Public Transportation: Federal Role in Value Capture Strategies for Transit Is Limited, but Additional Guidance Could Help Clarify Policies
Highlights
State and local governments are looking for alternative strategies to help fund transit systems. Value capture strategies--joint development, special assessment districts, tax increment financing, and development impact fees--are designed to dedicate to transit either a portion of increased tax revenue or additional revenue through assessments, fees, or rents based on value expected to accrue as a result of transit investments. GAO was asked to review (1) the extent to which transit agencies and local governments use joint development and other value capture strategies to fund or finance transit; (2) what stakeholders have identified as facilitators of, or hindrances to, the use of these; and (3) what stakeholders have said about the effects of federal policies and programs on the use of these strategies. GAO analyzed data from 55 of the 71 transit agencies that responded to its information request; reviewed literature, and statutes and regulations; and interviewed transit agency, local government, and Federal Transit Administration (FTA) officials; developers; and experts.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Transportation | To facilitate transit agencies use of joint development, the Secretary of Transportation should direct the Administrator of the Federal Transit Administration to issue additional guidance on federal joint development requirements including at a minimum further clarification on the types of developments and structures that are eligible under current law. |
In 2010, we reported that value capture strategies could be an effective means for the users of a transit system to contribute directly to its funding. Joint development, in which a transit agency and private entity partner to create development at a transit station, is one of these value capture strategies. However, we found that many transit agencies were confused about aspects of Federal Transit Administration's (FTA) joint development guidance. Specifically, transit agencies were sometimes unclear about which types of developments and structures were eligible for joint development sites. Transit agencies had difficulty understanding FTA guidance on which types of developments were eligible to become joint developments and which types of structures could be constructed using federal transit funds. This confusion hindered some agencies' ability to use joint development practices and can delay final federal approval of a project. Therefore, we recommended that FTA issue additional guidance to clarify the requirements for federal joint development. In 2014, the FTA issued this additional guidance on joint development requirements that clarified the types of developments and structures that are eligible or ineligible for joint development under current law. As a result, transit agencies will have a clearer understanding of joint development requirements, which could help streamline the approval process and potentially negotiations with private developers.
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| Department of Transportation | To facilitate transit agencies use of joint development, the Secretary of Transportation should direct the Administrator of the Federal Transit Administration to issue additional guidance on federal joint development requirements including at a minimum further clarification on any requirements or conditions for parking replacement. |
In 2010, we reported that value capture strategies could be an effective means for the users of a transit system to contribute directly to its funding. Joint development, in which a transit agency and private entity partner to create development at a transit station, is one of these value capture strategies. However, we found that many transit agencies were confused about aspects of Federal Transit Administration's (FTA) joint development guidance. Specifically, transit agencies were sometimes unclear to what extent FTA requires parking replacement in joint developments, particularly when they plan to convert existing surface park-and-ride lots into transit-oriented developments. FTA's joint development guidance does not provide examples of shared parking, but does address parking replacement. This confusion hindered some agencies' ability to use joint development practices and can delay final federal approval of a project. Therefore, we recommended that FTA issue additional guidance to clarify the requirements for federal joint development. In 2014, the FTA issued this additional guidance on joint development requirements that clarified the requirements and conditions for parking replacement. As a result, transit agencies will have a clearer understanding of FTA's requirements and conditions for parking replacement, which could reduce the potential for transit agencies to design projects with more parking than is actually needed.
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