From the New York Public Transit 2010 Fall Conference & Trade Show.

1. Disposition of
Federally Funded
Assets
November 18, 2010
Federal Transit Administration

2. FTA TRO-02 2
Introduction
Guidelines for Disposition of Project
Property :
REAL PROPERTY
EQUIPMENT, SUPPLIES & ROLLING
STOCK

3. Definition of Project Property
Definition of Project Property:
Any real property, equipment, supply,
rolling stock or facility purchased or
constructed with Federal funding.
FTA TRO-02 3

4. FTA TRO-02 4
USE OF PROJECT PROPERTY
Project property is to be used by the grantee in the
program or project for the purpose it was acquired as
long as needed, whether or not the program or project
continues to be supported by Federal funds.
FTA reserves the right in the Grant Agreement to
require the grantee, with FTA, approval, to transfer
title to project property no longer needed or used for
the purposes of the grant to the Federal Gov’t or an
otherwise eligible grantee. (49 CFR 18.32)
When need no longer exists, follow disposition
requirements in FTA Circular 5010.1D Chapter IV,
Subsection 3.1

5. REAL PROPERTY PENDING DISPOSAL
Follow valuation requirement of 49 CFR
part 24 and obtain an appraisal to
determine property value.
Sale procedure should provide for
competition to the extent possible to yield
highest possible return or at least
appraised fair market value.
FTA TRO-02 5

6. ALTERNATIVE DISPOSITION METHODS
FOR REAL PROPERTY Slide 1 of 7
Sell and Reimburse FTA
 Competitively market and sell the property
 Pay FTA the greater of its share of the fair market value
or the straight line depreciated value of the improvement
plus land value
 Note: FTA share is percentage participation in original
grant.
FTA TRO-02 6

7. ALTERNATIVE DISPOSITION METHODS
FOR REAL PROPERTY Slide 2 0f 7
Offset
 Sell property and apply net proceeds to cost of
replacement property under SAME program.
 Any excess MUST be returned to FTA (49 CFR
18.31)
FTA TRO-02 7

8. ALTERNATIVE DISPOSITION METHODS
FOR REAL PROPERTY Slide 3of 7
Sell and Use Proceeds for Other Capital
Projects.
 Sell and use proceeds to reduce gross cost of
another FTA eligible capital transit project.
 Grantee must record in their accounting system
to show that funds are solely for use in a
subsequent capital project.
 FTA approval required to apply the proceeds to
a subsequent capital grant.
FTA TRO-02 8

9. ALTERNATIVE DISPOSITION METHODS
FOR REAL PROPERTY Slide 4 of 7
Sell & Keep Proceeds in Open Project
 Grantee can apply proceeds to the original cost
of the real property which could possibly reduce
Federal Share.
 Grant must still be open to use this option.
FTA TRO-02 9

10. ALTERNATIVE DISPOSITION METHODS
FOR REAL PROPERTY Slide 5 of 7
Transfer to Public Agency for Non-Transit
Use
 Competitive process therefore no guarantee on
which public agency will receive property
 Need to be published in Federal Register
 No repayment to FTA required
 Ref. 49 USC 5334(h)(1)-(h)(3)
FTA TRO-02 10

11. ALTERNATIVE DISPOSITION METHODS
FOR REAL PROPERTY Slide 6 of 7
Transfer to Other Project
 This option simply involves transferring the
Federal interest to another FTA Eligible project.
 The pro rata share of the FTA interest in the
original property continues in the new project
FTA TRO-02 11

12. ALTERNATIVE DISPOSITION METHODS
FOR REAL PROPERTY Slide 7 of 7
Retain Title With Buyout
 This option involves compensating FTA in the
amount of the percentage of the original cost.
 Repayment amount is established similar to Sell
and Reimburse option.
FTA TRO-02 12

13. DISPOSITION of EQUIPMENT,
SUPPLIES & ROLLING STOCK
In order to properly effect disposition of project
property, we first have to establish useful life.
Circular 5010.1D list eight methods acceptable
to FTA for determining useful life:
 GAAP
 Independent Evaluation
 Manufacturer’s estimate of useful life
 IRS Guidelines
 Industry Standards
 Grantee Experience
 Grantee independent auditor
 Proven useful life developed at a Federal test facility
FTA TRO-02 13

