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From the New York Public Transit 2010 Fall Conference & Trade Show.
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Disposition of Federally Funded
AssetsNovember 18, 2010
Federal Transit Administration
FTA TRO-02 2
Introduction
Guidelines for Disposition of Project Property :
REAL PROPERTY
EQUIPMENT, SUPPLIES & ROLLING STOCK
Definition of Project Property
Definition of Project Property:
Any real property, equipment, supply,
rolling stock or facility purchased or
constructed with Federal funding.
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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
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.
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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.
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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)
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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.
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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.
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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)
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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
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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.
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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
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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)
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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
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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.
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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
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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
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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.
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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.
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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
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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
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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
DISPOSITION AT END of USEFUL LIFE SLIDE 8 of
10
Unused SuppliesThis option applies to supplies >$5k for
which there is no transit use.Grantee is required to compensate FTA
for its share.
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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-kindReturning an amount equal to the interest
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DISPOSITION AT END of USEFUL LIFE SLIDE 10 of
10
Insurance Proceeds Two option for insurance proceeds received :
Apply to like-kind replacementReturn 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
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GRANTEE EXPERIENCE
Grantee Input on Disposition Experience
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Questions and Answers:
Question?
FTA Region 2 Office
or
FTA Region 2 Office
(212)668-2170
