Notice2023-23946
Interim Asset Disposition Guidance
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 31, 2023
Effective
October 31, 2023
Issuing agencies
Transportation DepartmentFederal Transit Administration
Abstract
The Federal Transit Administration (FTA) hereby establishes Interim Guidance to provide clarity on an asset disposition option under the National Defense Authorization Act (NDAA) for Fiscal Year 2022. Under the new provision, FTA may authorize the transfer of real property acquired or improved with Federal assistance, but no longer needed for the originally authorized purpose, to a local governmental authority, nonprofit organization, or other third-party entity if certain statutory criteria are met.
Full Text
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<title>Federal Register, Volume 88 Issue 209 (Tuesday, October 31, 2023)</title>
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[Federal Register Volume 88, Number 209 (Tuesday, October 31, 2023)]
[Notices]
[Pages 74563-74565]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-23946]
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
[Docket No. FTA-2022-0029]
Interim Asset Disposition Guidance
AGENCY: Federal Transit Administration (FTA), Department of
Transportation (DOT).
ACTION: Interim Guidance and response to public comments.
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SUMMARY: The Federal Transit Administration (FTA) hereby establishes
Interim Guidance to provide clarity on an asset disposition option
under the National Defense Authorization Act (NDAA) for Fiscal Year
2022. Under the new provision, FTA may authorize the transfer of real
property acquired or improved with Federal assistance, but no longer
needed for the originally authorized purpose, to a local governmental
authority, nonprofit organization, or other third-party entity if
certain statutory criteria are met.
DATES: The effective date of this Interim Guidance is October 31, 2023.
ADDRESSES: One may access this interim guidance and public comments on
the proposed guidance at docket number FTA-2022-0029. For access to the
docket, please visit <a href="https://www.regulations.gov">https://www.regulations.gov</a> or the Docket
Operations office located in the West Building of the United States
Department of Transportation, Room W12-140, 1200 New Jersey Avenue SE,
Washington, DC 20590, between 9 a.m. and 5 p.m. Monday through Friday,
except Federal holidays.
FOR FURTHER INFORMATION CONTACT: For policy guidance questions, contact
Maggie Schilling, Office of Budget and Policy, Federal Transit
Administration, 1200 New Jersey Ave. SE, Room E52-315, Washington, DC
20590, phone: 202-366-1487, or email <a href="/cdn-cgi/l/email-protection#630e021104021106174d10000b0a0f0f0a0d0423070c174d040c15"><span class="__cf_email__" data-cfemail="076a667560667562732974646f6e6b6b6e69604763687329606871">[email protected]</span></a>. For
legal questions, contact Kathryn Loster at (202) 360-2322 or email
<a href="/cdn-cgi/l/email-protection#3f545e4b574d46511153504c4b5a4d7f5b504b11585049"><span class="__cf_email__" data-cfemail="b3d8d2c7dbc1cadd9ddfdcc0c7d6c1f3d7dcc79dd4dcc5">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Introduction
This guidance explains changes made to 49 U.S.C. 5334(h)(1) by the
National Defense Authorization Act (NDAA) for Fiscal Year 2022 (Pub. L.
117-81). Specifically, section 6609 of the NDAA added a new disposition
option for real property acquired or improved with Federal assistance
that are no longer needed for the originally authorized purpose. Under
the new provision, FTA may authorize the transfer of property to a
local government authority, nonprofit organization, or other third-
party entity if, among other criteria enumerated in the law, it will be
used for transit-oriented development and include affordable housing.
FTA published a notice of availability of the proposed asset
disposition guidance and request for comments on March 15, 2023 (88 FR
16076), and the comment period ended April 14, 2023. This notice
provides a summary of the comments received, responses and guidance
clarifications from FTA, and the publication of the interim guidance in
the form of FAQs, which is available on the agency's public website at
<a href="https://www.transit.dot.gov/funding/funding-finance-resources/interim-asset-disposition-guidance">https://www.transit.dot.gov/funding/funding-finance-resources/interim-asset-disposition-guidance</a>.
II. Response to Public Comments
FTA received comments from five respondents on its Proposed Asset
Disposition Guidance. The commenters represent transit agencies and
industry stakeholders, including the American Public Transportation
Association, Sound Transit, and the Local Initiatives Support
Corporation. In this section, FTA responds to public comments in the
following topical order: (A) General Comments; (B) Eligibility; (C)
Review and Approval Process; (D) Affordable Housing Requirements; (E)
Monitoring Requirements; (F) Other Requirements; and (G) Categorization
of Special Purpose Entities. One commenter raised issues that are
outside the scope of the Proposed Guidance and Legislative Authority,
and FTA does not address those concerns in this Interim Guidance.
A. General Comments
i. Two commenters expressed support for the legislative change,
which provides this additional asset disposition option, and the
benefit this will have on Transit Oriented Development and affordable
housing. One comment notes this guidance is helpful and constructive.
