without a 
direct physical connection, it (i) enhances the use of, connectivity 
with or access to public transportation; or (ii) provides a 
transportation-related service (such as, but not limited to, remote 
baggage handling or shared ticketing) or community services (such as 
daycare or health care) to the public. Considerations include a 
reduction in travel time between the joint development project and the 
public transportation facility, reasonable access between the joint 
development project and the public transportation facility, and 
increased trip generation rates resulting from the relationship between 
the joint development project and the public transportation facility.
    While the functional relationship test of activity and use permits 
the use of FTA funds for joint development improvements located outside 
the structural envelope of a public transportation project, and may 
extend across an intervening street, major thoroughfare or unrelated 
property, functional relationships should not extend beyond the 
distance most people can be expected to safely and conveniently walk to 
use the transit service (in certain cases, for example, within a radius 
of 1,500 feet around the center of the public transportation project).
e. ``Establishes New or Enhanced Coordination Between Public 
Transportation and Other Transportation'' \2\
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    \2\ Subsection (e), ``New or Enhanced Coordination,'' explains 
the second method for complying with a disjunctive requirement. As 
explained in section (I)(d) of this document, a joint development 
improvement may satisfy this requirement by (i) Relating physically 
or functionally to a public transportation project or (ii) 
establishing new or enhanced coordination between public 
transportation and other transportation.
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    Any reasonable forecast of joint development impacts that establish 
new or enhanced coordination between public transportation and other 
transportation will satisfy this criterion. FTA will accept any 
reasonably supported judgment of new or enhanced coordination from the 
project sponsor.
i. ``New or Enhanced Coordination''
    To establish new or enhanced coordination, a joint development 
improvement must create or enhance the physical or functional 
connections between public transportation and other transportation.\3\
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    \3\ This requirement is similar to, but not the same as, the 
requirement of physical or functional relationship described at 
subsection (d)(i) and (ii). The two are distinct, disjunctive 
requirements, but they share common criteria. A project could 
satisfy both requirements, but need only satisfy one to qualify for 
funding as a joint development improvement. Visualized as such, the 
disjunctive requirement would appear as a Venn diagram--separate 
requirements with overlapping criteria.
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    Examples of physical connections that establish new or enhanced 
coordination include, but are not limited to, proximate or shared 
ticket counters, termini, park-and-ride lots, taxicab bays, passenger 
drop-off points, waiting areas, bicycle paths and sidewalks connecting 
public transportation to non-transportation facilities. Projects that 
shorten the distance between public transportation termini and other 
transportation shall be presumed to enhance coordination.
    Examples of functional connections that establish new or enhanced 
coordination include, but are not limited to, shared or coordinated 
signage, schedules, and ticketing.
 ii. ``Public Transportation''
    Section 5307(a)(7) of Title 49 defines ``public transportation'' as

``transportation by a conveyance that provides regular and 
continuing general or special transportation to the public, but does 
not include schoolbus, charter, or intercity bus transportation or 
intercity passenger rail transportation provided by the entity 
described in chapter 243 \4\ (or a successor to such entity).''
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    \4\ National Railroad Passenger Corporation (``Amtrak'')
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iii. ``Other Transportation''
    FTA interprets the term ``other transportation,'' as used in 49 
U.S.C. 5307(a)(1)(G), to mean all forms of transportation that are not 
public transportation, including, but not limited to, airplane, school 
bus, charter bus, sightseeing vehicle, intercity bus and rail, 
automobile, taxicab, bicycle and pedestrian transportation.
 f. ``Provides a Fair Share of Revenue for Public Transportation That 
Will Be Used for Public Transportation''
    The third criterion for determining whether a joint development 
improvement is eligible for funding pursuant to a program established 
under the Federal Transit Law is that the improvement ``provides a fair 
share of revenue for public transportation that will be used for public 
transportation.'' \5\ 49 U.S.C. 5302(a)(1)(G). FTA will not define the 
term ``fair share of revenue,'' nor will it set a monetary threshold. 
What is a fair share of revenue, and what form it should take,\6\ shall 
be negotiated between the parties involved in the joint development 
improvement. The only requirements are (i) That the

