These FAQs do not have the force and effect of law and are not meant to bind the public in any way. These FAQs are intended only to provide clarity to the public regarding existing requirements under the law or agency policies. FTA recipients and subrecipients should refer to FTA’s statutes and regulations for applicable requirements.
In most cases, yes.
If a joint development involves the use of property previously acquired with the assistance of an FTA award for which the period of performance has ended, the project sponsor can use the revenue as program income and apply it to any transit capital or operating expense, or as local match for any FTA capital grant.
If FTA is funding the joint development through a new award or the joint development uses property recently acquired with the assistance of an FTA award for which the period of performance has not ended, the revenue a project sponsor earns during the period of performance of the award is treated as “program income,” as defined in FTA C 5010.1E. Program income may be used towards eligible transit capital or operating expenses, or as local match for a future FTA award. However, program income may not be used as local match for the same award from which it was earned, or the award that assisted the joint development project.
For more on this, see “Program Income” in FTA C 5010.1E.
Any procurements assisted with FTA funds, including those for FTA-assisted joint development, must adhere to certain standards, among which is the requirement for full and open competition. If FTA is not funding the project, FTA encourages project sponsors to engage in fair and competitive procurement practices.
Historically, FTA prohibited the encumbrance of title to FTA-assisted property because FTA viewed any lien against, or other conveyance of, FTA-assisted property as a disposition. In recognition of the fact that many joint development arrangements require conveyance of an interest in FTA-assisted property, FTA may now approve of conveyances for joint development.
However, a joint development project must not interfere with the project sponsor’s continuing control over the use of the property or their ability to continue to carry out the originally authorized purpose for which the property was acquired. Furthermore, project sponsors must adhere to all requirements designated in the original FTA grant that assisted in the property’s acquisition. Additionally, the project must satisfy all the eligibility criteria and other requirements of FTA joint development policy.
While FTA does not set a threshold for satisfying the Economic Benefit or Transit Benefit criteria, it does require project sponsors to demonstrate that the joint development meets the criteria. FTA may decline approval for a joint development if the project sponsor does not sufficiently address these criteria.
FTA does not set a value or monetary threshold for satisfying the Economic Benefit criterion. A project sponsor may satisfy this criterion by demonstrating that the project adds economic value to development activity occurring near a transit facility, including but not limited to new housing, office, retail, or other commercial activity. Private investment may be monetary or it may take the form of in-kind real property, commercial or residential development, or some other benefit to be generated initially or over the life of the joint development.
Similarly, FTA does not set a threshold for satisfying the Transit Benefit criterion. A project sponsor may satisfy this criterion by demonstrating that the project enhances the effectiveness of a transit service (e.g., increases transit ridership, reduces travel times, or enhances transit operations) or enhances multi-modal coordination between a transit service and another transportation mode (e.g., builds parking, adds bike racks, or improves pedestrian access to transit). Additionally, a project must have a physical or functional relationship to transit.
FTA only requires that a project sponsor identify the forecasts, reports, or studies that demonstrate the satisfaction of the Economic Benefit and Transit Benefit criteria. Project sponsors are not required to submit these documents along with their joint development project requests, unless requested by FTA.
Joint development agreements that convey FTA-assisted property must ensure that the transit access and use are not restricted and that access to the real property for its original transit purpose will be maintained. Furthermore, the agreement should ensure that all other pertinent FTA requirements for use of the real property for joint development, including crosscutting federal requirements, such as planning and environmental review, are satisfied by specific terms and conditions.
These joint development agreements must include provisions that:
Extend the requirements of the original FTA grant as necessary;
Ensure that the project sponsor maintains satisfactory continuing control of the property;
Ensure that the federal interest in the property will be reasonably protected; and
Ensure that the federal interest in the property is protected following any further transfer of the property.
These requirements should not be a deterrent to the pursuit of joint development. It is FTA’s policy to give project sponsors maximum flexibility within the law to enter arrangements with the private sector and others that are suitable to the joint development and the parties involved.
Project sponsors and other joint development participants determine the amount of revenue expected to be generated by the project and negotiate the share of that revenue the project sponsor will receive, taking into consideration the type of project and priorities that the project sponsor and/or local government and stakeholders want to advance.
