Joint Development May 20, 2014 Jayme L. Blakesley

1. Joint DevelopmentMay 20, 2014Jayme L. Blakesley

2. Outline • Introduction • FTA’s joint development policy • Criteria for all federally supported joint developments • Grant-funded joint development • Joint development on federally funded real property • Acquisition • Use • Conveyance for a purpose other than disposition • Disposition • Discussion

3. Definitions • Joint development: A public transportation project that is integrally related to and often co-located with commercial, residential, or mixed used development. • FTA can support joint development • (1) Through a grant • (2) By concurring in the use of FTA-funded real property for joint development

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

5. Framework for Analyzing a Proposed Joint Development Eligibility issues associated with either the use of FTA grant funds or the use of program income towards a capital project Issues associated with the acquisition, use, and disposition of real property that was, or will be, purchased using FTA funds

6. Grant-Assisted JD There is no pool of grant funds specifically for JD. JD is a kind of “capital project”. FTA has several funding programs that can be used for capital projects (e.g., urban formula, New Starts, seniors, bus formula). Grant funds must be used for purposes compatible with the program under which they are awarded.

7. Grant-Assisted JD • To qualify as a “capital project”, a joint development must satisfy four criteria: • Enhance economic development or incorporate private investment; • Enhance the effectiveness of public transportation OR enhance coordination between public transportation and other transportation; • Provide a fair share of revenue for transit; and • Occupants must pay a fair share of costs of the facility.

8. Grant-Assisted JD • Economic benefit • Enhance economic development, or … • Joint development must add value to economic activity occurring in close proximity to a public transportation facility • …incorporates private investment • Need not be monetary. • Investment can include, e.g., real property, commercial or residential development, or some other benefit. • Must be meaningful.

9. Grant-Assisted JD • Public transportation benefit • Either • Enhances effectiveness of a public transportation project, and … • Increased ridership, shortened travel times, wayfinding, deferred or reduced operating or capital costs, improved access to public transportation • … is related physically or functionally to that public transportation project; • OR • Creates new or enhanced coordination between public transportation and other transportation

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

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

12. Grant-Assisted JD • Eligible activities • Construction of space for commercial uses • Ineligible activities • Outfitting of a commercial space (other than for an intercity bus or rail terminal) • Public facilities not related to public transportation

13. Grant-Assisted JD • Federal requirements apply to grant-funded projects • Environmental (NEPA, section 4(f), envtl. justice)* • Labor (Davis-Bacon, section 13(c), PLAs) • Buy America • Historic preservation (NHPA, section 4(f)) • Procurement (Buy America, competition) • Et cetera

14. Town of Secaucus v. U.S. Department of Transportation Town of Secaucus v. U.S. Department of Transportation, 79 F.3d 1139 (3rd Cir. 1995). FTA may fund capital projects that include “building foundations” for “commercial and residential development” that is incorporated into a public transportation project. Statutory history

15. Real Property Acquisition Use Conveyance for purposes of JD (not disposition) Disposition

16. Real Property Definitions of use, incidental/shared use,

17. Real Property: Acquisition Uniform Assistance and Real Property Acquisition Policies Act Real Estate Acquisition Management Plan (RAMP) WMATA question: Discuss FTA’s requirements for timing of real property appraisals. Elapsed time between JDA and real property closing date.

18. Real Property: Use Authorized uses Incidental uses Shared uses Unallowable uses

19. Real Property: Use FTA retains a “federal interest” in how property it has financed is used. An asset acquired with an FTA grant must be used according to the terms of the grant: the “originally authorized purpose”. JD (i.e., a project that satisfies the four criteria above) is an authorized purpose.

20. Real Property: Use • FTA’s concurrence is required for incidental or shared uses of property. • Incidental use: • The authorized use of real property for a limited non-transit purpose that does not interfere with the property’s transit purpose. • Examples: after-hours parking for nearby establishments, advertising, newsstand in a station, air rights • Shared use: • When a party other than the transit provider occupies a facility and pays for its pro rata share of construction, maintenance, and operation costs. Must be declared and approved at time of grant award.

21. Real Property: Use • Incidental Use and Shared Use distinguished • Incidental: Parking is exclusively for transit customers until 6:00 p.m. and becomes available to the public in the evening. No interference with transit purpose. Can be approved after construction. • Shared: Parking situated between a transit station and retail is available to transit and retail customers at all times without segregation. Must be approved before grant award.

22. Real Property: Use Discussion Point: What is FTA’s position on cost-sharing arrangements such as shared parking.? Does FTA encourage or discourage these arrangements? Advice for how to structure such arrangements?

23. Real Property: Conveyance By default, OMB’s Common Rule for grants prevents recipients from conveying an interest in grant property. For authorized uses or incidental uses, FTA may permit a recipient to convey an interest in federally funded property. Generally, any kind of interest can be conveyed. Lien, fee, easement, lease, etc.

24. Real Property: Conveyance • FTA must be satisfied that the federal interest will be adequately protected. • The grant recipient protects the federal interest by maintaining “satisfactory continuing control”. • Retain an easement • Lease conditions • Reverterclause • Etc.

25. Real Property: Disposition • Disposition occurs when property is no longer needed for the grant’s originally authorized purpose • Extinguishes the federal interest • May or may not involve a sale or other conveyance

26. Real Property: Disposition • Common Rule disposition methods: • Grantee retains title; compensates federal share based on FMV • Grantee sells property (“highest possible return”); compensates federal share based on sale proceeds • Federal agency takes title or directs grantee to convey to third party; grantee is compensated its share of FMV • Special FTA authority: • Grantee may convey to a local government authority for a non-transit public use; must remain in public use for >5 years; public benefit must outweigh federal interest in liquidation value

27. Real Property: Disposition Discussion Point: Are the proceeds from the sale of FTA-funded real property considered program income?

28. Discussion Questions?

29. Contact Information • Jayme Blakesley, Acting Assistant Chief Counsel for General Law • Jayme.Blakesley@dot.gov • (202) 366-0304