Public Transit Issues and Developments [1 ed.] 9781614707165, 9781606926895

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Copyright © 2009. Nova Science Publishers, Incorporated. All rights reserved. Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

Copyright © 2009. Nova Science Publishers, Incorporated. All rights reserved. Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

Copyright © 2009. Nova Science Publishers, Incorporated. All rights reserved.

PUBLIC TRANSIT ISSUES AND DEVELOPMENTS

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Copyright © 2009. Nova Science Publishers, Incorporated. All rights reserved. Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

PUBLIC TRANSIT ISSUES AND DEVELOPMENTS

CALVIN B. LANG

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EDITOR

Nova Science Publishers, Inc. New York

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Copyright © 2009 by Nova Science Publishers, Inc. All rights reserved. No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher. For permission to use material from this book please contact us: Telephone 631-231-7269; Fax 631-231-8175 Web Site: http://www.novapublishers.com NOTICE TO THE READER The Publisher has taken reasonable care in the preparation of this book, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of information contained in this book. The Publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or in part, from the readers‘ use of, or reliance upon, this material.

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Independent verification should be sought for any data, advice or recommendations contained in this book. In addition, no responsibility is assumed by the publisher for any injury and/or damage to persons or property arising from any methods, products, instructions, ideas or otherwise contained in this publication. This publication is designed to provide accurate and authoritative information with regard to the subject matter covered herein. It is sold with the clear understanding that the Publisher is not engaged in rendering legal or any other professional services. If legal or any other expert assistance is required, the services of a competent person should be sought. FROM A DECLARATION OF PARTICIPANTS JOINTLY ADOPTED BY A COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS. LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA

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CONTENTS Preface Chapter 1

Chapter 2

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Chapter 3

Chapter 4 Chapter 5

Chapter 6

Chapter 7

vii Public Transit Program Funding Issues in Surface Transportation Reauthorization William J. Mallett

1

Public Transportation: Improvements are Needed to More Fully Assess Predicted Impacts of New Starts Projects Katherine Siggerud

25

Public Transportation Future Demand is Likely for New Starts and Small Starts Programs, but Improvements Needed to the Small Starts Application Process Katherine Siggerud

75

Hearing on the Federal Transit Administration's Implementation of the New Starts and Small Starts Programs

111

Subcommittee on Highways and Transit Hearing on Implementation of New Starts and Small Starts Programs, May 10, 2007 Testimony of Roger Snoble

119

Testimony for the House Committee on Transportation and Infrastructure‘s Subcommittee on Highways and Transit Gary C. Thomas

129

Statement of David Lewis, Ph.D. Senior Vice President, HDR/Decision Economics HDR Engineering Inc. before the Committee on Transportation and Infrastructure Sub-Committee on Highways and Transit Implementation of New Starts and Small Starts Program

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Chapter 8

Chapter 9

Chapter 10

Statement of James S. Simpson Administrator Federal Transit Administration U.S. Department of Transportation before the Subcommittee on Highways and Transit Committee on Transportation and Infrastructure U.S. House of Representatives FTA Implementation of the New Starts and Small Starts Programs

137

Testimony from Peter Varga, Executive Director, Chief executive Officer Interurban Transit Partnership Grand Rapids, Michigan: House Transportation and Infrastructure Committee Subcommittee on Highways and Transit, May 10, 2007

143

Subcommittee on Highways and Transit Rick Gustafson Executive Director, Portland Streetcar, Inc. Portland, Oregon

