Notice of Final Agency Guidance on the Eligibility of Joint Development Improvements Under Federal Transit Law, 5788-5800 [E7-1977]

Agencies

• Federal Transit Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 72, Number 25 (Wednesday, February 7, 2007)]
[Notices]
[Pages 5788-5800]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-1977]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No: FTA-2006-23511]


Notice of Final Agency Guidance on the Eligibility of Joint 
Development Improvements Under Federal Transit Law

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Final Agency Guidance.

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SUMMARY: This final Agency guidance describes the eligibility of 
``joint development'' improvements under 49 U.S.C. 5301 et seq. 
(Federal transit law) by interpreting 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 final Agency guidance is the culmination of three notices issued 
by the Federal Transit Administration (FTA or Agency), the first of 
which appeared in the Federal Register on January 31, 2006. FTA intends 
to publish the text of this final Agency guidance as a stand-alone FTA 
Circular

[[Page 5789]]

titled The Eligibility of Joint Development Improvements under Federal 
Transit Law.

DATES: Effective Date: The effective date of this final Agency guidance 
is February 7, 2007.
    Availability of the Final Agency Guidance and Comments: Copies of 
this final Agency guidance and comments and material received from the 
public, as well as any documents indicated in the preamble as being 
available in the docket, are part of docket number FTA-2006-23511. For 
access to the DOT docket, please go to https://dms.dot.gov at any time 
or to the Docket Management System facility, U.S. Department of 
Transportation, 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.

FOR FURTHER INFORMATION CONTACT: Jayme L. Blakesley, Attorney-Advisor, 
Office of Chief Counsel, Federal Transit Administration, 400 Seventh 
Street, SW., Washington, DC 20590-0001, (202) 366-0304, 
jayme.blakesley@dot.gov; or Robert J. Tuccillo, Associate 
Administrator, Office of Budget & Policy, Federal Transit 
Administration, 400 Seventh Street, SW., Washington, DC 20590-0001, 
(202) 366-4050, Robert.tuccillo@dot.gov. Office hours are from 8:30 
a.m. to 5 p.m., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION: This document is organized in the following 
sections:

I. Background
II. Final Agency Guidance on the Eligibility of Joint Development 
Improvements under Federal Transit Law
III. Response to Comments Received
Appendix A: Joint Development Checklist
Appendix B: Certificate of Compliance

I. Background

    This final Agency guidance describes the eligibility of ``joint 
development'' improvements under 49 U.S.C. 5301 et seq. (Federal 
transit law). 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 Federal transit law. This amendment 
permits the Federal Transit Administration (FTA or Agency) 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 (each, a project sponsor), and to their joint 
development partners, this final Agency 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 defers 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.
    This final Agency guidance is the culmination of three notices 
issued by FTA, the first two of which appeared in the Federal Register 
on January 31, 2006, at 71 FR 5107, and March 26, 2006, at 71 FR 15513. 
These notices were superseded by a Notice of Proposed Agency Guidance 
and Request for Comments on the Eligibility of Joint Development 
Improvements under Federal Transit Law published by FTA on September 
12, 2006, in the Federal Register at 71 FR 53745.
    In the past, FTA has appended its guidance on the eligibility of 
joint development to its Circulars 5010.1, 9300.1 and 9030.1, guidance 
for new Major Capital Investments, Grants Management, and Formula 
Capital Grants, respectively. FTA has decided to consolidate these 
appendices into one Circular on the eligibility of joint development 
improvements. FTA intends to publish the text of this final Agency 
guidance as a stand-alone FTA Circular titled The Eligibility of Joint 
Development Improvements under Federal Transit Law.
    FTA hereby adopts 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 in 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.

II. Final Agency Guidance on the Eligibility of Joint Development 
Improvements Under Federal Transit Law

    This final Agency guidance describes the eligibility of ``joint 
development'' improvements under 49 U.S.C. 5301 et seq. (Federal 
transit law). 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 transit funds. This amendment permits the Federal 
Transit Administration (FTA or Agency) 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 (project sponsor), and 
to their joint development partners, this final Agency 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 defers 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.