FTA has determined that the minimum threshold for a “fair share of revenue” a project sponsor receives cumulatively from joint development must be at least the amount of the original FTA investment in the joint development project. The revenue can be received in one lump sum or disbursed in multiple payments at a frequency or timing negotiated by the project sponsor.
Example: A transit agency bought property for $2 million in 1990 and FTA’s share of the land acquisition cost was 50%. Therefore, the original FTA investment was $1 million and the minimum threshold for a fair share of revenue for a joint development on the property today is $1 million. This means the transit agency must receive at least $1 million cumulatively over the life of the joint development agreement.
When a joint development includes a community service or publicly-operated facility, or affordable housing, FTA recognizes that the revenue generated may be less than what would be generated from a market-rate commercial, residential, or mixed-use development. As such, the resulting fair share of revenue can be less than the amount of the original FTA investment, but must be based upon the actual revenue generated by the project. While the proportion of the project that is community service or publicly-operated facilities, or affordable housing can be less than the amount of the original FTA investment in the project, the revenue the project sponsor receives from the proportion of the project that is market rate is subject to the minimum threshold, defined above.
Example (continued from https://www.transit.dot.gov/faq/joint-development/how-minimum-threshold-...): If the proposed joint development is 75% market rate housing and 25% affordable housing, the minimum threshold for a fair share of revenue is $750,000.
No. When surface parking is converted to joint development, FTA does not require the project sponsor to replace parking spaces at a one-to-one ratio.
However, as with any FTA-assisted joint development, the conversion of parking to joint development must benefit transit and must not cause a project sponsor to breach a full funding grant agreement, or similar contract, that requires construction of specific parking facilities or a certain number of parking spaces or a certain level of ridership. In addition, if an FTA-assisted parking facility is to be converted to joint development and useful life remains in the facility, the project sponsor must account for the remaining federal interest prior to any change or disposition (see FTA C 5010.1E, Chapter IV, Section 2j).
No, FTA does not have a dedicated funding program for joint development activities. Rather, eligible joint development expenses can be funded through all of FTA’s capital grant programs, including:
§5307: Urbanized area formula grants
§5309: Fixed guideway capital investment grants (New/Small Starts and Core Capacity)
§5310: Formula grants for the enhanced mobility of seniors and individuals with disabilities (Rides to Wellness)
§5311: Formula grants for rural areas
§5337: State of good repair grants
§5339: Bus and bus facilities formula grants
Not in all cases.
A “community service facility” is a facility that provides day care, career counseling, literacy training, education (including tutorial services), recreation, outpatient health care, or a similar service to local residents either free of charge or for an affordable fee. If the school, hospital, or retirement community is publicly-operated, however, or provides its services either free of charge or for an affordable fee, then it may be eligible for the fair share of revenue exception, described above.
 Internal Revenue Bulletin: 2003-29, July 21, 2003. FTA has chosen to use this definition of a community service facility for purposes of joint development.
FTA’s policy guidance includes the following definitions.
FTA Definition of Disposition: The settlement of the federal interest in project property that is no longer needed for the originally authorized purpose.
Distinction with Joint Development:
Disposition allows a grant recipient and the federal government to cash out of property that is no longer needed, so that funds can be applied to other projects. In most cases, disposition involves selling the unneeded property to a third party. After disposition, the property is no longer subject to any federal grant agreements. Joint development may also involve the transfer of an interest in property to a third party. However, unlike disposition, the federal government does not receive its share of the property’s value, so the property remains subject to the federal grant agreement, and any development that occurs on the property must therefore comply with FTA’s joint development policy.
Another important distinction between disposition and joint development is the way that the proceeds can be used in relation to the recipient’s transit program. After a disposition, FTA’s share of proceeds must either be reimbursed to FTA, or applied to FTA’s share of another eligible capital project. Because joint development occurs subject to an FTA grant agreement and as part of an FTA-assisted project, the proceeds received by the recipient are considered “program income” and can be applied to transit capital or operating expenses in the transit program.
