GAO to USDOT: Improve documentation of TOD financing decisions

The U.S. Government Accountability Office (GAO) has issued a report on how the U.S. Department of Transportation (USDOT) reviews and evaluates financing proposals for transit-oriented development (TOD) projects.

In its report, the GAO recommended that the USDOT's Build America Bureau document its decisions and follow procedures when reviewing TOD projects, and that the Federal Transit Administration develop a plan to evaluate its pilot program.

Transit agencies and local governments have looked to increase transit ridership and revenue by encouraging growth along transit corridors with TOD. Such projects generally comprise mixed-use residential and commercial real estate near transit.

In 2015, the Fixing America's Surface Transportation Act expanded eligibility under two federal financing programs administered by the Build America Bureau to TOD projects. Although the bureau has provided information on these programs to potential project sponsors, it has not approved financing for any TOD projects since 2016 or clearly documented all project eligibility decisions, according to the GAO's report.

Specifically, the bureau received 29 inquiries from project sponsors—mostly joint ventures by developers and local agencies—about financing such projects. All but seven inquiries were in the early stages of development and not ready for the bureau to assess their eligibility for financial assistance. Of the seven more developed projects, the bureau determined that six were ineligible for financing and that one project is preliminarily eligible.

However, the GAO determined bureau did not clearly document its rationale for five of the six declared ineligible, in part because it did not follow its procedures for conducting these reviews and implemented new procedures without documenting the changes.

Without a clearly documented rationale for eligibility decisions and procedures for making decisions, sponsors lack reasonable assurance that the bureau is reviewing projects consistently, the GAO determined.

The USDOT concurred with the GAO's recommendations. To read the full report, click here.