Frequently Asked Questions

1. What is joint development?

Typically, it is a construction project undertaken jointly by an FTA grantee with another party, and it occurs in, on or adjoining a transit facility and land in which FTA has an interest. More broadly, it is an income-producing activity involving a third party (that is not the grantee and not FTA), taking place on or with a real estate asset in which FTA has an interest. The third party is the source of the income and other benefits to the grantee; the third party is the party to whom the property is transferred or the lessee who leases the space or ground or air rights.

Joint development activities may be associated with fixed guide-way transit systems that are new, being modernized or being extended; with new or existing inter-modal transfer facilities (facilities that allow for easy transfer between bus and rail, or intra-and inter-city bus, or between bus or rail and bicycles or taxis, or between ferry and bus or rail or some combination thereof) and bus transfer facilities. While additional Federal funds may be used for such a project, the use of Federal funds does not determine a joint development.



2. What is the difference between "joint development" and "transit-oriented development?"

The term joint development is a subset of transit-oriented development. While all joint development is transit-oriented development, not all transit-oriented development meets the three joint development statutory tests of capital project, financial return, and highest and best transit use. Some transit-oriented development that is undertaken by private parties benefits from its proximity to transit without the use of a real estate asset in which FTA has an interest and/or without the use of FTA funds. However, since there are substantial financial benefits for both the transit agency and the developer, whenever possible, joint development opportunities should be explored.



3. May grant funds be used for joint development?

Yes, grant funds may be used to the extent allowable under the definition of a transit capital project in the regulations. Specifically, grant funds may be used to prepare a site for a specific joint development, including demolition of an existing structure, new, relocated or enhanced utilities, foundations, etc. All of these activities are in relation to an existing or new transit facility or an historic transportation facility. If there is no transit nexus, grant funds may not be used. That is, FTA will not consider an historic transportation facility or similar joint development as eligible for grant funds unless there is an underlying transit purpose to the project to begin with.

For example, on a former parking lot surrounding an existing inter-modal center, the transit agency may use grant funds to prepare the property for development. It may mitigate soil contamination, move or enhance utilities to accommodate the new development, and it may build footers or a foundation to facilitate the new development. However, on a similar property one half-mile away from the center, a property without significant transit service (a simple bus stop would not be sufficient), grant funds could not be used.



4. What is the limitation on new improvements for joint development?

The purpose of the Joint Development Policy is to facilitate the use of a real estate asset in which FTA has an interest for a transportation purpose that simultaneously aids in economic development of the land used or generates private investment in the land used, like commercial or residential development. The policy recognizes the impact of transit development on land use development and the interplay between the two. Thus, FTA will allow the use of grant funds for the construction of a transit facility. And, FTA will allow certain costs otherwise born by the private developer of a project, which is physically and functionally connected to the transit project, to be paid out of FTA grant proceeds.

However, FTA is unlikely to allow FTA grant funds to support a free-standing facility (even an otherwise eligible facility such as a daycare or senior care facility, or an intercity bus or rail terminal) that is not part of a transit facility. Although, while FTA will allow grant funds to support an integrated facility, including an intercity bus or rail terminal or a day care center, as part of a transit project, FTA will not allow Federal funds to be used for furniture, fixtures, or equipment required to operate the non-transit facility.



5. Does joint development require a private or nonprofit developer?

Not really. The third party's role need not be that of developer; it may be that of a lessee. For example, the transit agency can lease out its excess space to a senior care or day care provider, in which case the transit agency is the "developer" under FTA's policy. If, however, the project is to build an office/retail complex in the air space above a transit station, only a very large transit agency with its own dedicated revenue source (like a local tax) will have the means to borrow the sums necessary to build and finance the structure. (FTA funds could only be used for the space that has a public transportation use and for uses that are included in the definition of a capital project.)  It will be much easier (though not absolutely necessary) for the grantee to have a private partner who builds and manages the development.

For example, one transit authority has created a private entity (limited partnership) to be eligible to receive and syndicate historic preservation tax credits and thus assist it in developing portions of an historic central train station. This project created seven floors of multi-family rental housing above the floors used for transportation purposes but still within the “shell” of the historic station. The project was financed with a combination of historic preservation tax credits (syndicated to the private sector), and mortgage revenue bonds issued by the city, the proceeds of which were used to make a loan for the project. The transit operator is also a partner in the joint development. The transit operator receives a share of the project revenues for the life of the limited partnership. 

This was eligible on two bases: the rehabilitation of an historic train station as part of the overall transit project was an eligible capital project, and the seven floors of rental housing were paid for out of private funds raised by bond proceeds and the syndication of the tax credits.  The transit agency receives revenues in excess of its limited partnership’s costs of maintaining and operating the facility.