147

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Index

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PREFACE Through the New Starts program, the Federal Transit Administration (FTA) evaluates and recommends new fixed guideway transit projects for funding using the evaluation criteria identified in law. In August 2007, FTA issued a Notice of Proposed Rulemaking (NPRM), in part, to incorporate certain provisions within the Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA-LU) into the evaluation process. SAFETEA-LU requires the authors to annually review FTA‘s New Starts process. This book discusses (1) the information captured by New Starts project justification criteria, (2) challenges FTA faces as it works to improve the New Starts program, and (3) options for evaluating New Starts projects. To address these objectives, the authors reviewed statutes, FTA guidance and regulations governing the New Starts program, and interviewed experts, project sponsors, and Department of Transportation (DOT) officials. Chapter 1- As enacted in the Safe, Accountable, Flexible, Efficient Transportation Equity Act — A Legacy for Users (SAFETEA), federal public transit programs are currently authorized through September 2009. Decisions about reauthorization will likely hinge on the amount of funds available from the Mass Transit Account of the Highway Trust Fund, the source of about 80% of federal transit funding. Without an increase in the federal fuels tax, the use of other dedicated revenue mechanisms, or more money from the general fund, federal funding available to support both highways and transit will slow in the short term, and may decline in the medium term. Because of the growth in authorized spending in SAFETEA and the spending down of unexpended balances over the last few years, however, the transit account is expected to go into deficit in FY20 11 or FY20 12. At the spending level provided for in SAFETEA in FY2009, the fuels tax dedicated to the transit account would need to be raised by approximately 1 cent per gallon to remedy the current deficit in transit funding. This would allow for no growth in the program to deal with growing needs or inflation. The U.S. Department of Transportation, however, estimates that the country needs to spend 25% more annually over the next 20 years than is currently being spent to maintain the current conditions and performance of transit systems, and 73% more to make substantial improvements. At the current federal share of overall transit finances, this translates to an additional 0.6 cents per gallon in the federal fuels tax for transit to maintain the system and 1.8 cents per gallon to improve the system. Without new revenue, Congress may have to modify transit program priorities or, alternatively, may want to reexamine the federal role in the financing of transit systems. Some of the options that may be considered include reducing the federal matching share, encouraging more private-sector involvement, including the use of public-private partnerships

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Preface

and innovative financing, encouraging improvements in transit system productivity, and the broad restructuring of current federal transit programs. The report outlines several ways of restructuring federal public transit programs, each an alternative to the possibility of leaving the existing system unchanged. First, Congress might decide to focus more resources on major capital expenses for the rehabilitation and expansion of transit service in places that are best served by this mode, primarily the densely populated parts of large cities that are often severely congested. Second, Congress might focus on supporting and rehabilitating existing services rather than major capital expansion. Third, Congress might eliminate the capital improvement programs altogether, to be replaced with a simple ―block grant‖ that could be distributed based on transit ridership or population. This would allow state and local governments to decide how best to allocate transit funding support among existing and new services. Chapter 2-Through the New Starts program, the Federal Transit Administration (FTA) evaluates and recommends new fixed guideway transit projects for funding using the evaluation criteria identified in law. In August 2007, FTA issued a Notice of Proposed Rulemaking (NPRM), in part, to incorporate certain provisions within the Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA-LU) into the evaluation process. SAFETEA-LU requires GAO to annually review FTA‘s New Starts process. This report discusses (1) the information captured by New Starts project justification criteria, (2) challenges FTA faces as it works to improve the New Starts program, and (3) options for evaluating New Starts projects. To address these objectives, GAO reviewed statutes, FTA guidance and regulations governing the New Starts program, and interviewed experts, project sponsors, and Department of Transportation (DOT) officials. Chapter 3- Through the New Starts program, the Federal Transit Administration (FTA) identifies and recommends new fixed-guideway transit projects for funding. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEALU) created a separate program, commonly called Small Starts, which is intended to offer a streamlined evaluation and rating process for smaller-scale transit projects. FTA subsequently introduced a separate eligibility category within the Small Starts program for ―Very Small Starts‖ projects. These are simple, low-risk projects that qualify for a simplified evaluation and rating process. SAFETEA-LU requires GAO to annually review FTA‘s New Starts process. This report presents information on (1) FTA‘s fiscal year 2008 funding recommendations, (2) the extent to which the New Starts pipeline has changed over time, and (3) future projected trends for the New Starts and Small Starts pipelines. To address these objectives, GAO surveyed 215 project sponsors—78 percent of which responded—and interviewed FTA officials, 15 project sponsors, and 3 industry groups Chapter 4- The Subcommittee on Highways and Transit is scheduled to meet on Thursday, May 10, 2007 at 10:00 a.m., to receive testimony on the Federal Transit Administration's (FTA) implementation of the New Starts and Small Starts provisions of the Capital Investment Grants program. The Subcommittee will hear from officials of FTA, U.S. Government Accountability Office (GAO), Los Angeles County Metropolitan Transportation Authority (LA Metro), Dallas Area Rapid Transit (DART), Interurban Transit Partnership of Grand Rapids (The Rapid), Portland Streetcar, Inc., and the Senior Vice President of HDR Decision Economics, Inc. Chapter 5- LA Metro is the third largest public transit agency in the United States and is responsible for transportation planning, coordination, design, construction and operation of