FTA Response: FTA appreciates these comments and the transit agency
and industry stakeholder support for affordable housing.
B. Eligibility
i. One commenter requested clarity on whether provisions apply to
real property that was either acquired or improved with FTA assistance.
For example, those improved as part of an FTA-assisted project, even if
it was originally acquired with non-federal funds.
ii. One commenter requested clarity on whether provisions in
question apply to projects whose Federal funding
[[Page 74564]]
source was an FTA-administered RAISE grant or flexed funds from other
Operating Administrations, such as Federal Highway Administration
(FHWA).
FTA Response:
i. In accordance with the definition of ``real property'' in 49 CFR
262.3, eligible assets include land improvements. FTA will provide
additional clarity in the Interim Guidance.
ii. This provision applies to assets acquired, or improved, with
FTA-administered funds, including those flexed over from other
operating administrations such as FHWA. FHWA funds flexed to FTA allow
utilization of 49 U.S.C. 5334(h)(1) disposition provisions and these
funds take on Chapter 53 elements. RAISE grants are not authorized
under Chapter 53. As such, any property funded by a RAISE grant would
be outside the scope of this provision.
C. Review and Approval Process
i. A commenter requested confirmation that a disposition under this
new provision is approved by an FTA Regional Administrator and does not
require publication in the Federal Register.
FTA Response:
i. This disposition option does not require publication in the
Federal Register. Further, requests for asset disposition under this
provision follow existing asset disposition approval processes,
beginning with the FTA Regional Office and may involve additional
review by FTA Headquarters offices.
D. Affordable Housing Requirements
i. A commenter noted that the language includes owner income
requirements, which they state is not necessary for affordable rental
housing projects since they are required to serve low-income
households, and they recommend removing this language for affordable
rental housing projects.
ii. Clarification is requested on whether affordability
requirements are kept intact if the asset is subsequently sold or
changes partnership after the initial transfer.
iii. Additionally, a commenter requested clarification regarding
FAQ 2(c) of the Proposed Guidance, on whether the 20 percent of units
that must meet the 30 percent area median income (AMI) are included
within the total 40 percent of units that must meet the 60 percent AMI
level.
iv. Request for clarification on whether the non-housing space
within an affordable housing project is exempt from the ongoing housing
requirement.
FTA Response:
i. This is a statutory requirement, per 49 U.S.C. 5334(h)(1)(B)(i)-
(iii), and as such cannot be removed from this guidance. However, FTA
clarifies that only individuals purchasing or renting units that are
sold or rented as affordable owner-occupied units need to meet these
income thresholds. The income requirement does not apply to the
developer or property owner offering rentals.
ii. FTA confirms that the affordability requirements remain intact
for the 30-year period, even if the asset is sold or changes
partnership. The FTA recipient disposing of the property under this
provision is responsible for ensuring compliance with this requirement.
iii. The guidance states that at least 40 percent of housing units
must be legally binding affordability restricted to tenants and owners
at or below 60 percent AMI, which shall include at least 20 percent of
such housing units restricted to tenants and owners at or below 30
percent AMI. This is read to mean that the 20 percent of units that
must meet 30 percent AMI are included within the total 40 percent of
units that must meet the 60 percent AMI, meaning that at least 8
percent of the total amount of housing units must meet 30 percent AMI.
Please note that this requirement is separate from the requirement that
at least 20 percent of the total floor area ratio of the development be
dedicated to affordable housing. The Interim Guidance will be amended
to include this clarification.
iv. The requirement that 20 percent of the total floor area ratio
(FAR) applies to the totality of the project, including non-housing
space. The FTA recommendation is that, further, at least 50 percent of
the TOD's FAR is dedicated to housing or other community benefits; this
also applies to the totality of the project. The requirements for 40
percent of housing units to be legally binding affordability restricted
to tenants and owners at or below the 60 percent AMI level, which
includes 20 percent of units restricted at or below the 30 percent AMI
level, apply only to the project's housing space.
E. Monitoring Requirements
i. A requirement of this asset disposition option includes
monitoring of affordable housing requirements over a 30-year term. Two
commenters expressed that a monitoring requirement may place an undue
burden on an agency.
Further, commenters recommended that FTA allow the long-term
monitoring to be performed by other entities that conduct compliance
monitoring activities, including the new ownership entity, other public
agencies, state housing finance agencies, and other housing agencies
with subsidies in the project that require long-term affordability.
Other suggestions include a standard reporting mechanism to ease the
burden.
FTA Response:
i. The Proposed Guidance did not prescribe how the recipient must
ensure compliance with affordable housing requirements over the 30-year
term. The requirement for a property to remain in use and compliant
with affordable housing requirements for 30 years after the date of
transfer is a statutory requirement. FTA recognizes that there are many
ways in which a recipient could ensure oversight and compliance with
this requirement, including long-term monitoring by a third party or
other public agency.