FTA Definition of Incidental Use: The limited authorized non-transit use of project property. Such use must not conflict with the approved purposes of the project and must not interfere with the intended transit uses of the project property. An acceptable incidental use does not affect a property's transit capacity or use. FTA may concur in incidental use after award of the grant.
Distinction with Joint Development:
The primary distinction between incidental use and joint development is that joint development is a “capital project” (see “Capital Project” at U.S.C. §5302(3)). On the other hand, incidental use is a limited “use” of property.
FTA approval of incidental use can only be requested after award of a grant, whereas approval of joint development can be requested at the time of award of a grant or after the grant is awarded.
Like joint development, incidental use can generate revenue for transit, which is considered program income.
FTA Definition of Shared Use: Instances in which a project partner, separate from the recipient, occupies part of a facility and pays for its pro rata share of the construction, maintenance, and operation costs. Shared uses must be declared at the time of grant award.
Distinction with Joint Development:
Again, shared use is a “use” whereas joint development is a “capital project,” including the coordinated development and improvement of transit and non-transit assets.
Also, shared use must be requested and approved at the time of award of a grant, whereas FTA approval of joint development can be requested at the time of award of a grant or after the grant was awarded.
Like joint development, shared use can decrease the construction, maintenance, and operation costs of transit facilities by sharing them among multiple users, but shared use typically does not result in revenue for transit. It’s an arrangement that leads to more efficient asset utilization rather than ongoing revenue streams.
Joint development projects are eligible for FTA funding if they meet the following eligibility criteria:
Criterion 1 – Economic Benefit: Projects must either generate a positive economic impact in the community surrounding a transit facility or incorporate private investment to help pay for the project (see an example of how to satisfy this criterion in Question X).
Criterion 2 – Transit Benefit: Projects must either enhance the effectiveness of transit or enhance multi-modal coordination between transit and another transportation mode. Additionally, projects must have a physical or functional relationship to transit (see an example of how to satisfy this criterion in Question X).
Criterion 3 – Fair Share of Revenue: Projects must provide an amount of revenue to transit that is at least equal to the original FTA investment in the project. The “original FTA investment” is the dollar amount of FTA funding in the year of expenditure, not adjusted for inflation or the real estate market (see an example of how to calculate and satisfy the fair share of revenue threshold in Question XI and the exception to this criterion in Question XII).
Criterion 4 – Fair Share of Costs: Non-transit tenants of a joint development in a transit facility must pay the project sponsor a fair share of the costs to build, operate, and maintain the occupied space.
 Calculating the fair share of revenue minimum threshold for a specific joint development project can be complicated. Please consult with your respective FTA Regional Office.
A baseline market analysis evaluates the viability and expected outcomes of a joint development. As with any business transaction, a project sponsor should fully understand its relative position in participating in local/regional economic development activity and in negotiating the terms of the joint development based on the value of its contribution to the project. FTA requires that a baseline market analysis is conducted to ensure that the project sponsor makes a good faith effort in determining the amount of revenue to be received from the joint development project. FTA does not prescribe which specific studies and analyses are required, nor who is responsible for developing them. However, the results of the baseline market analysis should, at a minimum, identify the following information:
Fair market value of any FTA-assisted property or assets contributed to the project;
Expected amount of revenue generated by the project and the share of the revenue the project sponsor will receive; and
Estimated total cost of the project and the parties responsible for each of them.
Other information identified by the results of the baseline market analysis may include:
Existing conditions of the project property;
General economic and market conditions of the region/area;
Current and planned economic development activity for the region/area; and
Development risks and benefits to the project sponsor.
FTA only requires that a project sponsor identify the baseline market analysis conducted when submitting a formal project request to FTA. Project sponsors are not required to submit the baseline market analysis documents along with their joint development project requests, unless requested by FTA.
The 2007 report, “TOD 101: Transit-Oriented Development and Why Now?” by Reconnecting America and the Center for Transit-Oriented Development, defines transit-oriented development (TOD) like this:
TOD is not just development near transit. It’s development that also:
Increases “location efficiency” so people can walk, bike and take transit;
Boosts transit ridership and minimizes the impacts of traffic;
Provides a rich mix of housing, jobs, shopping and recreational choices;
Provides value for the public and private sectors, and for both new and existing residents; and
Creates a sense of community and of place.