[[Page 53748]]

public transportation provider receives a fair share of revenue, (ii) 
that such revenue be used for public transportation, and (iii) that the 
project sponsor obtain a written opinion of counsel or other advisor 
(or FTA's agreement) that the share of revenue to public transportation 
is fair. This allows a public transportation provider to negotiate for 
financial benefits in exchange for the benefits it will convey through 
the joint development improvement.
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    \5\ This criterion should not be confused with the requirement 
of 49 U.S.C. 5302(a)(1)(G)(ii) 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.''
    \6\ For example, ``fair share of revenue'' need not be a direct 
payment of revenue by an intercity bus provider to a transit agency 
but may take the form of an increase in revenues received by a 
transit agency, whether in its capacity as landlord or otherwise, as 
a result of enhanced passenger traffic created by the service of a 
jointly developed facility by an intercity bus provider, provided 
that the transit agency and intercity bus provider together 
designate and report to FTA the source of such ``fair share of 
revenue.'' FTA grantees shall expend the ``fair share of revenue'' 
in accordance with the common grant rule of 49 CFR 18.1-18.52.
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 g. ``Reasonable Share of the Costs of the Facility''
    While not a criterion to determine eligibility, as noted above, it 
is nonetheless required that any ``person making an agreement to occupy 
space in a facility under [49 U.S.C. 5302(a)(1)(G)] shall pay a 
reasonable share of the costs of the facility through rental payments 
and other means.'' FTA shall not require a specific valuation 
methodology and shall accept any reasonable valuation methodology used 
by the grantee to determine a reasonable share of the costs of the 
facility.

 II. Eligible Activities

    Subject to the eligibility criteria detailed at section (II) above, 
joint development improvements expressly include the following:
     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
     Renovation and improvement of historic transportation 
facilities.
    49 U.S.C. 5302(a)(1)(G). These and other joint development 
improvements will be eligible for FTA funding if they satisfy the 
criteria set forth above, and do not fall within the exclusion detailed 
at 49 U.S.C. 5302(a)(1)(G)(ii), which excludes the 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.\7\
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    \7\ Many aspects of commercial and residential development will 
be excluded by 49 U.S.C. 5302(a)(1)(G)(ii), which makes ineligible 
for FTA financial assistance the ``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.'' It is important to note, however, that commercial 
and residential development is not excluded wholesale. For example, 
space in an FTA-funded facility may be made available for commercial 
revenue-producing activities and for connections to revenue 
producing activities. Similarly, non-commercial, non-revenue-
producing aspects of commercial and residential developments may be 
eligible for FTA financial assistance, subject to the criteria 
detailed at section (II).
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    Costs related to a joint development improvement are only eligible 
for Federal Transit funding pursuant to a budget contained in an 
approved grant. FTA cannot approve funding for costs associated with a 
joint development improvement that are not contained in an approved 
grant budget. FTA Regional Administrators approve joint development 
proposals as part of the grant approval process.
    Eligible costs for joint development improvements include, but are 
not limited to, the following:
    a. Real Estate Acquisition, including the acquisition of real 
property and structures thereon; \8\
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    \8\ Note that certain costs in connection with real estate 
acquisition (such as costs associated with eminent domain and 
relocation assistance) shall be eligible, as provided by the 
respective statutes and regulations.
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    b. Demolition of Existing Structures;
    c. Site Preparation;
    d. Building Foundations, including substructure improvements for 
buildings constructed over transit facilities;
    e. Utilities, including utility relocation and construction;
    f. Walkways, including bicycle lanes and pedestrian connections and 
access links between public transportation services and related 
development;
    g. Open Space, including site amenities and related streetscape 
improvements such as street furniture and landscaping;
    h. Safety and Security Equipment and Facilities, including 
lighting, surveillance and related intelligent transportation 
applications;
    i. Construction, renovation, and improvement of bus and intercity 
rail stations and terminals;
    j. Facilities that Incorporate Community Services such as daycare 
or health care;
    k. 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, 
loading shelters, parking facilities, park-and-ride services, 
improvements of existing bus or rail transit terminals, stations, major 
transfer points, and shelters as well as other facilities directly 
related to the linking of public transportation facilities with other 
modes of transportation;
    l. Furniture, Fixtures and Equipment (FFE): Transportation-related 
FFE are eligible costs in all cases. However, due to the exclusion of 
commercial revenue-producing facilities (other than an intercity bus 
station or terminal) and public facilities not related to public 
transportation at 49 U.S.C. 5302(a)(1)(G)(ii), FFE related to 
commercial revenue-producing facilities (other than an intercity bus 
station or terminal) or public facilities not related to public 
transportation are considered ineligible;
     m. Parking, including parking improvements with a public 
transportation justification and use or an intercity bus or intercity 
rail justification and use in connection with joint development; and
    n. Project Development Activities, including design, engineering, 
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;
    o. Professional Services, including reasonable and necessary costs 
incurred to hire professionals to prepare or perform items a through n 
above, or to assist the grantee in reviewing the same.

