Notice of Issuance of Final Circular: Guidance on Joint Development, 49715-49718 [2020-17777]
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Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Notices
II. Changes to Circular 7050.1A
A. Fair Share of Revenue
B. Submission and Review Process
C. Technical and Conforming Changes
III. Response to Comments Received
Dated: August 10, 2020.
Lisa Jayne Lawn,
Administrative Officer.
[FR Doc. 2020–17799 Filed 8–13–20; 8:45 am]
BILLING CODE 8040–01–P
DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
[Docket No. FTA–2019–0002]
Notice of Issuance of Final Circular:
Guidance on Joint Development
Federal Transit Administration
(FTA), Transportation (DOT).
ACTION: Notice of availability of final
circular.
AGENCY:
The Federal Transit
Administration (FTA) has placed in the
docket and on its website guidance in
the form of FTA Circular 7050.1B, FTA
Guidance on Joint Development. The
purpose of the final Circular is to
increase flexibility for project sponsors
to pursue joint development projects,
reduce FTA oversight of joint
development agreements negotiated
between project sponsors and their
partners, streamline FTA’s project
eligibility review process, and clarify
prior guidance in FTA Circular 7050.1A.
DATES: The effective date of the Circular
is August 14, 2020.
FOR FURTHER INFORMATION CONTACT: For
policy guidance questions, Margaretta
Veltri, Office of Budget and Policy,
Federal Transit Administration, 1200
New Jersey Ave. SE, Room E52–315,
Washington, DC 20590, phone: (202)
366–5094, or email, margaretta.veltri@
dot.gov. For legal questions, Heather
Ueyama, Office of Chief Counsel, 1200
New Jersey Ave. SE, Room E54–417,
Washington, DC 20590, phone: (202)
366–7374, or email, heather.ueyama@
dot.gov.
SUMMARY:
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SUPPLEMENTARY INFORMATION:
Availability of Final Circular
This notice provides a summary of the
final changes to the FTA Guidance on
Joint Development Circular and
responds to comments received on the
proposed Circular. The final Circular
itself is not included in this notice;
instead, an electronic version may be
found on FTA’s website, at
www.transit.dot.gov, and in the docket,
at www.regulations.gov. Paper copies of
the final Circular may be obtained by
contacting FTA’s Administrative
Services Help Desk, at (202) 366–4865.
Table of Contents
I. Overview
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I. Overview
FTA is finalizing its update to its Joint
Development Circular to increase
flexibility for project sponsors to pursue
joint development projects, reduce FTA
oversight of joint development
agreements negotiated between project
sponsors and their partners, streamline
FTA’s project eligibility review process,
and clarify prior guidance in FTA
Circular 7050.1A. The final changes to
the Circular affect: (1) The minimum
threshold for the statutory ‘‘fair share of
revenue’’ requirement; and (2) the
submission and review process for FTAassisted joint development projects. The
final Circular also incorporates
technical and conforming changes that
increase clarity, conformity with
existing law, and internal consistency.
This notice provides a summary of
changes to Circular 7050.1A, and
addresses comments received in
response to the April 18, 2019 Federal
Register notice of proposed updated
circular and request for comments (84
FR 16339). The final Circular 7050.1B,
FTA Guidance on Joint Development, is
effective immediately and supersedes
Circular 7050.1A. The final Circular
applies to all new projects and those
pending FTA approval at the time of the
Circular’s publication.
II. Changes to Circular 7050.1A
A. Fair Share of Revenue
Section 5302(3)(G)(iii) of title 49,
United States Code, requires FTAassisted joint development projects to
provide a ‘‘fair share of revenue that
will be used for public transportation.’’
Prior to the October 1, 2014 effective
date of Circular 7050.1A, FTA generally
deferred to a project sponsor’s
assessment of a ‘‘fair share of revenue,’’
and did not require any specific amount
of revenue for transit from a joint
development project. FTA defined ‘‘fair
share of revenue’’ in Circular 7050.1A to
incorporate a minimum revenue
threshold that a joint development
project must produce for transit
purposes that at least equals the federal
government’s initial investment in the
joint development project. (79 FR
50,728; 50,731–32).
Over time, FTA has found that
defining a fair share of revenue
minimum threshold unnecessarily
limits the pool of potential projects by
reducing flexibility for project sponsors
and their partners to determine what
amounts to a fair share of revenue.
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Accordingly, the proposed Circular
eliminated the fair share of revenue
minimum threshold and monetary
requirement. FTA received several
comments supporting this proposal. In
response, the final Circular adopts this
change.
FTA allows the amount and form of
revenue received by the project sponsor
to be negotiated between joint
development parties. Consistent with
the proposed Circular and Circular
7050.1A, the project sponsor must
continue to report to FTA the amount
and source of the revenue it will
receive, and the revenue must be used
for transit purposes. FTA advises in the
final Circular that the project sponsor
should determine how to document its
reasonable determination that the terms
and conditions of the joint development
improvement (including the share of
revenue for public transportation which
shall be provided thereunder) are
reasonable and fair to the recipient. For
example, a project sponsor’s Board of
Directors (or similar governing body)
could, following a reasonable
investigation, document the fair share of
revenue determination in a Board
resolution or other Board materials. This
change provides discretion to the
project sponsor, while also ensuring
compliance with the fair share of
revenue requirement in lieu of the
certificate of compliance and baseline
market analysis that FTA no longer
requires, as discussed in Section (B)
below.
Further, in response to a comment,
and to provide additional flexibility to
the project sponsor, FTA will no longer
reserve the right to decline joint
development project funding or
approval if the project does not generate
revenue for the project sponsor.