Table of Contents

    This final Agency guidance is organized in the following sections:

I. Eligibility Criteria
    a. Definition of ``Capital Project''
    b. ``Enhances Economic Development or Incorporates Private 
Investment''
    i. ``Enhances Economic Development''
    ii. ``Incorporates Private Investment''
    c. ``Enhances the Effectiveness of a Public Transportation 
Project''
    d. ``Related Physically or Functionally''
    i. ``Physically Related''
    ii. ``Functionally Related''
    e. ``Establishes New or Enhanced Coordination between Public 
Transportation and Other Transportation''

[[Page 5790]]

    i. ``New or Enhanced Coordination''
    ii. ``Public Transportation''
    iii. ``Other Transportation''
    f. ``Provides a Fair Share of Revenue for Public Transportation 
that Will Be Used for Public Transportation''
    g. ``Reasonable Share of the Costs of the Facility''
II. Eligible Activities
    a. Real Estate Acquisition
    b. Demolition of Existing Structures
    c. Site Preparation
    d. Building Foundations
    e. Utilities
    f. Walkways
    g. Open Space
    h. Safety and Security Equipment and Facilities
    i. Construction, Renovation, and Improvement of Bus and 
Intercity Rail Stations and Terminals
    j. Facilities that Incorporate Community Services
    k. Capital Project, and Equipment, for an Intermodal Transfer 
Facility or Transportation Mall
    l. Furniture, Fixtures and Equipment
    m. Parking
    n. Project Development Activities
    o. Professional Services
III. Ineligible Activities
    a. Construction of a Commercial Revenue-Producing Facility or 
Part of a Public Facility Not Related to Public Transportation
IV. Federal Requirements
    a. Ground Lease or Transfer of Federally Assisted Real Estate
    b. Federally Assisted Construction of Joint Development 
Improvements
    c. National Environmental Policy Act
V. Real Property
VI. Applicability of Third Party Contracting Requirements
VII. Satisfactory Continuing Control
VIII. Eligibility Procedures
Appendix A--Joint Development Checklist
Appendix B--Certificate of Compliance

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 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 relate 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 shall 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.

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.
ii. ``Incorporates Private Investment''
    Any joint development improvement that incorporates private 
investment shall 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 shall not set a monetary threshold for private 
investment. Rather, 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 shall 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

[[Page 5791]]

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 shall satisfy this criterion. FTA shall 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 other 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 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 recipient's Board 
of Directors (or similar governing body) determines, following 
reasonable investigation, that the terms and conditions of the joint 
development improvement (including, without limitation, the share of 
revenues for public transportation which shall be provided thereunder) 
are commercially reasonable and fair to the recipient; and (ii) that 
such revenue shall be used for public transportation. This enhances the 
ability of 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)(i) 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 I 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 (I).

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[[Page 5792]]

    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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    a. Demolition of Existing Structures;
    b. Site Preparation;
    c. Building Foundations, including substructure improvements for 
buildings constructed over transit facilities;
    d. Utilities, including utility relocation and construction;
    e. Walkways, including bicycle lanes and pedestrian connections and 
access links between public transportation services and related 
development;
    f. Open Space, including site amenities and related streetscape 
improvements such as street furniture and landscaping;
    g. Safety and Security Equipment and Facilities, including 
lighting, surveillance and related intelligent transportation 
applications;
    h. Construction, renovation, and improvement of intercity bus and 
intercity rail stations and terminals;
    i. Facilities that Incorporate Community Services, such as daycare 
or health care;
    j. 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;
    k. 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. FFE related to an intercity 
bus station or terminal are eligible costs;
    l. 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
    m. 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;
    n. 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 or Part of a 
Public Facility Not Related to Public Transportation