 III. Ineligible Activities

 a. Construction of a Commercial Revenue-Producing Facility
    Eligible costs do not include construction of commercial revenue 
producing facilities (other than an intercity bus station or terminal) 
or part of a public facility not related to public transportation.

 IV. Federal Requirements

    FTA's Master Agreement contains the standard terms and conditions 
governing the administration of a project supported with Federal 
assistance awarded by FTA through a grant agreement or cooperative 
agreement with the recipient, or supported by FTA through a 
Transportation Infrastructure (TIFIA) Loan, loan guarantee, or line of 
credit with the recipient. Not every provision of the Master Agreement 
will apply to every project for which FTA provides Federal assistance 
through a grant agreement or cooperative agreement. The type of 
project, the Federal laws and regulations authorizing Federal 
assistance for the project, and the legal status of the recipient as a 
State or local government, private non profit entity, or private for 
profit entity will determine which Federal laws, regulations, and 
directives apply. Federal laws, regulations, and directives that do not 
apply will not be enforced. The recipient shall comply with all 
applicable Federal laws, regulations, and directives, except to the 
extent that FTA determines otherwise in writing. Any violation of a 
Federal law,

[[Page 53749]]

regulation, or directive applicable to the recipient or its project may 
result in penalties to the violating party. Applicable crosscutting 
requirements likely to apply to joint development improvements include, 
but are not limited to, the following:
 a. Ground Lease or Transfer of Federally Assisted Real Estate
    If the joint development improvement involves a ground lease or 
transfer of federally-funded real estate and there is no Federal 
assistance for new improvements, then the following requirements apply 
to the lessee or transferee and must be incorporated into the lease or 
the conveyance instrument:
    i. Language found at 49 CFR 26.7 binding the lessee or transferee 
not to discriminate based on race, color, national origin, or sex;
    ii. Language found at 49 CFR 27.7; 27.9(b) and 37 binding the 
lessee or transferee not to discriminate based on disability and 
binding the same to compliance with the Americans with Disabilities Act 
with regard to any improvements constructed; and
    iii. Language contained in FTA's Master Agreement, updated annually 
in October, particularly relating to conflicts of interest and 
debarment and suspension.
 b. Federally Assisted Construction of Joint Development Improvements
    If the construction of improvements is also federally assisted, 
then the following requirements will apply and must be incorporated 
into the lease or the conveyance or encumbrance instrument:
    i. Buy America--language making it clear that the steel, iron, and 
manufactured goods used in the joint development project are produced 
in the United States, as described in 49 U.S.C. 5323(j) and 49 CFR part 
661;
    ii. Planning and Environmental Analysis--language making it clear 
that the grantee must comply with, and the joint development project is 
subject to the requirements of:
    A. The FHWA/FTA metropolitan and statewide planning regulations at 
23 CFR part 450;
    B. The National Environmental Policy Act of 1969, as amended, 42 
U.S.C. 4321 et seq.;
    C. Executive Order No. 12898, ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations,'' 59 FR 7629, Feb. 16, 1994;
    D. FTA statutory requirements on environmental matters at 49 U.S.C. 
5324(b); Council on Environmental Quality regulations on compliance 
with the NEPA, 40 CFR part 1500 et seq.;
    E. FHWA/FTA regulations, ``Environmental Impact and Related 
Procedures,'' 23 CFR part 771;
    F. Section 106 of the National Historic Preservation Act, 16 U.S.C. 
470f, involving historic and archaeological preservation; Advisory 
Council on Historic Preservation regulations on compliance with Sec. 
106, ``Protection of Historic and Cultural Properties,'' 36 CFR part 
800; and
    G. restrictions on the use of certain publicly owned lands and 
historic resources unless the FTA makes the specific findings required 
by 49 U.S.C. 303.
    iii. Cargo Preference--language making it clear that items imported 
from abroad and used in the joint development were shipped 
predominantly on U.S.-flag ships and that the project complies with 46 
CFR part 381, to the extent these regulations apply to the joint 
development;
    iv. Seismic Safety--language certifying that a structure conforms 
to seismic safety standards, as contained in 49 CFR part 41;
    v. Energy Assessments--Language making it clear that the 
transferee(s) or joint developer agrees to perform a mandatory, energy 
assessment as prescribed by 23 CFR part 771 and 42 U.S.C. 8373(b)(1) 
for any buildings constructed, reconstructed or modified with FTA 
assistance. The assessment shall be incorporated into the Environmental 
Impact Statement or Environmental Assessment, if the project has one; 
otherwise the assessment shall be provided with the application for FTA 
assistance;
    vi. Lobbying--49 CFR part 20;
    vii. Labor Protection--Language making it clear that the transferee 
or joint developer will adhere to labor protection requirements 
applying to Federal projects, such as Davis-Bacon--49 U.S.C. 5333(a) 
and 40 U.S.C. 3141 et seq., and 29 CFR part 5; Copeland ``Anti-
Kickback'' Act as amended, 18 U.S.C. 874 and 29 CFR part 3; and 
Contract Work Hours and Safety Standards Act, 40 U.S.C. 3701 et seq, 
and 29 CFR part 5 and at 40 U.S.C. 3704; as well as 49 U.S.C. 5333(b) 
concerning protection of transit employees;
    viii. Civil Rights Requirements--49 U.S.C. 5332 and DOT 
implementing regulations at 49 CFR part 21 (effecting Title VI of the 
Civil Rights Act of 1964), 49 CFR 26 (participation by Disadvantaged 
Business Enterprises in DOT financial assistance programs) and 49 CFR 
parts 27 and 37 (respectively, nondiscrimination on the basis of 
disability in programs or activities receiving Federal financial 
assistance and transportation services for individuals with 
disabilities);
    ix. Program Fraud--grantees agree to comply with Program Fraud 
Civil Remedies Act of 1986, as amended, 31 U.S.C. 3801 et seq. and 49 
CFR part 31. Penalties may apply for noncompliance;
    x. Language making it clear that the level of Federal participation 
in the joint development provides no U.S. Government obligation to 
third parties in the project; and
    xi. Uniform Relocation--If the federally-funded site to be improved 
is occupied by other than the grantee and the occupant is displaced, 
the transferee(s) or joint developer must comply with 42 U.S.C. 4601 et 
seq. and the regulations at 49 CFR part 24.
c. National Environmental Policy Act (NEPA)
    In any instance in which FTA determines that NEPA applies to the 
joint development, the level of environmental analysis will depend upon 
the complexity of the project and its likely impacts. In some 
instances, minimal review will be necessary, in which case FTA may 
issue a Categorical Exclusion. Generally, however, joint development 
activities that portend significant environmental impacts will 
necessitate the preparation of an Environmental Assessment or an 
Environmental Impact Statement. FTA is available to provide guidance on 
the environmental review process. See generally the FTA Environmental 
Impact and Related Procedures at 23 CFR part 771.