B. Submission and Review Process
Circular 7050.1A prescribed a process
by which project proposals are
submitted to FTA for review. It required
a formal project proposal to include: (1)
A completed project request form that
contains pertinent information about the
joint development project, including
how the eligibility criteria are to be
satisfied; (2) all proposed agreements
between the project sponsor and project
partners; (3) an executed certificate of
compliance; and (4) two forms
identifying other required and
supplemental documentation, including
a baseline market analysis to
demonstrate a good faith effort to
provide a fair share of revenue to the
project sponsor.
FTA will update the project request
form to reflect the changes regarding the
‘‘fair share of revenue’’ requirement
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described in Section (A) above. The
revised project request form will be
published on FTA’s website at
www.transit.dot.gov/jointdevelopment.
FTA has determined that the
elimination of the fair share of revenue
minimum threshold makes the
submission of a baseline market analysis
and certificate of compliance
unnecessary. Accordingly, the proposed
Circular no longer required project
sponsors to submit either document. In
response to several comments
expressing support for this proposal, the
final Circular finalizes these changes.
This will streamline the review of FTAassisted joint development projects by
reducing the amount of paperwork that
project sponsors must prepare and FTA
must review. In response to another
comment, FTA encourages, but does not
require, project sponsors to conduct
baseline market analyses to better
understand current market conditions
and evaluate the viability of joint
development projects.
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C. Technical and Conforming Changes
The final Circular incorporates several
minor edits for clarity and ease of
reading. One commenter noted that
certain defined terms were not included
in the text of the document. FTA has
reviewed all defined terms to ensure all
are used in the final Circular. For
example, FTA has removed ‘‘original
federal investment’’ and ‘‘affordable
housing’’ from the list of definitions in
Chapter I. These definitions are
unnecessary because all joint
development projects now are subject to
the same statutory fair share of revenue
requirements.
Supporting access to affordable
housing is a long-standing goal of FTA’s
joint development program. In Circular
7050.1A, only certain community
service projects, publicly operated
projects, and affordable housing projects
were exempt from the fair share of
revenue minimum threshold
requirement. In this final Circular,
however, FTA no longer defines a
minimum fair share of revenue
threshold for any type of joint
development project. Two commenters
indicated that this change will increase
flexibility for project sponsors to pursue
a greater range of affordable housing
projects.
The final Circular also no longer
includes a definition of ‘‘incidental use’’
in Section IV.3.e, as the term is already
defined in Chapter I. To the extent
practicable, FTA has removed
redundant references to FTA Circulars
and replaced them with direct
references to the underlying statutes and
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regulations on which the text of the
Circular is based.
The distinction between joint
development and public-private
partnerships, as defined, was edited in
Section II.1.c of the Circular for clarity
and to conform with the definition of
public-private partnership in 49 CFR
650.5.
FTA also updated the Environmental
Requirements in Section V.3 of the
Circular for clarity and accuracy, and
added a reference to the underlying
statute for NEPA re-evaluations (23 CFR
771.129). The Civil Rights sections
(Sections V.5.b and V.6) were updated
for clarity and accuracy as well, and to
accurately reflect the nondiscrimination
prohibitions listed in 49 U.S.C.
53329(b).
The final Circular incorporates
technical corrections for conformity
with existing law. For example, 49
U.S.C. 5302(3)(G)(i) requires that FTAassisted joint development projects
either enhance economic development
or incorporate private investment. In
Section III.3.a.2 of the proposed
Circular, FTA reserved the right to
decline joint development project
funding or approval if the level of
private investment was not meaningful
to promote an economic benefit. FTA
has determined that this language
conflates the statutory text, and clarifies
that per § 5302(3)(G)(i), FTA requires a
showing of either enhancing economic
development or incorporating private
investment—not both. Accordingly,
FTA will no longer reserve the right to
decline project funding or approval if
the level of private investment is not
meaningful to promote an economic
benefit. Further, FTA clarified the use of
the terms ‘‘program income’’ and
‘‘period of performance’’ when
describing proceeds generated from
joint development projects. ‘‘Program
income’’ is defined as gross income
‘‘generated by a supported activity or
earned as a result of the Federal award
during the period of performance.’’ (2
CFR 200.80). ‘‘Period of performance’’ is
defined as the duration of time
designated within the initial grant. (2
CFR 200.77). FTA has determined that
the term ‘‘program income’’ does not
accurately describe proceeds derived
from FTA-assisted joint development
projects, as such projects often continue
beyond the time designated within an
initial grant. For clarity and accuracy,
FTA has therefore revised the term
‘‘program income’’ to ‘‘revenue’’ in
several places throughout the Circular.
FTA has also updated the final
Circular to ensure internal consistency.
Although FTA declines to provide a
minimum threshold for both the
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statutory ‘‘fair share of revenue’’ and
‘‘fair share of costs’’ requirements, the
Circular provided an inconsistent level
of discretion to the project sponsor for
each requirement. As discussed in
Section (A) above, with respect to ‘‘fair
share of revenue,’’ the final Circular
eliminates FTA’s reservation of the right
to decline joint development project
funding or approval if the project does
not generate revenue. For consistency,
FTA has eliminated a similar restriction
with respect to the ‘‘fair share of costs’’
requirement—FTA will no longer
reserve the right to decline joint
development project funding or
approval if a rental payment, or other
means, is less than the actual cost to the
project sponsor to operate and maintain
the space in its facility. FTA made this
change because this language
unnecessarily inhibits a project
sponsor’s flexibility when making a
‘‘fair share of costs’’ determination and
is inconsistent with the level of
discretion that FTA provides with
respect to the ‘‘fair share of revenue’’
requirement.
