FTA Real Estate March 12, 2013 Pam Peckham Realty Specialist

Proposed OMB Uniform Guidance : Cost Principles, Audit, and Administrative Requirements for Federal Awards – as related to Real Estate

Proposed OMB Uniform Guidance To deliver on President Obama's promise of a 21st-Century government that is more efficient, transparent, and creative, the Office of Management and Budget (OMB) is seeking to adjust the Federal government's partnership with non-Federal stakeholders to best achieve program outcomes while we ensure the financial integrity of the dollars we spend. 3

Proposed OMB Uniform Guidance The goal of this effort is to transform our Federal financial assistance framework so that it meets a higher standard of performance on behalf of the American people. Federal grant-making must be streamlined to make the most of taxpayer dollars and ensure financial integrity while delivering the right program outcomes. 4

Proposed OMB Uniform Guidance This proposed guidance would supersede and streamline requirements from OMB Circulars A-21, A-87, A-110, and A-122 (which have been placed in 2 CFR Parts 220, 225, 215, and 230); Circulars A-89, A-102, and A-133; the guidance in Circular A-50 on Single Audit Act follow-up; and pending further review, the Cost Principles for Hospitals at 45 CFR Part 74, Appendix E.2 CFR Parts CFR Part 74 5

Proposed OMB Uniform Guidance Reform Ideas Discussed in the Advance Notice of Proposed Guidance – Section A: Reforms to Administrative Requirements – Section B: Reforms to Cost Principles – Section C: Reforms to Audit Requirements – Section D: Additional Suggestions Outside of the Scope of This Proposed Guidance 6

Proposed OMB Uniform Guidance Comments must be received by OMB electronically through no later than midnight Eastern Standard Time (E.S.T.) on May 2, Comments on this proposal must be submitted electronically at 7

Proposed OMB Uniform Guidance Subchapter E under the Administrative Requirements Section references donated property, disposition and appropriate notice under the Property Standards subsection. 8

Proposed OMB Uniform Guidance The value of the donated land and buildings shall not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser and certified by a responsible official of the recipient as required by the Uniform Act. 9

Proposed OMB Uniform Guidance – Agencies may require recipients to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with Federal funds and that use and disposition conditions apply to the property. 10

Proposed OMB Uniform Guidance Subchapter E under the Administrative Requirements Section references real property reporting requirements under the Performance and Financial Monitoring and Reporting subsection. 11

Proposed OMB Uniform Guidance – An agency must require a recipient to submit reports at least annually on the status of real property in which the government retains an interest, unless the Federal interest in the real property extends 15 years or longer. 12

Proposed OMB Uniform Guidance – In those instances where the Federal interest attached is for a period of 15 years or more, the agency, at its option, may require the recipient to report at various multi-year frequencies (e.g., every two years or every three years, not to exceed a five-year reporting period; or an agency may require annual reporting for the first three years of a Federal award and thereafter require reporting every five years). – In such reports, the agency must require that a recipient report critical changes in the status of real property. 13

Proposed OMB Uniform Guidance – For purposes of this section and when used in connection with the acquisition or improvement of real property, equipment, or supplies under an award, Federal interest means the dollar amount that is the product of the: (A) Federal share of total project costs; and (B) Current fair market value of the property, improvements, or both, to the extent the costs of acquiring or improving the property were included as project costs (whether paid by Federal funds or recipient contributions, or through third party in-kind contributions counted toward cost sharing and matching requirements). 14

Categorical Exclusion Guidance

Background FTA has issued two final rules on Categorical Exclusions (CE) that apply to FTA actions: – Addition of new section for FTA CE actions with ten new CEs (23 CFR ) on February 7, 2013 – Addition of Emergency Recovery Action CE (23 CFR (c)(11)) on February 19, 2013 The CEs contained in the final rules were effective upon publication

New Final Rule NPRM – FTA proposed changes to 23 CFR 771, including a new section (Section ) for FTA CEs Final Rule – Effective Date: February 7, 2013 – Designates Section for FTA actions Contains 10 new c-list CEs and 6 new d-list examples – Section is no longer valid for FTA actions

Section ( c ) (1) Acquisition, installation, operation, evaluation, replacement, and improvement of discrete utilities and similar appurtenances (existing and new) within or adjacent to existing transportation right-of-way, such as: utility poles, underground wiring, cables, and information systems; and power substations and utility transfer stations.

Section ( c ) (2) Acquisition, construction, maintenance, rehabilitation, and improvement or limited expansion of stand-alone recreation, pedestrian, or bicycle facilities, such as: a multiuse pathway, lane, trail, or pedestrian bridge; and transit plaza amenities.

Section ( c ) (6) Acquisition or transfer of an interest in real property that is not within or adjacent to recognized environmentally sensitive areas (e.g., wetlands, non-urban parks, wildlife management areas) and does not result in a substantial change in the functional use of the property or in substantial displacements, such as: acquisition for scenic easements or historic sites for the purpose of preserving the site. This CE extends only to acquisitions and transfers that will not limit the evaluation of alternatives for future FTA-assisted projects that make use of the acquired or transferred property.

Section ( c ) (10) Development of facilities for transit and non- transit purposes, located on, above, or adjacent to existing transit facilities, that are not part of a larger transportation project and do not substantially enlarge such facilities, such as: police facilities, daycare facilities, public service facilities, amenities, and commercial, retail, and residential development.

