CFR > Title 49 - Transportation > SUBTITLE B—Other Regulations Relating to Transportation > CHAPTER VI—FEDERAL TRANSIT ADMINISTRATION, DEPARTMENT OF TRANSPORTATION (Parts 600–665) > PART 639—CAPITAL LEASES > SUBPART D—Lease Management (§639.31 to §639.33) > 639.31—Early lease termination or modification.

639.31—Early lease termination or modification.

(a) Except as provided in paragraph (c) of this section, if a capital lease under this part is terminated or its terms substantially modified before the end of the period used in the cost-effectiveness evaluation, or if the recipient by an affirmative act or omission vitiates the cost-effectiveness determination of the lease, future lease costs will no longer qualify as eligible capital expenses. In addition, the recipient must reimburse the project—
(1) Any Federal funds paid for the portion of the lease term eliminated by early termination; and
(2) The Federal share of the excess, if any, of the present value of lease costs, which exceeds the purchase costs as calculated under subpart C of this part for the period of the lease up to the point of termination.
(b) Penalties resulting from early termination of a capital lease under this part are not eligible for Federal financial assistance.
(c) Paragraph (a) of this section does not apply if a lessor defaults on or otherwise does not meet its obligations under the capital lease and the recipient takes appropriate action to ensure that the procurement continues to be cost-effective. FTA shall be notified of any such event.