 V. Eligibility Procedures

    Before becoming eligible for FTA funding, a joint development 
improvement must be approved by the FTA Regional Administrator, or his 
designee, responsible for the project sponsor's locality. Only FTA 
grantees may sponsor a joint development improvement. The project 
sponsor may submit a joint development proposal at any time. FTA 
approval shall be contingent upon the project sponsor certifying that 
the joint development improvement conforms to the criteria set forth 
above and that the project conforms to the requirements of the common 
grant rule found at 49 CFR 18.31. In the event that the project does 
not conform to 49 CFR 18.31, FTA may approve the project if the project 
sponsor submits an alternative certification explaining compliance with 
49 U.S.C. 5302(a)(1)(G) and 49 CFR 18.25(g)(4) and (5) together with 
supporting documentation, in each case

[[Page 53750]]

in form and substance satisfactory to FTA in its reasonable discretion. 
The FTA Regional Administrator, or his designee, shall approve all 
proposals that meet the criteria described herein. Like all projects 
funded by FTA, joint development improvements are subject to the 
applicable crosscutting requirements.
    There are two methods for seeking approval for a joint development 
project. In all cases, the project sponsor must submit a completed 
Joint Development Checklist and proposed Joint Development Agreement. 
By submitting a completed Joint Development Checklist, the project 
sponsor shall certify that the proposed joint development improvement 
conforms to the criteria of 49 U.S.C. 5302(a)(1)(G) as outlined above.
    For an expedited review, the joint development proposal shall 
include a signed Certificate of Compliance. By signing the Certificate 
of Compliance, the project sponsor shall certify, among other things, 
that the proposed joint development improvement conforms to the 
requirements of 49 CFR 18.31.
    If a project sponsor seeks a more individualized review of the 
project, a joint development proposal shall include an explanation of 
compliance with 49 U.S.C. 5302(a)(1)(G) and 49 CFR 18.25(g)(4) and (5) 
(the ``alternative certification'') with supporting documentation.
    The Joint Development Checklist and Certificate of Compliance are 
attached hereto.