FTA has also determined that the
Circular provided inconsistent guidance
on how a project sponsor should
document compliance with certain
statutory requirements. In response to
comments regarding the ‘‘fair share of
revenue’’ determination, the final
Circular incorporates a recommendation
that the project sponsor should
determine how to document its
reasonable determination that the terms
and conditions of the joint development
improvement (including the share of
revenue for public transportation that
shall be provided thereunder) are
reasonable and fair to the recipient. For
consistency, the final Circular
incorporates similar recommendations
with respect to the § 5302(3)(G)(i)
‘‘private investment’’ and
§ 5302(3)(G)(iv) ‘‘fair share of costs’’
determinations. Regarding ‘‘private
investment,’’ the final Circular advises
that a project sponsor should determine
how to document its reasonable
determination that the level of private
investment is reasonable. Regarding
‘‘fair share of costs,’’ the final Circular
advises that a project sponsor should
determine how to document its
reasonable determination that a rental
payment, or other means, is reasonable
and fair to the recipient. These changes
ensure a consistent level of flexibility
and discretion to the project sponsor
when documenting its compliance with
each of these statutory requirements.
III. Response to Comments Received
Twelve parties submitted sixty-one
comments in response to FTA’s April
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18, 2019 notice of Proposed Changes to
the Joint Development Circular. As
outlined in Section II, comments
addressed: (A) Fair Share of Revenue,
(B) Submission and Review Process, and
(C) Technical and Conforming Changes,
including general comments on the
circular outside the scope of the
proposed updates.
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A. Fair Share of Revenue
In the Notice of Proposed Update to
the Joint Development Circular, FTA
invited comments on the proposal to no
longer define a minimum revenue
threshold. Section 5302(3)(G)(iii) of title
49, United States Code, requires FTAassisted joint development projects to
provide a ‘‘fair share of revenue that
will be used for public transportation.’’
Removing the minimum revenue
threshold for the fair share of revenue
requirement increases flexibility by
allowing project sponsors to determine
what constitutes a fair share of revenue
in joint development projects. FTA will
still require the project sponsor to report
the expected amount of revenue it will
receive, and its funding sources.
FTA received fifteen comments on the
fair share of revenue requirement, most
of which supported no longer defining
a fair share of revenue minimum
threshold. One commenter suggested
FTA clarify that the removal of a
minimum threshold should not be
interpreted as a fair market value
requirement by default. One comment
sought specific clarification of the
documentation that would be required
to demonstrate a fair share of revenue
meeting FTA’s expectations.
Two commenters asked when to
report on the expected revenue for a
project, specifically: (1) Whether the
amount of revenue should be reported
as part of the joint development
application or later in the joint
development process, and (2) if a
determination of revenue is required in
the joint development submission,
whether this still functionally creates a
minimum threshold. Another
commenter sought clarification on how
the proposed changes would affect joint
development projects that advance
community service or publicly operated
projects, or affordable housing.
One commenter suggested FTA not
retain the right to decline funding if a
project does not generate revenue.
Another commenter suggested FTA
require the project sponsor’s General
Manager or Chief Executive Officer to
certify that the terms and conditions of
the joint development project are
commercially reasonable and fair to the
project sponsor.
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FTA Response
B. Submission and Review Process
No longer defining a fair share of
revenue minimum threshold is not new
for FTA’s joint development process. In
2007, FTA’s guidance on joint
development deferred to project
sponsors and parties involved to
determine what constitutes a fair share
of revenue (72 FR 5788). The final
updated Circular will no longer impose
a fair share minimum threshold and
defers to the project sponsors and
parties involved to determine a fair
share of revenue. In response to
comments received, FTA has removed
the provision reserving FTA’s right to
decline funding for joint development
projects that do not generate revenue.
FTA has declined to add clarification
that the elimination of a minimum
threshold should not be interpreted as a
fair market value requirement by
default, as this would be inconsistent
with FTA’s policy to not define ‘‘fair
share of revenue.’’ In response to
comments on reporting requirements for
expected revenue, FTA will continue to
require the project sponsor to report the
fair share of revenue and the sources of
funding in the joint development
application submitted to FTA. In
response to comments regarding the
documentation of a fair share of revenue
determination, FTA has added a
recommendation that the project
sponsor should determine how to
document its reasonable determination
that the terms and conditions of the
joint development improvement
(including the share of revenue for
public transportation that shall be
provided thereunder) are reasonable and
fair to the recipient. FTA has adopted
similar recommendations with respect
to the statutory ‘‘private investment’’
and ‘‘fair share of costs’’ requirements.
Since FTA will no longer define a fair
share of revenue threshold, the
proposed changes will now require all
joint development projects to follow the
same requirements regarding the fair
share of revenue—including community
service projects, publicly operated
projects, and affordable housing.
In response to the suggestion that FTA
require the project sponsor’s General
Manager or Chief Executive Officer
(CEO) to certify that the terms and
conditions of the joint development
project are commercially reasonable and
fair to the project sponsor, FTA has
removed this requirement. It will be at
the discretion of the project sponsor and
parties involved if they want the
General Manager or CEO to certify the
joint development project.
FTA received seven comments on the
proposed changes to the submission and
review process. Most comments
expressed support for the changes.