    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, 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:
    iv. 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 661;
    v. 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:
    1. The FHWA/FTA metropolitan and statewide planning regulations at 
23 CFR 450;
    2. The National Environmental Policy Act of 1969 (NEPA), as 
amended, 42 U.S.C. 4321 et seq.;

[[Page 5793]]

    3. Executive Order No. 12898, ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations,'' 59 FR 7629, Feb. 16, 1994;
    4. 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 1500 et seq.;
    5. FHWA/FTA regulations, ``Environmental Impact and Related 
Procedures,'' 23 CFR 771;
    6. 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 800; 
and
    7. 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.
    vi. Cargo Preference--language making it clear that items imported 
from abroad and used in the joint development improvements were shipped 
predominantly on U.S.-flag ships and that the project complies with 46 
CFR 381, to the extent these regulations apply to the joint 
development;
    vii. Seismic Safety--language certifying that a structure conforms 
to seismic safety standards, as contained in 49 CFR 41;
    viii. 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 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;
    ix. Lobbying--49 CFR 20;
    x. 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. Sec.  
5333(a) and 40 U.S.C. 3141 et seq., and 29 CFR 5; Copeland ``Anti-
Kickback'' Act as amended, 18 U.S.C. 874 and 29 CFR 3; and Contract 
Work Hours and Safety Standards Act, 40 U.S.C. 3701 et seq., and 29 CFR 
5 and at 40 U.S.C. 3704; as well as 49 U.S.C. 5333(b) concerning 
protection of transit employees;
    xi. Civil Rights Requirements--49 U.S.C. 5332 and DOT implementing 
regulations at 49 CFR 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 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);
    xii. 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 31. Penalties may apply for noncompliance;
    xiii. Language making it clear that the level of Federal 
participation in the joint development improvement provides no U.S. 
Government obligation to third parties in the project; and
    xiv. 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 24.

c. National Environmental Policy Act (NEPA)

    In any instance in which FTA determines that NEPA applies to the 
joint development improvement, 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 771.

V. 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 in 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 its 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 
development improvements, 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.
---------------------------------------------------------------------------

VI. 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

[[Page 5794]]

competition. However, where the third party contracting requirements 
are not involved, FTA leaves 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. 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.

VIII. 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.
    There are two methods for seeking approval for a joint development 
project: (i) If the joint development improvement conforms to the 
specifics of the Certificate of Compliance, then the project sponsor 
may expedite FTA approval by executing the Certificate of Compliance 
and submitting it to FTA along with a completed Joint Development 
Checklist and a Joint Development Agreement; or (ii) if the joint 
development improvement will deviate from the specifics of the 
Certificate of Compliance, then the project sponsor must substitute an 
``alternative certification,'' which certification shall include an 
explanation of compliance with 49 U.S.C. 5302(a)(1)(G) and 49 CFR 18. 
In all cases, the project sponsor must submit a completed Joint 
Development Checklist, a proposed Joint Development Agreement, and 
either (i) An executed Certificate of Compliance or (ii) an alternative 
certification. 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. 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. 
An alternative certification must explain compliance with 49 U.S.C. 
5302(a)(1)(G) and 49 CFR 18 together with supporting documentation, in 
each case 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.
    The Joint Development Checklist and Certificate of Compliance are 
attached hereto as Appendix A and B respectively.

Appendix A--Joint Development Checklist

BILLING CODE 4910-57-P

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[GRAPHIC] [TIFF OMITTED] TN07FE07.016

BILLING CODE 4910-57-C

[[Page 5796]]

APPENDIX B--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 (1) 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 the entity with 
which the Project Sponsor has partnered, through a Joint Development 
Agreement, to construct a joint development improvement pursuant to 
49 U.S.C. 5302(a)(1)(G).
    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 to any investigation, audit or inquiry by the Federal 
government following approval by FTA of the project.