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ix

bus, subway, light rail, Bus Rapid Transit (BRT) services, and, in partnership with Caltrans, carpool lanes. Metro also works in partnership with Caltrans on carpool lanes and with MetroLink on its expansive commuter rail system. Metro has a $3 billion annual budget, 9,000 employees, and serves a 1,433 square mile service area in one of the Nation‘s largest and most populous counties of 10 million people. Metro has approximately 200 bus routes, 73 miles of rail lines, and over 400 miles of carpool lanes that crisscross Los Angeles County. We fund a vast array of surface transportation improvement projects, including street widening, bikeways, synchronized traffic lights, and busways. Metro‘s transportation network is extensive, and we are a leading innovator in improving the mobility of the community we serve. Chapter 6- DART is a 24 year old regional transportation authority providing a multimodal transit system for a 700 square mile area of North Texas. DART is comprised of 13 member cities and serves approximately 330,000 total passenger trips per day. Currently, DART serves Dallas and 12 surrounding cities with approximately 130 bus routes, 45 miles of light rail transit (DART Rail), 31 freeway miles of high occupancy vehicle (HOV) lanes, and paratransit service for persons with mobility impairments. DART and the Fort Worth Transportation Authority (the T) jointly operate 35 miles of commuter rail transit (the Trinity Railway Express or TRE), linking downtown Dallas and Fort Worth with stops in the mid-cities and DFW International Airport. Through 2013, the DART Rail System is slated to more than double in size to 93 miles. Chapter 7- Whereas the New Starts process quantifies ridership as the principal benefit of New Starts, the economic benefits of transit actually fall into three categories, congestion management; mobility for transit users; and community economic development. While all three are measureable, albeit with uncertainty, the FTA New Starts program focuses on ridership alone, which is actually a sub-set of the mobility category. Chapter 8- ETA's management of the New Starts program fosters highly successful Federal-local partnerships that positively impact millions of Americans across the country on a daily basis — both transit riders and users of our Nation's highway system who benefit from additional transportation capacity. Communities across the country count on public transportation systems to provide a reliable alternative to congested highways and highway users who fund large percentages of the costs of public transportation expect these systems to be integrated with highway policies. For example, the Texas Transportation Institute estimates that without public transportation, the cost of lost time and wasted fuel on our Nation's highways would be nearly $20 billion more every year. New Starts and Small Starts investments can be particularly effective when utilized in connection with a highway congestion reduction strategy. In addition, millions of Americans who lack access to an automobile need public transportation for their basic mobility needs. And, public transportation contributes to economic development, air quality, and other local goals and objectives. Chapter 9- The Grand Rapids region began a study of transit options in early 2003 as part of a Major Investment Study ("MIS") to consider the most appropriate technology and project corridors for an expansion of transit service through the New Starts program for the region. As the MIS was being conducted, which we refer to locally as "Great Transit, Grand Tomorrows" (GT2), Congress adopted the Small Starts program as part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ("SAFETEALU"). We quickly shifted our focus to the new Small Starts program since it provided an

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opportunity to develop a transit project that was consistent with the scale of project most appropriate for Grand Rapids. Chapter 10- Portland Streetcar inaugurated modern low floor streetcar service in 2001. We have extended the line three times to reach a 4.0 mile line serving the Central City of Portland. We carry over 3 million riders per year and have been a part of extraordinary urban redevelopment that has occurred in Portland. Since we announced the streetcar, there has been $2.8 billion of new investment along the corridor with over 7,000 new residential units built. The streetcar operates in mixed traffic and serves a shorter trip than light rail and provides the connections between centers in denser populated areas.