6. How can existing space be used for a joint development?

The transit agency may wish to encourage local economic activity and community services at its existing facilities. Under the Joint Development Policy, the transit agency may identify under-utilized space within its existing structure. It may rehabilitate an existing transit owned facility resulting in excess space, which may be leased for non-transit purposes. It may identify air rights that can be put to greater use without interfering with the transit use below. In these instances, it is important to distinguish between joint development and other types of uses, including:


1. incidental use;


2. leasing or sale and,


3. development of a shared use facility

A Neighborhood Travel and Jobs Center involved just such a joint development. There, the local transit authority was allowed to convert an existing, underutilized office building into a $3 million Neighborhood Travel Center. The center serves as a terminal for bus lines to industrial jobs and it provides the focus for a downtown redevelopment "campus" including jobs training, child care facilities, and a privately-financed development bank.

The tenant finishes for each of these ancillary activities were paid for with non-grant funds, though grant funds were used to rehabilitate the building itself. The tenants will pay market rate rent to the transit authority. FTA grant funds were used to rehabilitate the outside shell and structural members of the building, including necessary repairs to floors, bearing walls, utilities, and surrounding space to accommodate transit buses. The site had to be redesigned to provide a direct pedestrian connection to the nearby light rail stop, while promoting safe passage of the transit buses. This was eligible use of grant funds because it involved activities specifically authorized under the regulations. Ineligible activities (tenant finishes) were paid for out of private or local funds not otherwise used to match the Federal funds.



7. How can FTA's joint development policy assist in providing housing to low and moderate-income households?

While FTA's grant funds cannot be used directly to build housing for low and moderate-income households, developers wishing to provide such housing can benefit from the Joint Development Policy by working closely with transit operators to identify excess or underutilized real estate or opportunities adjacent to proposed new, fixed-guide-way and bus facilities. In each instance, real estate can be leased through a ground lease or air rights lease or transferred through a joint development transfer so as to facilitate housing development.

Furthermore, the developer could benefit from the transit agency's acquisition (consolidation) of the parcels, especially if the transit operator has eminent domain authority, and because of the time and effort to clear title, especially in urban redevelopment areas. The developer can also benefit from the transit agency's capacity to: clear the site, relocate utilities, provide pedestrian connection, and lighting and landscaping of the same. The cost savings to the developer associated with these and other allowable activities can help make possible mixed-income development opportunities that otherwise might not be financially feasible.

In addition, affordable housing is consistent with FTA's Transit Oriented Development goals because households with moderate to low incomes, including seniors and people with disabilities, are less likely to own or be able to operate private automobiles and are more likely to take advantage of public transportation. Moreover, if these individuals can spend less of their income on housing, they can expand their budget for transit. For its part, the transit agency should be able to quantify additional rider-ship as well as the fair return on its investments over time.



8. May FTA funds be used to pay for parking for community service facilities?

Yes. In 2004, a grantee proposed the use of FTA funds for construction of a Day Care Center on property owned by the local university. The Day Care center was to be adjacent to an existing park and ride facility located on the university’s land. Use of the park and ride facility was restricted to university employees only. This proposal was not eligible for FTA funding. The grantee redesigned its proposal to create a transit project, including construction of a transit center with rental space sufficient to accommodate a day care center and a park and ride facility that is to be open to the transit riding public.

The underlying principles in this case are: that community service facilities must be contained within the transit project, the parking for the day care may be supported with FTA funds, and that all other transit facilities supported with FTA funds must be open to the general transit riding public. They cannot be restricted to particular patrons who are not transit riders.



9. Can building a transit facility adjoined to and sharing party walls with an existing building justify using Federal funds to refurbish the entire building?

Generally, the use of grant funds would be limited to the transit facility itself as justified by a feasibility study and the shared party wall and any necessary connections between the transit facility and the rest of the existing building. The connection does not make the existing structure eligible for transit funding absent a public transportation use. The only specific exception to this limitation is that of an historic transportation facility, which by definition is a transit capital project.

However, the acquisition of an otherwise appropriate building for a transit purpose, and its repair or rehabilitation for that purpose, would be an eligible activity. Additional space within such a building, usable for joint development such as public health or day care, could be eligible as well.



10. Are intercity bus and rail stations built as transit capital projects required to return the reasonable cost of their construction to transit?

No, they are not required to return the cost of their construction to transit. FTA has interpreted the intercity bus and rail exception from the prohibition on building a “commercial revenue-producing facility” as indicating that the intent of the Statute was to exempt such facilities from the requirements of other joint development projects.