Under the proposed changes, FTA will
no longer require project sponsors to
submit a baseline market analysis or
certificate of compliance. One
commenter noted that a baseline market
study may continue to be useful in
providing an expected amount for the
fair share of revenue; another
commenter suggested updating the
Certificate of Compliance requirement
rather than eliminating it.
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FTA Response
FTA agrees that a baseline market
study may continue to be useful in
providing an expected amount for the
fair share of revenue. While a baseline
market analysis is no longer required for
submission, project sponsors are still
encouraged to conduct baseline market
analyses to better understand current
market conditions and evaluate the
viability of joint development projects.
Eliminating the Certificate of
Compliance requirement will streamline
the review of FTA-assisted joint
development projects by reducing the
amount of paperwork that project
sponsors must prepare and FTA must
review. However, when requesting a
formal FTA review of the proposed
project, a project sponsor will still
submit a completed Joint Development
Project Request form and a proposed
Joint Development Agreement, along
with any supplemental documentation.
FTA approval of a proposed joint
development project will be contingent
upon the project sponsor satisfying the
eligibility criteria set forth in 49 U.S.C.
5302(3)(G) and complying with the
Uniform Assistance and Real Property
Acquisition Policies Act of 1970, as
amended (Uniform Act), and the
Uniform Administrative Requirements
at 2 CFR parts 200 and 1201.
Project sponsors are also encouraged
to submit joint development project
proposals for preliminary FTA review,
prior to determining the terms and
conditions to be agreed upon by all
parties in the joint development project.
C. Notice of Update to Joint
Development Circular Generally
FTA received thirty-nine general
comments, covering a wide range of
topics, including: Real property, the
period of performance as it pertains to
program income, and FTA policy.
Several commenters requested
clarification on the requirements and
terminology in the Circular. Comments
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Federal Register / Vol. 85, No. 158 / Friday, August 14, 2020 / Notices
overall were receptive to the proposed
changes.
Nine comments—including eight from
transit agencies—were written in direct
support of the proposed changes to the
Circular. Sixteen comments addressed
concerns or asked questions about real
property; specifically regarding
disposition, incidental use, and federal
requirements on FTA-funded real
property. Three comments sought
clarification of the term ‘‘period of
performance’’ under which FTA
requirements attach. Eleven comments
offered suggestions for clarifying
language in the Circular generally. One
of these comments suggested that in
Section III.3.a of the Circular, FTA
should consolidate the ‘‘enhances
economic development’’ and
‘‘incorporates private investment’’ subelements into one element.
apply separate federal requirements to
joint development projects using real
property are outside the scope of this
update. Terminology in this Circular has
been updated only as it relates to
substantive changes in policy related to
the ‘‘fair share of revenue’’ requirement
and the submission and review process
for FTA-assisted joint development
projects, as well as the technical and
conforming changes discussed in
Section (II.C) above.
FTA disagrees that the ‘‘enhances
economic development’’ and
‘‘incorporates private investment’’ subelements should be consolidated in
Section III.3.a of the Circular.
Consolidating these two items would
conflate the text of 49 U.S.C.
5302(3)(G)(i), which requires either
economic enhancement or private
investment—not both.
FTA Response
FTA has included insights from
several comments, and answered many
of the questions received, in the final
updates to the Circular. However,
several comments addressed subjects
outside the scope of the proposed
changes. These comments were
reviewed and will be useful in the
development of FTA programs and
guidance in the future.
Regarding real property, any joint
development project that includes FTA
funding or FTA-assisted property is an
FTA-assisted joint development project
and must comply with the requirements
and procedures set forth in Circular
7050.1B. FTA-assisted property
includes land previously acquired with
FTA funds.
While joint development can be
considered a form of transit-oriented
development, it is usually much smaller
in scope and always uses FTA-assisted
project property or a direct investment
of FTA grant funds. FTA assistance may
not be used in the construction of
transit-oriented development that is not
eligible FTA-assisted joint development.
However, FTA assistance may be used
to plan transit-oriented development
that is not eligible FTA-assisted joint
development, in conjunction with
transit projects.
Under the definition of program
income, ‘‘period of performance’’ refers
to the duration of time designated
within the initial grant. In response to
a comment requesting clarification
regarding FTA’s use of the terms
‘‘program income’’ and ‘‘period of
performance’’ when describing proceeds
generated from joint development
projects, FTA has revised ‘‘program
income’’ to ‘‘revenue’’ in several places
throughout the Circular. Suggestions to
K. Jane Williams,
Deputy Administrator.
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[FR Doc. 2020–17777 Filed 8–13–20; 8:45 am]
BILLING CODE 4910–57–P
DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
[FTA Docket No. FTA 2020–0007]
Agency Information Collection Activity
Under OMB Review
Federal Transit Administration,
Transportation (DOT).
ACTION: Notice of request for comments.
AGENCY:
In compliance with the
Paperwork Reduction Act of 1995, this
notice announces that the Information
Collection Requirements (ICRs)
abstracted below have been forwarded
to the Office of Management and Budget
(OMB) for review and comment. The
ICR describe the nature of the
information collection and their
expected burdens.
DATES: Comments must be submitted on
or before September 14, 2020.
ADDRESSES: Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to www.reginfo.gov/public/do/
PRAMain. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function.
Comments are Invited On: Whether
the proposed collection of information
is necessary for the proper performance
of the functions of the Department,
including whether the information will
have practical utility; the accuracy of
SUMMARY:
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the Department’s estimate of the burden
of the proposed information collection;
ways to enhance the quality, utility, and
clarity of the information to be
collected; and ways to minimize the
burden of the collection of information
on respondents, including the use of
automated collection techniques or
other forms of information technology.