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Chapter 1

PUBLIC TRANSIT PROGRAM FUNDING ISSUES IN SURFACE TRANSPORTATION REAUTHORIZATION



William J. Mallett

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ABSTRACT As enacted in the Safe, Accountable, Flexible, Efficient Transportation Equity Act — A Legacy for Users (SAFETEA), federal public transit programs are currently authorized through September 2009. Decisions about reauthorization will likely hinge on the amount of funds available from the Mass Transit Account of the Highway Trust Fund, the source of about 80% of federal transit funding. Without an increase in the federal fuels tax, the use of other dedicated revenue mechanisms, or more money from the general fund, federal funding available to support both highways and transit will slow in the short term, and may decline in the medium term. Because of the growth in authorized spending in SAFETEA and the spending down of unexpended balances over the last few years, however, the transit account is expected to go into deficit in FY20 11 or FY20 12. At the spending level provided for in SAFETEA in FY2009, the fuels tax dedicated to the transit account would need to be raised by approximately 1 cent per gallon to remedy the current deficit in transit funding. This would allow for no growth in the program to deal with growing needs or inflation. The U.S. Department of Transportation, however, estimates that the country needs to spend 25% more annually over the next 20 years than is currently being spent to maintain the current conditions and performance of transit systems, and 73% more to make substantial improvements. At the current federal share of overall transit finances, this translates to an additional 0.6 cents per gallon in the federal fuels tax for transit to maintain the system and 1.8 cents per gallon to improve the system. Without new revenue, Congress may have to modify transit program priorities or, alternatively, may want to reexamine the federal role in the financing of transit systems. Some of the options that may be considered include reducing the federal matching share, encouraging more private-sector involvement, including the use of public-private

 This is an edited, excerpted and augmented edition of a Congressional Research service publication RL34171, dated March 28, 2008. Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

2

William J. Mallett partnerships and innovative financing, encouraging improvements in transit system productivity, and the broad restructuring of current federal transit programs. The report outlines several ways of restructuring federal public transit programs, each an alternative to the possibility of leaving the existing system unchanged. First, Congress might decide to focus more resources on major capital expenses for the rehabilitation and expansion of transit service in places that are best served by this mode, primarily the densely populated parts of large cities that are often severely congested. Second, Congress might focus on supporting and rehabilitating existing services rather than major capital expansion. Third, Congress might eliminate the capital improvement programs altogether, to be replaced with a simple ―block grant‖ that could be distributed based on transit ridership or population. This would allow state and local governments to decide how best to allocate transit funding support among existing and new services.

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INTRODUCTION As enacted in the Safe, Accountable, Flexible, Efficient Transportation Equity Act — A Legacy for Users (SAFETEA), P.L. 109-59, federal public transit programs are currently authorized through September 2009. Decisions about reauthorization will likely hinge on the amount of funds available for surface transportation, particularly revenues from the federal fuels tax and related taxes.[1] Currently, approximately 80% of federal transit funding is derived from the Mass Transit Account of the Highway Trust Fund, and the other roughly 20% is taken from the General Fund of the U.S. Treasury. Without an increase in the fuels tax, the use of other dedicated revenue mechanisms, or more money from the general fund, federal funding available to support both highways and transit will slow in the short term, and may decline in the medium term. Because of the growth in spending provided for in SAFETEA and the spending down of unexpended balances over the last few years, however, the highway account [2] of the trust fund is likely go into deficit in FY2009 and the transit account is expected to follow in FY2012.[3] Fiscal austerity may require a reassessment of federal transportation priorities. A significant increase in the fuels tax, the identification of other revenues, or a combination of the two, on the other hand, may allow the programs to grow as they have in the recent past. In terms of transit programs, SAFETEA authorized approximately $53 billion from FY2004 through FY2009. In nominal terms, this was a 46% increase in transit spending over the Transportation Equity Act for the 21st Century (TEA-21), as amended, P.L. 105-178 and P.L. 105-206, and double the amount authorized in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), P.L. 102-240. In this context, this report examines the financing of the federal public transit program, and transit financing in general. The report begins with an overview of public transit finance and the role of the federal government. This is followed by a discussion of the funding issues that Congress is likely to face in the reauthorization of the transit programs. These include the overall level of funding, issues with the Mass Transit Account of the Highway Trust Fund, state and local matching shares, the role of the private sector and innovative financing, and transit industry productivity. The report concludes with a discussion of broad options for restructuring federal transit program finances.

