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Page 25 of 40 <br /> company. The Contractor agrees to obtain written approval from the Department before the <br /> lease is executed and forward a copy of the signed, executed lease agreement to the <br /> Department. The Contractor, as a Community Transportation System, shall not lease vehicles <br /> to human service agencies, county agencies/government, community agencies or school <br /> systems. The Contractor agrees not to loan vehicle(s) to other agencies/individuals for short- <br /> term use, even during hours that the transportation system is not providing service, as the <br /> vehicle(s) will generally be used to provide service that is "closed-door," i.e., not open to the <br /> general public. <br /> L Disposition of Project Property. With prior Department approval, the <br /> Contractor may sell, transfer, or lease Project property and use the proceeds to reduce the <br /> gross project cost of other eligible capital public transportation projects to the extent permitted <br /> by 49 U.S.C. § 5334(h)(4). The Contractor also agrees that the Department shall determine <br /> "useful life" for all Project property and that the Contractor will use Project property continuously <br /> and appropriately throughout the useful life of that property. Upon the end of the period of <br /> useful life, the Contractor may dispose of Project property after notifying and receiving <br /> disposition instructions from the Department. <br /> (1) Project Property Whose Useful Life Has Expired. When the useful life <br /> of Project property has expired, the Contractor agrees to comply with the Department's <br /> disposition requirements. <br /> (2) Project Property Prematurely Withdrawn from Use. For Project <br /> property withdrawn from appropriate use before its useful life has expired, the Contractor agrees <br /> as follows: <br /> (a) Notification Requirement. The Contractor agrees to notify the <br /> Department immediately when any Project property is prematurely withdrawn from appropriate <br /> use, whether by planned withdrawal, misuse, or casualty loss. <br /> (b) Calculating the Fair Market Value of Prematurely Withdrawn <br /> Project Property. The Contractor agrees that the Federal/State Government retains a <br /> Federal/State interest in the fair market value of Project property prematurely withdrawn from <br /> appropriate use. The amount of the Federal/State interest in the Project property shall be <br /> determined by the ratio of the Federal/State assistance awarded for the property to the actual <br /> cost of the property. The Contractor agrees that the fair market value of Project property <br /> prematurely withdrawn from use will be calculated as follows: <br /> 1. Equipment and Supplies. The Contractor agrees that the <br /> fair market value of Project equipment and supplies shall be calculated by straight-line <br /> depreciation of that property, based on the useful life of the equipment or supplies as <br /> established by the Department. The fair market value of Project equipment and supplies shall <br /> be the value immediately before the occurrence prompting the withdrawal of the equipment or <br /> supplies from appropriate use. In the case of Project equipment or supplies lost or damaged by <br /> fire, casualty, or natural disaster, the fair market value shall be calculated on the basis of the <br /> condition of that equipment or supplies immediately before the fire, casualty, or natural disaster, <br /> or the amount of insurance coverage, whichever is greater. <br /> 2. Real Property. The Contractor agrees that the fair market <br /> value of real property shall be determined either on the basis of competent appraisal based on <br /> an appropriate date approved by the Department, as provided by 49 C.F.R. Part 24, or by <br /> straight line depreciation of improvements to real property coupled with the value of the land as <br /> determined on the basis of appraisal, or other Federal/state law or regulations that may be <br /> applicable. <br /> 3. Exceptional Circumstances. The Contractor agrees that <br /> the Department may require the use of another method to determine the fair market value of <br /> Project property. In unusual circumstances, the Contractor may request that another <br /> reasonable valuation method be used including, but not limited to, accelerated depreciation, <br /> Revised 02/20/13 <br />