A comment to OMB is best assured of
having its full effect if OMB receives it
within 30 days of publication of this
notice in the Federal Register.
FOR FURTHER INFORMATION CONTACT: Tia
Swain, Office of Administration,
Management Planning Division, 1200
New Jersey Avenue, SE, Mail Stop
TAD–10, Washington, DC 20590 (202)
366–0354 or tia.swain@dot.gov.
SUPPLEMENTARY INFORMATION: The
Paperwork Reduction Act of 1995
(PRA), Public Law 104–13, Section 2,
109 Stat. 163 (1995) (codified as revised
at 44 U.S.C. 3501–3520), and its
implementing regulations, 5 CFR part
1320, require Federal agencies to issue
two notices seeking public comment on
information collection activities before
OMB may approve paperwork packages.
44 U.S.C. 3506, 3507; 5 CFR 1320.5,
1320.8(d)(1), 1320.12. On October 18,
2019, FTA published a 60-day notice
(84 FR 56012) in the Federal Register
soliciting comments on the ICR that the
agency was seeking OMB approval. FTA
received no comments after issuing this
60-day notice. Accordingly, DOT
announces that these information
collection activities have been reevaluated and certified under 5 CFR
1320.5(a) and forwarded to OMB for
review and approval pursuant to 5 CFR
1320.12(c).
Before OMB decides whether to
approve these proposed collections of
information, it must provide 30 days for
public comment. 44 U.S.C. 3507(b); 5
CFR 1320.12(d). Federal law requires
OMB to approve or disapprove
paperwork packages between 30 and 60
days after the 30-day notice is
published. 44 U.S.C. 3507(b)–(c); 5 CFR
1320.12(d); see also 60 FR 44978, 44983,
Aug. 29, 1995. OMB believes that the
30-day notice informs the regulated
community to file relevant comments
and affords the agency adequate time to
digest public comments before it
renders a decision. 60 FR 44983, Aug.
29, 1995. Therefore, respondents should
submit their respective comments to
OMB within 30 days of publication to
best ensure having their full effect. 5
CFR 1320.12(c); see also 60 FR 44983,
Aug. 29, 1995.
The summaries below describe the
nature of the information collection
requirements (ICRs) and the expected
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]]>Agencies
[Federal Register Volume 85, Number 158 (Friday, August 14, 2020)]
[Notices]
[Pages 49715-49718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17777]
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
[Docket No. FTA-2019-0002]
Notice of Issuance of Final Circular: Guidance on Joint
Development
AGENCY: Federal Transit Administration (FTA), Transportation (DOT).
ACTION: Notice of availability of final circular.
-----------------------------------------------------------------------
SUMMARY: The Federal Transit Administration (FTA) has placed in the
docket and on its website guidance in the form of FTA Circular 7050.1B,
FTA Guidance on Joint Development. The purpose of the final Circular is
to increase flexibility for project sponsors to pursue joint
development projects, reduce FTA oversight of joint development
agreements negotiated between project sponsors and their partners,
streamline FTA's project eligibility review process, and clarify prior
guidance in FTA Circular 7050.1A.
DATES: The effective date of the Circular is August 14, 2020.
FOR FURTHER INFORMATION CONTACT: For policy guidance questions,
Margaretta Veltri, Office of Budget and Policy, Federal Transit
Administration, 1200 New Jersey Ave. SE, Room E52-315, Washington, DC
20590, phone: (202) 366-5094, or email, [email protected]. For
legal questions, Heather Ueyama, Office of Chief Counsel, 1200 New
Jersey Ave. SE, Room E54-417, Washington, DC 20590, phone: (202) 366-
7374, or email, [email protected].
SUPPLEMENTARY INFORMATION:
Availability of Final Circular
This notice provides a summary of the final changes to the FTA
Guidance on Joint Development Circular and responds to comments
received on the proposed Circular. The final Circular itself is not
included in this notice; instead, an electronic version may be found on
FTA's website, at www.transit.dot.gov, and in the docket, at
www.regulations.gov. Paper copies of the final Circular may be obtained
by contacting FTA's Administrative Services Help Desk, at (202) 366-
4865.
Table of Contents
I. Overview
II. Changes to Circular 7050.1A
A. Fair Share of Revenue
B. Submission and Review Process
C. Technical and Conforming Changes
III. Response to Comments Received
I. Overview
FTA is finalizing its update to its Joint Development Circular to
increase flexibility for project sponsors to pursue joint development
projects, reduce FTA oversight of joint development agreements
negotiated between project sponsors and their partners, streamline
FTA's project eligibility review process, and clarify prior guidance in
FTA Circular 7050.1A. The final changes to the Circular affect: (1) The
minimum threshold for the statutory ``fair share of revenue''
requirement; and (2) the submission and review process for FTA-assisted
joint development projects. The final Circular also incorporates
technical and conforming changes that increase clarity, conformity with
existing law, and internal consistency.
This notice provides a summary of changes to Circular 7050.1A, and
addresses comments received in response to the April 18, 2019 Federal
Register notice of proposed updated circular and request for comments
(84 FR 16339). The final Circular 7050.1B, FTA Guidance on Joint
Development, is effective immediately and supersedes Circular 7050.1A.
The final Circular applies to all new projects and those pending FTA
approval at the time of the Circular's publication.