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Public Transit Program Funding Issues in Surface Transportation Reauthorization

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PUBLIC TRANSIT FINANCE

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In 2004, a total of $39.5 billion from all sources was spent on providing transit service in the United States, with $28.4 billion of this amount derived from public funds and $11.1 billion from system-generated revenues such as passenger fares and advertising. The federal contribution amounted to about $7 billion, representing 18% of all transit revenue sources if system-generated revenue is included (Figure 1). If system-generated revenue is excluded, local government contributed almost half of the funding spent on transit provision, with state government contributing slightly more than one-quarter and the federal government slightly less than one-quarter (Figure 2). There was very little public funding of transit until the mid-1960s, when, with falling ridership and mounting debts, many private transit companies were reestablished as public agencies. The federal government supported this process with capital grants beginning in a substantial way with the Urban Mass Transportation Act of 1964 (P.L. 88-365). Public funding for transit at all levels of government expanded rapidly toward the end of the 1960s and through the 1970s. In the 1980s, overall public funding remained relatively constant, at about $15 billion a year (in constant 2004 dollars), followed by a period of growth in the 1990s that has been particularly rapid since the late 1990s. The federal share of public funding for transit grew rapidly in the 1970s, peaking in the early 1980s at around 40% before stabilizing at around 25% during the past decade.[4]

Source: U.S. Department of Transportation, Federal Highway Administration and Federal Transit Administration, 2006 Status of the Nation‘s Highways, Bridges, and Transit: Conditions and Performance (Washington, DC, 2007). Figure 1. Public Transit Revenue From All Sources, 2004 (in Billions).

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Source: U.S. Department of Transportation, Federal Highway Administration and Federal Transit Administration, 2006 Status of the Nation‘s Highways, Bridges, and Transit: Conditions and Performance (Washington, DC, 2007). Note: Percentages do not add to 100 due to rounding.

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Figure 2. Public Transit Revenue From Government Sources, 2004 (in Billions).

Although the federal government provides only 18% of transit revenues, including system-generated revenues, this support is particularly important for capital expenditures. Almost three-quarters of federal funds go for capital, representing 39% of transit capital expenditures.[5] As rail modes are generally more capital-intensive than non-rail modes, about 70% of this federal capital support goes to rail, with most of the remaining 30% used for bus and bus-related capital expenses. As noted in the introduction, about 80% of federal transit funding comes from the Mass Transit Account of the Highway Trust Fund, with the remaining roughly 20% from the General Fund of the U.S. Treasury. Of the 18.4 cents federal tax on a gallon of gasoline, 2.86 cents is deposited in the transit account. Of the rest, 15.44 cents is deposited in the highway account, and 0.1 cent is deposited in the Leaking and Underground Storage Tank (LUST) Trust Fund. Revenues credited to the trust fund also come from taxes on diesel, gasohol, and special fuels.[6] Since the Surface Transportation Assistance Act of 1982 (P.L. 97-424), it has been customary for 20% of federal fuels tax increases to be dedicated to the transit account. In 1983, the transit account was established with a dedicated 1.0 cent of a 5.0-cent-per-gallon increase in the federal fuels tax.[7] Increases in the fuels tax since then have seen the amount per gallon dedicated to transit increase to 1.5 cents in 1990, 2.0 cents in 1995, 2.85 cents in 1997, and to 2.86 cents in 1998 (retroactive to October 1, 1997).[8] SAFETEA authorized approximately $53 billion for transit programs from FY2004 through FY2009. In nominal terms, this was a 46% increase in transit spending over the TEA2 1, as amended, and more than double the amount authorized in the ISTEA.[9] In addition to federal funding for transit from the transit programs themselves, federal funding is also

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available from several surface transportation programs that allow highway money to be spent on transit projects and vice versa. Most funds ―flexed‖ to the transit programs come from the Surface Transportation Program (STP) and the Congestion Mitigation and Air Quality Improvement Program (CMAQ). Flexing funds is largely the decision of state decisionmakers; hence, the amount transferred can vary widely from year to year. In 15 years, from FY1992 through FY2006, a total of $13.1 billion has been flexed from highways to transit, ranging from $0.3 billion in FY1992 to $1.6 billion in FY2000.[10] Very little transit program funding has been flexed to highways. Paratransit is another area in which funding is available from the federal government outside the transit program. Paratransit, also known as demand response or dial-a-ride, is nonfixed route service for people with disabilities and the elderly, and typically involves the use of small buses, vans, or passenger cars. In a 2003 report, the General Accounting Office (now the Government Accountability Office), or GAO, found that 56 federal programs in seven federal agencies other than DOT fund transportation services to transportation-disadvantaged populations.[11] The same report could not estimate the transportation spending in these programs because the money often was not tracked separately from other types of spending. Because of the complexity of federal programs and overlapping responsibilities in paratransit, the President issued Executive Order (EO) 13330 on Human Service Transportation Coordination on February 24, 2004, directing federal agencies to examine and improve the coordination of federal programs supporting paratransit, and, to implement the effort, created the Federal Interagency Coordinating Council on Access and Mobility (CCAM).[12] The CCAM launched a national initiative, United We Ride, and prepared a report to the President on the issue of coordinating federal paratransit programs with five recommendations that focused on 1) coordinated planning, 2) vehicle sharing, 3) cost sharing, 4) performance measures, and 5) demonstration grants.[13] According to CCAM‘ s latest progress report, 40 states have United We Ride-coordinated transportation plans, and a number of grants have been distributed to help demonstrate the various strategies.[14]