F. Other Requirements
i. Under this provision, an asset can be transferred to a Third-
Party Entity if a Local Government Authority or Nonprofit Organization
is ``unable to receive'' the property. A commenter requested
clarification on whether ``choosing not to receive'' is assumed to be
the same as ``unable to receive.''
FTA Response:
i. Under this provision, a local government or nonprofit entity
``choosing not to receive'' the property can be considered the same as
``unable to receive.'' Documentation demonstrating that the property
has been offered and refused would be sufficient to meet this
requirement.
G. Categorization of Special Purpose Entities
i. Three commenters requested that FTA clarify that Special Purpose
Entities created by a nonprofit organization for the purpose of
utilizing Low-Income Housing Tax Credits (LIHTC) will be treated as
nonprofit organizations, rather than third-party entities, for the
purposes of transferring eligible assets under this provision.
Nonprofit developers typically form Special Purpose Entities (e.g.,
Limited Liability Companies or Limited Partnerships) to utilize the
LIHTC available under Internal Revenue Code (IRC) 26 U.S.C. Chapter 42.
As commenters note, LIHTC encourages private parties to invest in
affordable housing projects, constituting an important and commonly
used method for financing affordable housing. While the Special Purpose
Entity is a private entity, it may be controlled and managed by the
nonprofit housing
[[Page 74565]]
developer. This is important to clarify because, in some cases, the
Special Purpose Entity may not be able to satisfy the statutory
requirements for transfer to a third-party entity, such as
demonstrating a ``satisfactory history of constructing or operating an
affordable housing development;'' this is because a new Special Purpose
Entity is created for each project and would not have a history of past
projects.
FTA Response:
i. FTA recognizes that this is a common concern among transit
agencies and stakeholders interested in utilizing this provision. FTA
further notes that Special Purpose Entities receiving LIHTC's may take
many different forms. In interpreting Special Purpose Entities formed
for the purpose of utilizing LIHTCs under this provision, FTA will look
to which party (i.e., public or nonprofit vs. for-profit entity) has
control over the project. Ownership may be transferred to a for-profit
entity to facilitate the use of tax credits for the project only if the
public or nonprofit entity demonstrates in its application that it
retains control over the property (i.e., still considered ``owned'' for
purposes of this provision). Sufficient control may be satisfied by any
of the following: (1) a fee simple interest in the Project property,
(2) owns 51 percent or more of the general partner interests in a
limited partnership or 51 percent or more of the managing member
interests in a limited liability company with all powers of the general
partner or managing member, (3) owns a lesser percentage of the general
partner or managing member interests and holds control rights, or (4)
owns 51 percent or more of all ownership interests in a limited
partnership or limited liability company and holds certain control
rights.
``Control rights,'' as referenced above, include control over
leasing of the project (e.g., exclusively maintaining and administering
the waiting list, performing eligibility determinations) and consent
rights over certain areas, such as changing the number of affordable
housing units, setting utility allowances, selecting the management
agent, or setting the operating budget. FTA will treat a Special
Purpose Entity as a nonprofit entity under this asset disposition
provision if they meet the above requirements.
III. Interim Guidance
FTA has reviewed and deliberated over the public comments received
for the Proposed Asset Disposition Guidance. All feedback was
appreciated and informative for further shaping this guidance. FTA
makes made the following amendments in the Interim Asset Disposition
Guidance:
The Interim Asset Disposition Guidance is amended to provide a
response to comments requesting that Special Purpose Entities using Low
Income Housing Tax Credits (LIHTC) are treated as a nonprofit entity
under this provision. FTA will allow Special Purpose Entities using
LIHTCs to be treated as nonprofits if the nonprofit entity retains
control over the project, as detailed above.
Additionally, FTA amends the guidance to provide additional clarity
on the area median income (AMI) percentage requirements. Some
commenters voiced confusion over the statutory requirements that 40
percent of the housing units offered must be legally binding
affordability restricted to tenants and owners at or below 60 percent
AMI, which shall include at least 20 percent offered to tenants and
owners at or below 30 percent AMI. FTA will clarify that this is 20
percent out of the 40 percent, not 20 percent out of the totality of
the project.
On the eligibility requirements to use this provision, FTA amends
the guidance to clarify that this provision applies to assets that have
been acquired or improved with FTA assistance, including FTA-
administered Federal funds that have been flexed over from other
Operating Administrations, such as Federal Highway Administration
(FHWA). However, this provision does not apply to assets acquired or
improved with FTA-administered RAISE grants, as discussed above.
FTA amends the guidance to provide additional clarifying language
on the options available for compliance monitoring during the 30-year
term, to include third party oversight.
Nuria I. Fernandez,
Administrator.
[FR Doc. 2023-23946 Filed 10-30-23; 8:45 am]
BILLING CODE 4910-57-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.