 VI. Real Property

    Real property acquired by a grantee or subgrantee pursuant to 49 
U.S.C. 5302(a)(1)(G) shall be governed by 49 U.S.C. 5334(h)as amended, 
and subject to the obligations and conditions set forth in 49 CFR 18.31 
as amended, which require the grantee or subgrantee to request 
disposition instructions from FTA whenever real property is no longer 
needed for the originally authorized purpose.\9\
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    \9\ FTA shall rely on the parties to joint development 
transactions, including, notably, transit agencies, to determine the 
appropriate use and disposition of real property used on joint 
development improvements, so long as such disposition and use 
complies with applicable statutes and duly promulgated regulations 
of FTA. For example, FTA shall no longer apply, and shall not 
require it grantees to apply, its administratively-derived test of 
``highest and best transit use'' (or any other tests) for 
determining the value of real property used in FTA-funded joint 
developments, including the disposition of real property connected 
to a joint development improvement. In the past, FTA relied on 49 
CFR 18.25(g) as its authority for requiring (and determining in its 
discretion) the ``highest and best transit use'' of such property. 
No such requirement is expressly authorized or required by 49 CFR 
18.25(g), however.
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 VII. Applicability of Third Party Contracting Requirements

    FTA's third party contracting requirements, which appear in FTA 
Circular 4220.1E, have limited applicability to joint development 
projects. As described on page 12 of Circular 4220.1E, the third-party 
contracting requirements must apply to the federally funded 
construction aspects of joint development. With regard to revenue 
contracts as defined in the Circular, FTA will work with grantees on a 
case-by-case basis to craft approaches that satisfy the statutory and 
regulatory requirements while preserving the benefits of this 
innovative contracting strategy to the maximum possible extent.
    If a contract between a grantee and a third party involving a joint 
development project is not a construction contract or a revenue 
contract as defined by Circular 4220.1E, then such contract is not 
covered by FTA's third party contracting requirements. Paragraph 7.n. 
of Circular 4220.1E defines ``revenue contracts'' as ``those third 
party contracts whose primary purpose is to either generate revenues in 
connection with a transit related activity or to create business 
opportunities utilizing an FTA funded asset.''
    Revenue contracts in joint development projects that do not meet 
this primary purpose test are not covered by the third party 
contracting requirements. For example, third party contracts to manage, 
operate, and/or maintain intercity bus or intercity rail terminals that 
are part of FTA-funded joint development projects or tenancy agreements 
with third party intercity bus or intercity rail operators are not 
covered revenue contracts. The primary purpose of such contracts is to 
carry out the congressional intent to give grantees the flexibility to 
integrate intercity rail and intercity bus terminals and their related 
services into FTA-funded joint development projects.
    Even in situations not covered by the third party contracting 
requirements, FTA generally favors full and open competition. However, 
where the third party contracting requirements are not involved, FTA 
will leave it to the full discretion of the grantees to determine the 
appropriate extent and nature of competition, if any, for such 
contracts. For example, in cases involving management of intercity bus 
or rail terminals or tenancy agreements in those terminals, FTA 
recognizes that given the unique nature of the national intercity rail 
and bus systems, a competitive procurement process for such contracts 
may not be appropriate.

VII. Certificate of Compliance

    To ensure compliance with 49 CFR 18.31 and other Federal 
requirements related to joint development improvements, and the 
acquisition, use and disposition of real property for such 
improvements. FTA shall require project sponsors to sign a Certificate 
of Compliance or, in lieu of such certificate, an alternative 
certification explaining compliance with 49 U.S.C. 5302(a)(1)(G) and 49 
CFR 18.25(g)(4) and (5) with supporting documentation. By signing the 
Certificate of Compliance, the project sponsor shall certify, among 
other things, that the proposed joint development improvement conforms 
to the requirements of 49 CFR 18.31.

IX. Satisfactory Continuing Control

    For purposes of this guidance and the Certificate of Compliance, 
``satisfactory continuing control'' shall not mean complete operating 
or managerial control of a joint development facility. In determining 
whether ``satisfactory continuing control'' with respect to a joint 
development capital project is maintained, the project sponsor and FTA 
shall consider, as a primary factor, whether the project sponsor has 
the right and power to direct that such project shall be used for 
activities eligible for funding under Federal Transit Law (49 U.S.C. 
53).