ISSUES FOR CONGRESS With looming fiscal difficulties and growing demand on the transportation system, there is likely to be vigorous debate over the level of funding for surface transportation programs in the reauthorization of SAFETEA. The overall level of transit funding, therefore, is likely to be a major issue for Congress. Without new revenue, Congress may have to reexamine the federal role in the financing of transit systems. Some of the options discussed below include reducing the federal matching share, encouraging more private-sector involvement, including the use of public- private partnerships and innovative financing, encouraging improvements in transit system productivity, and the broad restructuring of current federal transit programs.

Transit Funding Level The overall level of federal transit funding is likely to be a major issue in the reauthorization of SAFETEA, particularly as it relates to the relative balance between

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highway and transit funding. A number of groups, including the American Association of State Highway and Transportation Officials (AASHTO), the U.S. Chamber of Commerce, and the American Society of Civil Engineers, argue that America is underinvesting in transportation infrastructure, including public transit infrastructure.[15] These groups contend that the physical condition and operational performance of public transit is suffering and will continue to suffer unless there is an increase in funding levels. In their view, federal infrastructure investment should be significantly increased to deal with an existing backlog of projects and other future needs. This view is bolstered, to some degree, by the most recent highway and transit ―needs assessment‖ by DOT, which suggests that the capital cost to maintain the current condition and operational performance of transit systems in the United States from 2005 through 2024 is 25% more annually than is being currently spent by all levels of government. In 2004, transit capital spending by all levels of government in 2004 was $12.6 billion, $3.2 less than the $15.8 billion that DOT estimates will be needed annually over the next 20 years.[16] Of this $15.8 billion, $10.4 billion is for replacement and rehabilitation of current infrastructure, and $5.4 billion is for new vehicles and infrastructure to accommodate new riders. Capital spending to improve conditions and operational performance is estimated to require $21.8 billion annually, 73% more than is currently being spent.[17] It should be pointed out, however, that, as with any attempt to estimate current and future system conditions and performance, there are a host of simplifying assumptions, omissions, and data problems that influence the results. Nevertheless, this analysis suggests that if total government spending is not increased above current levels, the physical condition and operational performance of system elements may decline. DOT makes no recommendation about the shares of capital spending made by different levels of government in its estimates of capital needs. However, in the current ratio of capital spending, according to DOT‘s estimates of total need, this would translate to $6.2 billion of federal spending annually to maintain the system and $8.5 billion annually to improve the system. In 2004, the federal government provided $4.9 billion for capital expenses (the remaining $2 billion in federal spending went for non-capital expenses). The congressionally created National Surface Transportation Policy and Revenue Study Commission (NSTPRSC), created under Section 1909 of SAFETEA, estimated significantly greater needs than DOT in its December 2007 report to Congress.[18] In comparison with currently sustainable transit capital spending by all levels of government of about $13 billion (in 2006 dollars), the NSTPRSC estimated middle- and high-range capital spending needs over 15-year, 30-year, and 50-year periods. The middle-range capital spending for transit by all levels of government over the next 30 years (2006 through 2035) was estimated to be in the range of $17 billion to $25 billion per year (in constant 2006 dollars) (an increase of between 31% and 92%), and the high range was estimated to be $23 billion to $34 billion (in constant 2006 dollars) (an increase of 77% to 162%).[19] In its most recent policy statement on national transportation infrastructure, AASHTO contends that it will be very difficult for the country to build enough highway infrastructure to keep up with the current forecasted growth in highway travel. Consequently, it argues that a national policy goal should be to double transit ridership over the next 20 years to reduce highway demand and to meet the needs of the transit-dependent. AASHTO believes this would require increasing federal transit assistance from $10.3 billion in FY2009, the amount authorized in the final year of SAFETEA, to $17.3 billion by FY20 15, possibly the last year