II. Changes to Circular 7050.1A
A. Fair Share of Revenue
Section 5302(3)(G)(iii) of title 49, United States Code, requires
FTA-assisted joint development projects to provide a ``fair share of
revenue that will be used for public transportation.'' Prior to the
October 1, 2014 effective date of Circular 7050.1A, FTA generally
deferred to a project sponsor's assessment of a ``fair share of
revenue,'' and did not require any specific amount of revenue for
transit from a joint development project. FTA defined ``fair share of
revenue'' in Circular 7050.1A to incorporate a minimum revenue
threshold that a joint development project must produce for transit
purposes that at least equals the federal government's initial
investment in the joint development project. (79 FR 50,728; 50,731-32).
Over time, FTA has found that defining a fair share of revenue
minimum threshold unnecessarily limits the pool of potential projects
by reducing flexibility for project sponsors and their partners to
determine what amounts to a fair share of revenue. Accordingly, the
proposed Circular eliminated the fair share of revenue minimum
threshold and monetary requirement. FTA received several comments
supporting this proposal. In response, the final Circular adopts this
change.
FTA allows the amount and form of revenue received by the project
sponsor to be negotiated between joint development parties. Consistent
with the proposed Circular and Circular 7050.1A, the project sponsor
must continue to report to FTA the amount and source of the revenue it
will receive, and the revenue must be used for transit purposes. FTA
advises in the final Circular that the project sponsor should determine
how to document its reasonable determination that the terms and
conditions of the joint development improvement (including the share of
revenue for public transportation which shall be provided thereunder)
are reasonable and fair to the recipient. For example, a project
sponsor's Board of Directors (or similar governing body) could,
following a reasonable investigation, document the fair share of
revenue determination in a Board resolution or other Board materials.
This change provides discretion to the project sponsor, while also
ensuring compliance with the fair share of revenue requirement in lieu
of the certificate of compliance and baseline market analysis that FTA
no longer requires, as discussed in Section (B) below.
Further, in response to a comment, and to provide additional
flexibility to the project sponsor, FTA will no longer reserve the
right to decline joint development project funding or approval if the
project does not generate revenue for the project sponsor.
B. Submission and Review Process
Circular 7050.1A prescribed a process by which project proposals
are submitted to FTA for review. It required a formal project proposal
to include: (1) A completed project request form that contains
pertinent information about the joint development project, including
how the eligibility criteria are to be satisfied; (2) all proposed
agreements between the project sponsor and project partners; (3) an
executed certificate of compliance; and (4) two forms identifying other
required and supplemental documentation, including a baseline market
analysis to demonstrate a good faith effort to provide a fair share of
revenue to the project sponsor.
FTA will update the project request form to reflect the changes
regarding the ``fair share of revenue'' requirement
[[Page 49716]]
described in Section (A) above. The revised project request form will
be published on FTA's website at www.transit.dot.gov/jointdevelopment.
FTA has determined that the elimination of the fair share of
revenue minimum threshold makes the submission of a baseline market
analysis and certificate of compliance unnecessary. Accordingly, the
proposed Circular no longer required project sponsors to submit either
document. In response to several comments expressing support for this
proposal, the final Circular finalizes these changes. This will
streamline the review of FTA-assisted joint development projects by
reducing the amount of paperwork that project sponsors must prepare and
FTA must review. In response to another comment, FTA encourages, but
does not require, project sponsors to conduct baseline market analyses
to better understand current market conditions and evaluate the
viability of joint development projects.
C. Technical and Conforming Changes
The final Circular incorporates several minor edits for clarity and
ease of reading. One commenter noted that certain defined terms were
not included in the text of the document. FTA has reviewed all defined
terms to ensure all are used in the final Circular. For example, FTA
has removed ``original federal investment'' and ``affordable housing''
from the list of definitions in Chapter I. These definitions are
unnecessary because all joint development projects now are subject to
the same statutory fair share of revenue requirements.
Supporting access to affordable housing is a long-standing goal of
FTA's joint development program. In Circular 7050.1A, only certain
community service projects, publicly operated projects, and affordable
housing projects were exempt from the fair share of revenue minimum
threshold requirement. In this final Circular, however, FTA no longer
defines a minimum fair share of revenue threshold for any type of joint
development project. Two commenters indicated that this change will
increase flexibility for project sponsors to pursue a greater range of
affordable housing projects.
The final Circular also no longer includes a definition of
``incidental use'' in Section IV.3.e, as the term is already defined in
Chapter I. To the extent practicable, FTA has removed redundant
references to FTA Circulars and replaced them with direct references to
the underlying statutes and regulations on which the text of the
Circular is based.
The distinction between joint development and public-private
partnerships, as defined, was edited in Section II.1.c of the Circular
for clarity and to conform with the definition of public-private
partnership in 49 CFR 650.5.
FTA also updated the Environmental Requirements in Section V.3 of
the Circular for clarity and accuracy, and added a reference to the
underlying statute for NEPA re-evaluations (23 CFR 771.129). The Civil
Rights sections (Sections V.5.b and V.6) were updated for clarity and
accuracy as well, and to accurately reflect the nondiscrimination
prohibitions listed in 49 U.S.C. 53329(b).