14. USEFUL LIFE
FTA provides recommended useful life for
the following:
 Buses ( 4yrs to 12ys & 100k to 500k miles depending on
type
 Trolleys (15-25 yrs depending on type)
 Rail Vehicles ( minimum 25 yrs)
 Ferries ( 25-60 yrs depending on type & use)
FTA TRO-02 14

15. USEFUL LIFE
Where a useful life policy has not been
defined by FTA, the grantee, in
consultation with the FTA regional or
metropolitan office shall ‘make the case’
by identifying a useful life period for all
equipment and facilities with an acquisition
value greater than $5000
FTA TRO-02 15

16. USEFUL LIFE & DISPOSITION
Project property to be disposed must have
achieved at least the minimum useful life
Disposition before the end of useful life
requires prior FTA approval.
FTA TRO-02 16

17. DISPOSITION AT END of USEFUL LIFE
SLIDE 1 of
10
Retain and Use Elsewhere
 If minimum useful life has been reached,
property can be used for other transit projects or
programs.
 No prior FTA approval required.
 Remaining FTA interest if fair market value is
over $5K
FTA TRO-02 17

18. DISPOSITION AT END of USEFUL LIFE
SLIDE 2 of
10
Fair Market Value > $5000
 Grantee has the option to retain or sell.
 Need to notify FTA in writing of sale or retention.
 If sold, reimbursement calculated similar to
previously mentioned methods.
 Option for use of proceeds similar to previously
discussed
FTA TRO-02 18

19. DISPOSITION AT END of USEFUL LIFE
SLIDE 3 of
10
Fair Market Value < $5000
 Grantee has the option to sell or retain
 No prior FTA approval required
 Record of action taken must be retained and
available for review upon request.
FTA TRO-02 19

20. DISPOSITION AT END of USEFUL LIFE
SLIDE 4 of
10
Like-Kind Exchange Policy
 This type of disposition typically ocurr before the
end of minimum useful life.
 However, whenever a grantee chooses to use
this method, ALL net proceeds from the sale or
trade should be use to acquire a replacement
vehicle of ‘like-kind’ in lieu of returning Federal
funds.
 Special conditions for proceeds less or greater
than Federal share.
FTA TRO-02 20

21. DISPOSITION AT END of USEFUL LIFE
SLIDE 5 of
10
Transfer of Rolling Stock
 From Grantee to Grantee with prior FTA
approval.
 Coordination between grantees and FTA
regional office plus prerequisites in 5010.1D
Chapter IV
 Desired prior to end of useful life
FTA TRO-02 21

22. DISPOSITION AT END of USEFUL LIFE
SLIDE 6 of
10
Transfer of Assets No Longer Needed
 Can be used if useful life has not been met and
with prior FTA approval.
 Transfer to a public agency for non-
transportation use.
 Four conditions apply to use this option
FTA TRO-02 22

23. DISPOSITION AT END of USEFUL LIFE
SLIDE 7 of
10
Sell & Use Proceeds for Other Capital
Project
 Similar option discussed earlier for Real
Property.
 Most important that grantee is expected to
record the proceeds of the transaction in their
accounting system
FTA TRO-02 23

24. DISPOSITION AT END of USEFUL LIFE
SLIDE 8 of
10
Unused Supplies
This option applies to supplies >$5k for
which there is no transit use.
Grantee is required to compensate FTA
for its share.
FTA TRO-02 24

25. DISPOSITION AT END of USEFUL LIFE
SLIDE 9 of
10
Casualty, Fire and Natural Disaster
 FMV calculated on the basis of the condition of
the project property just before any of the above,
irrespective of the extent of insurance coverage.
Remit the Federal interest by either:
Like-kind
Returning an amount equal to the interest
FTA TRO-02 25

26. DISPOSITION AT END of USEFUL LIFE
SLIDE 10 of
10
Insurance Proceeds
 Two option for insurance proceeds received :
Apply to like-kind replacement
Return an amount equal to the Federal interest.
 Please note that the Federal interest is NOT
dependent on the extent of the insurance
coverage or the insurance adjustment received.
FTA TRO-02 26

27. FTA TRO-02 27
GRANTEE EXPERIENCE
Grantee Input on Disposition Experience

28. FTA TRO-02 28
Questions and Answers:
Question?
Hans.PointduJour@dot.gov
FTA Region 2 Office
or
Donovan.vincent@dot.gov
FTA Region 2 Office
(212)668-2170