Section ( d ) The “d-list” – Implemented the same way as old list (Section (d)), including the possibility of “unusual circumstances” – Section (d) is generally FTA’s “Other” CE category: paragraphs listed under (d) are only examples of typically categorically excluded actions – Any action can be a CE under the d-list if documentation shows that there is no potential for significant environmental impacts (e.g., any action that fails to meet one of the “conditions” of a CE in the c-list could potentially use a documented CE) – Documentation can be as brief as a paragraph in TEAM

Section ( d ) (3) Acquisition of land for hardship or protective purposes. Hardship and protective buying will be permitted only for a particular parcel or a limited number of parcels. – “Hardship or Protective Property Acquisition” – Mirrors the language found at Section (d)(12) – Applies where the acquisition will not limit the evaluation of alternatives, including shifts in alignment for planned construction projects – No project development on such land may proceed until the NEPA process has been completed

Section ( d ) (4) Acquisition of right-of-way. No project development on the acquired right-of-way may proceed until the NEPA process for such project development, including the consideration of alternatives, has been completed. – “Acquisition of Right-of-Way” – Essentially mirrors the language found at Section (d)(13) – Pursuant to MAP-21 (Section 20016), the “railroad” limitation no longer exists – Due to the broad language, FTA needs documentation to justify purchases through this CE example

Joint Development Guidance

Joint Development Efforts at FTA Proposed Circular – Was published March 7, 2013 for public comment – Single guidance document for grantees – Incorporates MAP-21 provisions FTA Defines Joint Development (JD) Clarifies FTA Policy Provides Framework for Analyzing JD Projects 26

Joint Development : Defined A transit project Integrally related to commercial, residential or mixed-use development; often co-located May include public, private or non-profit development associated with transit capital investments FTA financial assistance = “a federal interest” 27

Joint Development : FTA ’ s Policy FTA supports the use of joint development wherever possible to maximize utility of FTA-funded projects FTA allows the revenue received from an FTA-funded joint development project to be treated as program income FTA recognizes that joint development provides multiple and varied benefits FTA will defer to grantee on business decisions 28

FTA Funding for Joint Development Since joint development is a transit project, generally all FTA planning and capital program funds are available for use! Planning Activities: – FTA/FHWA Metropolitan and Statewide Transportation Planning – Other Federal community development funding programs Capital Activities: – Urbanized Area Formula: Section 5307 – Fixed Guideway Capital Investments: Section 5309 – Elderly and Disabled Formula: Section 5310 – Rural Area Formula: Section 5311 – Bus and Bus Facilities Formula: Section

JD Project Eligibility i. Provides economic benefit;ii. Enhances public transportation;iii. Provides revenue for public transportation; andiv. Requires the JD’s tenants to pay a fair share of the JD’s costs. 30 § 5302(3)(G): “Capital project” means a project for a JD improvement that …

Activities Eligible for FTA Funds Standard capital project activities: Standard capital project activities:  Property acquisition,  Demolition  Site preparation  Utilities  Building Foundations  Walkways  Pedestrian/bike access  Renovation and improvement of historic transportation facilities Open space, site amenities, streetscape elements Open space, site amenities, streetscape elements Parking that links to transit use Parking that links to transit use Standard capital project activities: Standard capital project activities:  Property acquisition,  Demolition  Site preparation  Utilities  Building Foundations  Walkways  Pedestrian/bike access  Renovation and improvement of historic transportation facilities Open space, site amenities, streetscape elements Open space, site amenities, streetscape elements Parking that links to transit use Parking that links to transit use 31 Construction of new or improvement to intermodal transfer facility or transit mall Construction of new or improvement to intermodal transfer facility or transit mall Facility that incorporates community services such as daycare or health care Facility that incorporates community services such as daycare or health care Construction of commercial space Construction of commercial space  FTA funds cannot outfit the space Safety and security equipment/facilities Safety and security equipment/facilities Project development activities Project development activities Professional services Professional services Construction of new or improvement to intermodal transfer facility or transit mall Construction of new or improvement to intermodal transfer facility or transit mall Facility that incorporates community services such as daycare or health care Facility that incorporates community services such as daycare or health care Construction of commercial space Construction of commercial space  FTA funds cannot outfit the space Safety and security equipment/facilities Safety and security equipment/facilities Project development activities Project development activities Professional services Professional services

Joint Development and Real Estate Joint development projects often involve real property – in which there is a federal interest – that is transferred or leased by the transit operator to a third party. Real Property requirements: – Primarily governed by the Uniform Act, 49 U.S.C. 4335(h) and the Common Grant Rule. 32

Use of Real Property Originally Authorized Purpose FTA’s Master Agreement includes joint development purposes that generate program income FTA’s interpretation of 49 C.F.R (g), Program Income, brings revenues derived from JD within the definition of program income. Joint Development Transfers Program income is derived from the recipient encumbering title to FTA funded real property Examples include: leases, covenants, mortgages, deed restrictions, easements and any other contractual arrangements short of a disposition JD transfers do not include sale of real property. Income derived from the sale of real property is not program income C. F. R 18.31( b ) Except as otherwise provided by Federal statutes, real property will be used for the originally authorized purposes as long as needed for that purpose ; and the recipient shall not dispose of or encumber its title or other interests

The Federal Interest and Joint Development Encumbrance of Title Allows joint development financing at market rates using real property as collateral General occurs with property leases Subordination of Federal Interest Driven by business arrangements for joint development transfer FTA would continue to retain a federal interest Incidental Use of Property Is permitted as long as it doesn’t interfere with intended transit use Satisfactory Continuing Control Property must remain available for its intended transit purpose and be able to be accessed by the transit agency/grantee at any time Asset Need Grantee can hold onto property for original transit purpose or for future transit purpose 34

National Transit Institute Real Estate Courses – FTA Real Estate Requirements NTI - Classes for 2013 March 20-21, Seattle, WA April 10-11, Kansas City, MO NTI - Classes for 2014 Salt Lake, Utah Miami, FL Future Webinars

Questions ? Pam Peckham

Federal Transit Administration