The final Circular incorporates technical corrections for
conformity with existing law. For example, 49 U.S.C. 5302(3)(G)(i)
requires that FTA-assisted joint development projects either enhance
economic development or incorporate private investment. In Section
III.3.a.2 of the proposed Circular, FTA reserved the right to decline
joint development project funding or approval if the level of private
investment was not meaningful to promote an economic benefit. FTA has
determined that this language conflates the statutory text, and
clarifies that per Sec. 5302(3)(G)(i), FTA requires a showing of
either enhancing economic development or incorporating private
investment--not both. Accordingly, FTA will no longer reserve the right
to decline project funding or approval if the level of private
investment is not meaningful to promote an economic benefit. Further,
FTA clarified the use of the terms ``program income'' and ``period of
performance'' when describing proceeds generated from joint development
projects. ``Program income'' is defined as gross income ``generated by
a supported activity or earned as a result of the Federal award during
the period of performance.'' (2 CFR 200.80). ``Period of performance''
is defined as the duration of time designated within the initial grant.
(2 CFR 200.77). FTA has determined that the term ``program income''
does not accurately describe proceeds derived from FTA-assisted joint
development projects, as such projects often continue beyond the time
designated within an initial grant. For clarity and accuracy, FTA has
therefore revised the term ``program income'' to ``revenue'' in several
places throughout the Circular.
FTA has also updated the final Circular to ensure internal
consistency. Although FTA declines to provide a minimum threshold for
both the statutory ``fair share of revenue'' and ``fair share of
costs'' requirements, the Circular provided an inconsistent level of
discretion to the project sponsor for each requirement. As discussed in
Section (A) above, with respect to ``fair share of revenue,'' the final
Circular eliminates FTA's reservation of the right to decline joint
development project funding or approval if the project does not
generate revenue. For consistency, FTA has eliminated a similar
restriction with respect to the ``fair share of costs'' requirement--
FTA will no longer reserve the right to decline joint development
project funding or approval if a rental payment, or other means, is
less than the actual cost to the project sponsor to operate and
maintain the space in its facility. FTA made this change because this
language unnecessarily inhibits a project sponsor's flexibility when
making a ``fair share of costs'' determination and is inconsistent with
the level of discretion that FTA provides with respect to the ``fair
share of revenue'' requirement.
FTA has also determined that the Circular provided inconsistent
guidance on how a project sponsor should document compliance with
certain statutory requirements. In response to comments regarding the
``fair share of revenue'' determination, the final Circular
incorporates a recommendation that the project sponsor should determine
how to document its reasonable determination that the terms and
conditions of the joint development improvement (including the share of
revenue for public transportation that shall be provided thereunder)
are reasonable and fair to the recipient. For consistency, the final
Circular incorporates similar recommendations with respect to the Sec.
5302(3)(G)(i) ``private investment'' and Sec. 5302(3)(G)(iv) ``fair
share of costs'' determinations. Regarding ``private investment,'' the
final Circular advises that a project sponsor should determine how to
document its reasonable determination that the level of private
investment is reasonable. Regarding ``fair share of costs,'' the final
Circular advises that a project sponsor should determine how to
document its reasonable determination that a rental payment, or other
means, is reasonable and fair to the recipient. These changes ensure a
consistent level of flexibility and discretion to the project sponsor
when documenting its compliance with each of these statutory
requirements.
III. Response to Comments Received
Twelve parties submitted sixty-one comments in response to FTA's
April
[[Page 49717]]
18, 2019 notice of Proposed Changes to the Joint Development Circular.
As outlined in Section II, comments addressed: (A) Fair Share of
Revenue, (B) Submission and Review Process, and (C) Technical and
Conforming Changes, including general comments on the circular outside
the scope of the proposed updates.
A. Fair Share of Revenue
In the Notice of Proposed Update to the Joint Development Circular,
FTA invited comments on the proposal to no longer define a minimum
revenue threshold. Section 5302(3)(G)(iii) of title 49, United States
Code, requires FTA-assisted joint development projects to provide a
``fair share of revenue that will be used for public transportation.''
Removing the minimum revenue threshold for the fair share of revenue
requirement increases flexibility by allowing project sponsors to
determine what constitutes a fair share of revenue in joint development
projects. FTA will still require the project sponsor to report the
expected amount of revenue it will receive, and its funding sources.
FTA received fifteen comments on the fair share of revenue
requirement, most of which supported no longer defining a fair share of
revenue minimum threshold. One commenter suggested FTA clarify that the
removal of a minimum threshold should not be interpreted as a fair
market value requirement by default. One comment sought specific
clarification of the documentation that would be required to
demonstrate a fair share of revenue meeting FTA's expectations.
Two commenters asked when to report on the expected revenue for a
project, specifically: (1) Whether the amount of revenue should be
reported as part of the joint development application or later in the
joint development process, and (2) if a determination of revenue is
required in the joint development submission, whether this still
functionally creates a minimum threshold. Another commenter sought
clarification on how the proposed changes would affect joint
development projects that advance community service or publicly
operated projects, or affordable housing.
One commenter suggested FTA not retain the right to decline funding
if a project does not generate revenue. Another commenter suggested FTA
require the project sponsor's General Manager or Chief Executive
Officer to certify that the terms and conditions of the joint
development project are commercially reasonable and fair to the project
sponsor.
FTA Response
No longer defining a fair share of revenue minimum threshold is not
new for FTA's joint development process. In 2007, FTA's guidance on
joint development deferred to project sponsors and parties involved to
determine what constitutes a fair share of revenue (72 FR 5788). The
final updated Circular will no longer impose a fair share minimum
threshold and defers to the project sponsors and parties involved to
determine a fair share of revenue. In response to comments received,
FTA has removed the provision reserving FTA's right to decline funding
for joint development projects that do not generate revenue. FTA has
declined to add clarification that the elimination of a minimum
threshold should not be interpreted as a fair market value requirement
by default, as this would be inconsistent with FTA's policy to not
define ``fair share of revenue.'' In response to comments on reporting
requirements for expected revenue, FTA will continue to require the
project sponsor to report the fair share of revenue and the sources of
funding in the joint development application submitted to FTA. In
response to comments regarding the documentation of a fair share of
revenue determination, FTA has added a recommendation that the project
sponsor should determine how to document its reasonable determination
that the terms and conditions of the joint development improvement
(including the share of revenue for public transportation that shall be
provided thereunder) are reasonable and fair to the recipient. FTA has
adopted similar recommendations with respect to the statutory ``private
investment'' and ``fair share of costs'' requirements.