Although related in purpose, joint development and TOD differ in several ways.
First, in joint development, the transit agency is an active partner, contributing to and benefiting from the development of real estate around its system. In TOD, the transit agency should benefit indirectly, but is not necessarily a partner that contributes to, or shares in the direct proceeds from, the development.
Second, joint development usually has a smaller scope than TOD, but that’s not always the case. Joint development projects tend to focus on a single parcel of property or small area near a transit facility, whereas TOD is broader and tends to encompass several parcels or an entire station area or community.
The third difference is with how federal funding can be used in different ways for joint development and TOD. In general, FTA funds may not be used for TOD construction, but FTA funds and other assistance can be used for TOD planning in conjunction with transit projects. FTA offers these resources through the Pilot Program for TOD Planning, the TOD Technical Assistance Initiative [external link], and the National Transit Institute’s TOD courses [external link]. Furthermore, U.S. DOT’s Build America Bureau offers opportunities to finance construction of certain elements of TOD projects through the Transportation Infrastructure Finance and Innovation Act (TIFIA) and the Railroad Rehabilitation and Improvement Financing (RRIF) loan programs.
However, FTA funds can be invested into joint development in two ways: 1) FTA funds can be directly spent on certain joint development activities (see https://www.transit.dot.gov/faq/joint-development/which-joint-developmen...), and 2) real property and assets acquired with FTA funds can be contributed to joint development projects.
The definition of “joint development” in FTA Circular 7050.1A is “a public transportation project that integrally relates to, and often co-locates with commercial, residential, mixed-use, or other non-transit development. Joint development may include partnerships for public or private development associated with any mode of transit system that is being improved through new construction, renovation, or extension. Joint development may also include intermodal facilities, intercity bus and rail facilities, transit malls, or historic transportation facilities.”
When FTA contributes funds, or real property or assets acquired with FTA funds, to a joint development, the project is “FTA-assisted.”
Simply put, joint development is the simultaneous improvement of a transit system and the surrounding real estate coordinated between the transit agency and real estate developers. Transit agencies actively participate in joint development by contributing either property or funding, and transit agencies also benefit from joint development by enjoying system improvements and by receiving a share of the development revenues.
Examples of joint development projects may include, but are not limited to:
Building an office tower in the air rights over an existing commuter rail station;
Constructing a mixed-use development that is connected to a new light rail transit station; or
Converting an underutilized surface parking lot near a bus transfer facility to affordable housing.
Certain capital costs associated with joint development activities are eligible for FTA assistance. Some of these activities are included in the various definitions of capital project at 49 U.S.C. 5302(3). Activities not designated under 49 U.S.C. 5302(3)(G), joint development, must be associated with a project that has been identified through the transportation planning process. Circular 7050.1A provides a list of common eligible capital expenses on page III-7. In general:
Property acquired with FTA funds can be:
sold or leased to a developer to build residential, commercial, or mixed-use development, and
used as collateral for debt financing of development activities or used in other innovative financing arrangements;
FTA capital funding can be used to:
pay for certain activities associated with, and in support of, the construction of residential, commercial, or mixed-use development, including but not limited to:
buy land and relocate existing residents and businesses,
demolition of existing structures,
improve or relocate utilities,
build foundations, or
build walkways and bike lanes between the development and transit,
construct, renovate and improve intercity bus and rail stations, other historic transportation facilities, or intermodal transfer facilities or transportation malls,
make open space and streetscape improvements, including transportation-related furniture, fixtures, and equipment, such as benches and shelters,
construct community service facilities, such as day care, career counseling, literacy training, education, recreation, or outpatient health care, etc.,
build space within a transit facility for commercial uses,
build or improve transportation-related parking,
This broad eligibility can result in dynamic, mixed-use spaces with retail or community services, all closely connected to existing or planned transit facilities, in addition to the revenue- and cost-sharing arrangements of benefit to transit agencies.