Appendix A--Proposed Joint Development Checklist

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Appendix B--Proposed Certificate of Compliance

Certificate of Compliance

    Effective as of the date hereof, the undersigned hereby 
certifies and covenants to the Federal Transit Administration 
(``FTA'') as follows:
    1. Title. Subject to the obligations and conditions set forth in 
49 CFR 18.31, as amended, title to real property acquired under a 
grant or subgrant for FTA Project Number----, [insert project title 
here] (the ``Project''), shall vest in the undersigned or subgrantee 
thereof (collectively or individually, as the case may be, the 
``Grantee'').
    2. Use. Except as otherwise provided by Federal statutes, real 
property shall only be used for the originally authorized purposes 
(which may include Joint Development purposes that generate program 
income, both during and after the award period and used to support 
public transportation activities) as long as needed for such 
purposes, and that the Grantee shall not dispose of or encumber its 
title or other interests.
    3. Disposition. When real property acquired with funds provided 
by FTA for the Project is no longer needed for the purpose 
originally authorized by FTA, the Grantee shall request disposition 
instructions from FTA and shall agree that, unless otherwise 
authorized by FTA, such disposition shall be made in accordance with 
applicable law, including without limitation 49 U.S.C. 5334(h) and 
49 CFR 18.31.
    4. Federal Interest. The Federal Government retains a Federal 
interest in any real property, equipment, and supplies financed with 
Federal assistance (``Project Property'') until, and to the extent 
that, the Federal Government relinquishes its Federal interest in 
such Project Property.
    5. Incidental Use. Any incidental use of Project Property, as 
determined by FTA, shall not exceed that permitted under applicable 
Federal laws, regulations, and directives, including the 
requirements of FTA's Master Agreement.
    6. Encumbrance of Project Property. The Grantee covenants to FTA 
as follows:
    a. Written Transactions. The Grantee agrees that it will not 
execute any transfer of title to the Project Property or enter into 
an instrument legally binding on the Grantee that would encumber 
Federal Interest in the Project Property.
    b. Oral Transactions. The Grantee agrees that it will not 
obligate itself in any manner to any third party with respect to 
Project Property.
    7. Notice to Joint Development Partner. The undersigned has 
delivered to the Joint Development Partner a duly executed copy of 
this certificate, dated as of the date hereof, receipt of which has 
been acknowledged by the Joint Development Partner in writing to the 
undersigned on or before the date of execution of the Joint 
Development Agreement.
    8. Other Actions. The Grantee (a) agrees that it will not take 
any action that encumbers the Federal Interest in the Project 
Property and (b) hereby affirms that each of its representations and 
warranties set forth in the Master Agreement is true and correct in 
all material respects as of the date hereof. The Grantee agrees that 
nothing herein shall supersede, amend, modify or otherwise affect 
the provisions, terms or conditions set forth in the Master 
Agreement.
    9. Definitions.
    a. ``FTA'' shall have the meaning provided in the preamble of 
this certificate.
    b. ``Grantee'' shall have the meaning provided in section (2) of 
this certificate.
    c. ``Joint Development'' shall mean a capital project as defined 
by 49 U.S.C. 5302(a)(1)(G) that is eligible for funding pursuant to 
the terms and conditions set forth in [insert new Joint Development 
circular number].
    d. ``Joint Development Partner'' shall mean [insert definition].
    e. ``Master Agreement'' shall mean that certain Master Agreement 
by and between FTA and the Grantee, as authorized by 49 U.S.C. 53, 
Title 23, United States Code (Highways), the National Capital 
Transportation Act of 1969, as amended, the Safe, Accountable, 
Flexible, Efficient Transportation Equity Act: A Legacy for Users, 
the Transportation Equity Act for the 21st Century, as amended, or 
other Federal laws that FTA administers, as the same may be lawfully 
revised, superseded or supplemented from time to time.
    f. ``Project'' shall have the meaning provided in section (1) of 
this certificate.
    g. ``Project Property'' shall have the meaning provided in 
section (4) of this certificate.
    10. No Estoppel. The undersigned agrees that acceptance of this 
Certificate of Compliance by FTA shall not estop the Federal 
government from initiating or conducting, and shall not be used as a 
defense for, any investigation, audit or inquiry by the Federal 
government following approval by FTA of the project.

    Issued on the 5th day of September, 2006.
James S. Simpson,
Administrator.

[FR Doc. E6-15022 Filed 9-11-06; 8:45 am]
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