Since FTA will no longer define a fair share of revenue threshold,
the proposed changes will now require all joint development projects to
follow the same requirements regarding the fair share of revenue--
including community service projects, publicly operated projects, and
affordable housing.
In response to the suggestion that FTA require the project
sponsor's General Manager or Chief Executive Officer (CEO) to certify
that the terms and conditions of the joint development project are
commercially reasonable and fair to the project sponsor, FTA has
removed this requirement. It will be at the discretion of the project
sponsor and parties involved if they want the General Manager or CEO to
certify the joint development project.
B. Submission and Review Process
FTA received seven comments on the proposed changes to the
submission and review process. Most comments expressed support for the
changes. Under the proposed changes, FTA will no longer require project
sponsors to submit a baseline market analysis or certificate of
compliance. One commenter noted that a baseline market study may
continue to be useful in providing an expected amount for the fair
share of revenue; another commenter suggested updating the Certificate
of Compliance requirement rather than eliminating it.
FTA Response
FTA agrees that a baseline market study may continue to be useful
in providing an expected amount for the fair share of revenue. While a
baseline market analysis is no longer required for submission, project
sponsors are still encouraged to conduct baseline market analyses to
better understand current market conditions and evaluate the viability
of joint development projects.
Eliminating the Certificate of Compliance requirement will
streamline the review of FTA-assisted joint development projects by
reducing the amount of paperwork that project sponsors must prepare and
FTA must review. However, when requesting a formal FTA review of the
proposed project, a project sponsor will still submit a completed Joint
Development Project Request form and a proposed Joint Development
Agreement, along with any supplemental documentation. FTA approval of a
proposed joint development project will be contingent upon the project
sponsor satisfying the eligibility criteria set forth in 49 U.S.C.
5302(3)(G) and complying with the Uniform Assistance and Real Property
Acquisition Policies Act of 1970, as amended (Uniform Act), and the
Uniform Administrative Requirements at 2 CFR parts 200 and 1201.
Project sponsors are also encouraged to submit joint development
project proposals for preliminary FTA review, prior to determining the
terms and conditions to be agreed upon by all parties in the joint
development project.
C. Notice of Update to Joint Development Circular Generally
FTA received thirty-nine general comments, covering a wide range of
topics, including: Real property, the period of performance as it
pertains to program income, and FTA policy. Several commenters
requested clarification on the requirements and terminology in the
Circular. Comments
[[Page 49718]]
overall were receptive to the proposed changes.
Nine comments--including eight from transit agencies--were written
in direct support of the proposed changes to the Circular. Sixteen
comments addressed concerns or asked questions about real property;
specifically regarding disposition, incidental use, and federal
requirements on FTA-funded real property. Three comments sought
clarification of the term ``period of performance'' under which FTA
requirements attach. Eleven comments offered suggestions for clarifying
language in the Circular generally. One of these comments suggested
that in Section III.3.a of the Circular, FTA should consolidate the
``enhances economic development'' and ``incorporates private
investment'' sub- elements into one element.
FTA Response
FTA has included insights from several comments, and answered many
of the questions received, in the final updates to the Circular.
However, several comments addressed subjects outside the scope of the
proposed changes. These comments were reviewed and will be useful in
the development of FTA programs and guidance in the future.
Regarding real property, any joint development project that
includes FTA funding or FTA-assisted property is an FTA-assisted joint
development project and must comply with the requirements and
procedures set forth in Circular 7050.1B. FTA-assisted property
includes land previously acquired with FTA funds.
While joint development can be considered a form of transit-
oriented development, it is usually much smaller in scope and always
uses FTA-assisted project property or a direct investment of FTA grant
funds. FTA assistance may not be used in the construction of transit-
oriented development that is not eligible FTA-assisted joint
development. However, FTA assistance may be used to plan transit-
oriented development that is not eligible FTA-assisted joint
development, in conjunction with transit projects.
Under the definition of program income, ``period of performance''
refers to the duration of time designated within the initial grant. In
response to a comment requesting clarification regarding FTA's use of
the terms ``program income'' and ``period of performance'' when
describing proceeds generated from joint development projects, FTA has
revised ``program income'' to ``revenue'' in several places throughout
the Circular. Suggestions to apply separate federal requirements to
joint development projects using real property are outside the scope of
this update. Terminology in this Circular has been updated only as it
relates to substantive changes in policy related to the ``fair share of
revenue'' requirement and the submission and review process for FTA-
assisted joint development projects, as well as the technical and
conforming changes discussed in Section (II.C) above.
FTA disagrees that the ``enhances economic development'' and
``incorporates private investment'' sub-elements should be consolidated
in Section III.3.a of the Circular. Consolidating these two items would
conflate the text of 49 U.S.C. 5302(3)(G)(i), which requires either
economic enhancement or private investment--not both.
K. Jane Williams,
Deputy Administrator.
[FR Doc. 2020-17777 Filed 8-13-20; 8:45 am]
BILLING CODE 4910-57-P