III. Response to Comments Received

    On September 12, 2006, FTA published in the Federal Register a 
Notice of Proposed Agency Guidance and Request for Comments on the 
Eligibility of Joint Development Improvements under Federal Transit 
Law (notice of proposed guidance) (71 FR 53745). In its notice of 
proposed guidance, FTA interpreted the definition and operation of 
the term ``capital project'' as defined at 49 U.S.C. Sec.  
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). The text of FTA's notice of proposed 
guidance included sections on (I) Eligibility criteria, including 
(a) The definition of a ``capital project,'' and the criteria for 
determining whether a joint development improvement (b) ``enhances 
economic development or incorporates private investment,'' (c) 
``enhances the effectiveness of a public transportation project,'' 
(d) is ``related physically or functionally,'' (e) ``establishes new 
or enhanced coordination between public transportation and other 
transportation,'' (f) ``provides a fair share of revenue for public 
transportation that will be used for public transportation,'' and 
(g) contributes a ``reasonable share of the costs of the facility''; 
(II) eligible activities; (III) ineligible activities; (IV) Federal 
requirements; (V) eligibility procedures; (VI) real property; (VII) 
the applicability of third party contracting requirements; (VIII) 
certificate of compliance; and (IX) satisfactory continuing control.
    Fourteen parties submitted comments in response to FTA's 
September 12, 2006, notice of proposed guidance. FTA hereby responds 
to these comments by topic and in the following order: (a) Notice of 
Proposed Guidance Generally; (b) Definition of Capital Project; (c) 
Eligibility Criteria; (d) Eligible/Ineligible Activities; (e) 
Eligibility Procedures; (f) Real Property; (g) Third Party 
Contracting; (h) Certificate of Compliance; (i) Satisfactory 
Continuing Control; and (j) Miscellaneous.

 (a) Notice of Proposed Guidance Generally

    The intended purpose of FTA's notice of proposed guidance was 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 
development, subject to the broad parameters set forth therein.
    FTA received fourteen general comments. Nine commenters praised 
FTA's notice of proposed guidance. Two commenters asked FTA to 
clarify the scope and purpose of its proposed guidance, particularly 
whether FTA intends its final guidance to supplement or replace its 
prior guidance. One commenter encouraged FTA to place emphasis on 
joint development in its New Starts rating process. Another 
commenter suggested that FTA view local grantees as partners and not 
as adversaries. One commenter stated that the proposed guidance is 
inconsistent with regulation inasmuch as it compares fixed 
facilities with rolling stock.
    FTA Response: FTA is pleased by the number of commenters that 
support and praise its Proposed Guidance. FTA appended its past 
guidance on the eligibility of joint development to its Circulars 
5010.1, 9300.1 and 9030.1, guidance for new Major Capital 
Investments, Grants Management, and Formula Capital Grants, 
respectively. FTA intends to publish this Final Guidance as a stand-
alone circular titled ``The Eligibility of Joint Development 
Improvements under Federal Transit Law.'' This Final Guidance shall 
replace FTA's existing guidance on joint development, currently 
located at FTA Circulars 5010.1, 9300.1 and 9030.1. FTA is uncertain 
why the commenter viewed its proposed guidance as adversarial to FTA 
grantees, particularly since FTA's stated purpose is to afford 
grantees maximum

[[Page 5797]]

flexibility within the law to work with the private sector and 
others for purposes of joint development. Similarly, FTA is unsure 
how its guidance is inconsistent, as the commenter did not identify 
the inconsistent comparisons between fixed facilities and rolling 
stock. Rather, the commenter stated that ``FTA has nearly eliminated 
the ability to generate revenue from rolling stock.'' FTA is unclear 
how it has eliminated the grantee's ability to generate revenue from 
rolling stock. Moreover, the comment is beyond the scope of this 
guidance, which speaks to joint development improvements, not 
rolling stock.

