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Disposition of Federally Funded Assets - Donovan Vincent, General Engineer, FTA Region II

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

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

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    Disposition of Federally Funded Assets - Donovan Vincent, General Engineer, FTA Region II Disposition of Federally Funded Assets - Donovan Vincent, General Engineer, FTA Region II Presentation Transcript

    • Disposition of Federally Funded Assets November 18, 2010 Federal Transit Administration
    • Introduction
      • Guidelines for Disposition of Project Property :
        • REAL PROPERTY
        • EQUIPMENT, SUPPLIES & ROLLING STOCK
      FTA TRO-02
    • 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
    • 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
      FTA TRO-02
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • GRANTEE EXPERIENCE
      • Grantee Input on Disposition Experience
      FTA TRO-02
    • Questions and Answers:
      • Question?
      • [email_address]
      • FTA Region 2 Office
      • or
      • [email_address]
      • FTA Region 2 Office
      • (212)668-2170
      FTA TRO-02