 (b) Definition of Capital Project

    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). In its notice of 
proposed guidance, FTA interpreted the definition and operation of 
these terms. Nine parties submitted comments on this topic. Seven 
commenters believe that FTA correctly interpreted the definition and 
operation of the terms ``capital project'' and ``joint development'' 
relating to 49 U.S.C. 5302(a)(1)(G). One commenter suggested that 
FTA use the statutory definition of joint development rather than 
attempting to create a new definition for this guidance. This same 
commenter asked FTA to define the term ``historic transportation 
properties.'' Another commenter asked FTA for clear definitions of 
``joint development,'' ``joint development activity,'' ``joint 
development project,'' and ``joint development improvement.'' This 
same commenter inquired whether joint development is limited to 
development that includes a functionally required element of the 
transit facility, or encompasses development on federally assisted 
land, transferred by lease or sale, within walking distance of a 
transit stop that may only provide increased ridership for the 
transit agency.
    FTA Response: To the commenter that suggested FTA use the 
statutory definition of the term ``joint development,'' FTA responds 
by stating that it interprets the term ``joint development'' to mean 
any public transportation project, improvement or enhancement 
eligible for Federal transit funding pursuant to 49 U.S.C. 
5302(a)(1)(G), a subsection of the statutory definition of ``capital 
project.'' FTA's use of the term joint development in this guidance 
document refers to the type of capital project defined at 49 U.S.C. 
5302(a)(1)(G). FTA will not define the term ``historic 
transportation properties'' in this final Agency guidance. For 
information on historic properties, FTA refers the commenter to the 
National Historic Preservation Act located at 16 U.S.C. 470 et seq. 
Finally, joint development improvements are not limited to 
development that includes a functionally required element of the 
transit project. Any joint development improvement must, however, 
satisfy the statutory criteria at 49 U.S.C. 5302(a)(1)(G) to be 
eligible for funding pursuant to a program established under Federal 
transit law. This Circular seeks to afford FTA grantees maximum 
flexibility within the law to work with the private sector and 
others for purposes of joint development, and FTA 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.

(c) Eligibility Criteria

    Section 5302(a)(1)(G) of Title 49 establishes the following 
criteria for determining whether a joint development improvement is 
eligible for funding pursuant to a program established under 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 
relate 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. FTA interpreted these criteria in its 
notice of proposed guidance, and will respond to comments criterion-
by-criterion, in the order outlined above.

(i) Enhances Economic Development or Incorporates Private Investment

    In its notice of proposed guidance, FTA described the threshold 
requirement for Federal funding of a joint development improvement--
that such improvement either enhance economic development or 
incorporate private investment. In accordance with the statute's use 
of the disjunctive ``or,'' rather than the conjunctive ``and,'' the 
notice of proposed guidance states that 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). FTA received three comments on this requirement, with 
one party offering two comments. All three comments favor FTA's 
description of the threshold requirement for Federal funding of a 
joint development improvement--that such improvement either enhance 
economic development or incorporate private investment. Two 
commenters agreed with FTA's reading of the eligibility requirements 
as disjunctive. The other commenter applauded FTA for not setting 
any monetary thresholds or providing limiting definitions of private 
investments.

(ii)(a) Enhances the Effectiveness of a Public Transportation Project 
and Relates Physically or Functionally to That Public Transportation 
Project

    FTA received two comments on this criterion generally. Both 
commenters suggested that FTA specifically note in the Guidelines 
that if an intercity bus terminal or other facility meets the new or 
enhanced coordination test it does not have to meet the physically 
or functionally related test.
    FTA received four comments on the criterion that a joint 
development improvement enhance the effectiveness of a public 
transportation project. One party agreed with FTA's determination 
that any reasonable forecast of joint development impacts that 
enhance the effectiveness of a public transportation project shall 
satisfy this criterion. Another party disagreed, commenting that 
FTA's use of the term ``reasonable'' as the standard for evaluating 
this criterion may lead to an inconsistent evaluation of projects. A 
third party recommended that FTA make clear in section I of its 
guidance that a project sponsor's reliance on the past results of 
similarly situated projects is sufficient to form the basis of a 
reasonable forecast of joint development impacts that enhance the 
effectiveness of a public transportation project shall satisfy this 
criterion. Another commenter asked FTA to provide an additional 
explanation under section I(c) that would guide FTA staff to 
eliminate the presumed requirement for one-to-one replacement of 
park and ride spaces.
    FTA received ten comments on the criterion that a joint 
development improvement relate physically or functionally to a 
public transportation project. One commenter agreed that the 
functional relationship can be shown by activity or use, and agreed 
with how FTA defined these terms, but recommended that FTA 
specifically note in the guidance that if an intercity bus terminal 
or other facility meets the new or enhanced coordination test, it 
does not have to meet the physically or functionally related test. 
One commenter asked whether an intercity facility located miles away 
from a local transit center would satisfy this criterion; and 
recommended that in order for any intercity bus facility to receive 
Federal assistance, it should satisfy both requirements [physically 
and functionally related] in addition to being subject to a local 
grantee. This same commenter recommended that these facilities 
should not be separated by a major or busy street. Another commenter 
stated that a joint development improvement can be functionally 
related even if it is across a major thoroughfare or unrelated 
property from public transportation as long as it is within walking 
distance of the public transportation facility. One commenter 
suggested that there needs to be a strong functional relationship 
when there is no physical connection to a transit facility; that 
project sponsors should be required to commit to ensuring the 
functional connection by providing a clear connection for users; and 
that funding may be contingent upon a shuttle service connecting the 
joint development to a transit facility. In its notice of proposed 
guidance, FTA used 1500 feet around the center of a public 
transportation project as an example of the distance that most 
people can be expected to safely and conveniently walk to use the 
transit service. Four commenters expressed concern that

[[Page 5798]]

1500 feet is too short a distance, and worry that it may become the 
de facto limitation, despite being clearly labeled as an example. 
One of these commenters agreed that functional relationships should 
not extend beyond the distance most people can be expected to safely 
and conveniently walk to use the transit service.
    FTA Response: FTA directs the commenters to section I(a) of this 
final agency guidance, which indicates that if a joint development 
improvement satisfies the criterion of enhancing the effectiveness 
of a public transportation project and relates physically or 
functionally to that public transportation project, it need not 
establish new or enhanced coordination between public transportation 
and other transportation. The disjunctive nature of this criterion 
is also apparent in the box labeled ``Public Transportation 
Benefit'' on the Joint Development Checklist.
    FTA responds to the commenter that questioned FTA's use of the 
term ``reasonable'' by reminding the commenter that through this 
guidance FTA seeks to afford FTA grantees maximum flexibility within 
the law to work with the private sector and others for purposes of 
joint development, and generally defers to the decisions of the 
project sponsor, negotiating and contracting at arm's length with 
third parties. Successful joint development improvements necessitate 
this flexibility.
    FTA cannot state with certainty that a project sponsor's 
reliance on the past results of similarly situated projects is 
sufficient to form the basis of a reasonable forecast of joint 
development impacts that enhance the effectiveness of a public 
transportation project shall satisfy this criterion. Although past 
results may not be sufficient in all cases, FTA encourages project 
sponsors to utilize such results when forecasting joint development 
impacts that enhance the effectiveness of a public transportation. 
Any reasonable forecast shall satisfy this criterion.
    In response to the comments on the requirement that a joint 
development improvement be physically or functionally related to a 
public transportation project, FTA reemphasizes the following 
points, each of which is addressed in section I(d) of this final 
agency guidance: A joint development improvement is ``physically 
related'' to a public transportation project only if it provides a 
direct physical connection to public transportation services or 
facilities. A joint development improvement is ``functionally 
related'' to a public transportation project if by activity an