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of the next authorizing legislation.[20] One way to boost ridership, according to AASHTO, is to provide more funding for the New Starts program (49 U.S.C. §5309), which provides up to 80% of federal matching funds for the creation or extension of fixed-guideway transit systems (including bus rapid transit). New Starts funding is in great demand. By AASHTO‘s estimate, $35 billion is needed to fund the 36 projects that have moved beyond the initial planning stages,[21] and, in a survey of transit project sponsors, GAO found that there are another 141 projects planned, of which three- quarters are likely to request federal New Starts funding.[22] In SAFETEA, the New Starts program is authorized at $1.8 billion in FY2009. An alternative view of the overall level of government transportation spending in general, and of transit spending in particular, is that it has not been dramatically deficient. In terms of the nation‘s transit systems, the DOT needs analysis shows that total government spending on capital and operations (excluding farebox and other revenue) grew by approximately 80% between 1980 and 2004 (in real terms), much faster than passenger trips and passenger miles, which grew by 12% and 23%, respectively.[23] However, it is true that federal spending grew relatively slowly over this period, particularly when compared with state and local spending, 4% and 129%, respectively (in real terms). Consequently, the federal share of total spending over the period declined from 42% to 25%. The federal share of capital spending has also declined, from approximately 50% in the mid-1990s to 39% in 2004. Since 1995, federal spending has slightly outpaced state and local spending, growing by 43% and 39%, respectively.[24] As a result of this increase in overall government spending, transit service has grown and the condition and performance of transit systems have generally improved over the past decade. Transit system capacity, measured in capacity-equivalent revenue miles, increased by 30% between 1995 and 2004. With the opening of several new systems and extensions, light rail capacity more than doubled over the period. Bus capacity grew by a more modest 18%.[25] The growth in ridership, on average, has generally lagged behind the growth in capacity; hence, capacity utilization has slipped. Between 1995 and 2004, utilization, as measured in terms of passenger miles per capacity-equivalent vehicle, increased for heavy rail, decreased for commuter rail and light rail, and remained about the same for motorbus.[26] The overall physical condition of transit systems is a more complex picture. Nonetheless, conditions have generally improved, particularly in the bus fleet. The condition of the urban bus fleet weighted for bus size has improved from 2.88 in 1995 to 3.08 in 2004 on a 5-point scale (1 = poor; 5 = excellent). Rail vehicle condition has remained about the same over the period, at around 3.5. Rail maintenance facilities are in reasonable condition. Of the 152 facilities in 2004, only 7% were considered substandard and 1% poor. Additionally, 48% were rated adequate and 43% were rated good or excellent. Rail systems — communication, train control, traction power, and revenue collection — all improved, except for train control systems. About one-quarter of train control systems were rated substandard or worse in 2004. Other structures such as elevated structures and tunnels and track have improved, and are rated good overall. Rail yards have deteriorated slightly over the past few years, and had an overall rating of 3.8 in 2004. One area of concern, according to the DOT study, is transit rail stations, as about half are rated substandard.[27] A third view on the overall level of transit funding is that governments, including the federal government, spend too much on public transit relative to the benefits it provides.[28] It is often pointed out that while transit spending amounts to about 16% of all government

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highway and transit spending and about 14% of federal highway and transit capital expenditure (in 2004),[29] only about 2% of all trips are made by this mode.[30] Even for commuting trips, for which transit is better-suited, transit only accounts for 5% nationwide, a share that has changed little over the past two decades. Only in two cities, New York and Chicago, does the transit share rise above 10%.[31] The effect, according to transit critics, is to short-change highway spending, thereby causing highway conditions and performance, including highway congestion, to be worse than they would be otherwise.[32] A corollary to this view is that a significant proportion of federal transit funding, roughly 80%, comes from taxes paid by highway users. A number of critics of federal transit policy argue that it focuses too much on financial support for building new rail systems. These critics contend that such systems are expensive to build and maintain, less flexible compared with regular bus transit, and ill-suited to today‘s low-density, dispersed metropolitan areas. These critics contend that rail transit may only be worth the cost in high-density corridors, and that few of these corridors remain without rail service.[33] Moreover, critics contend that construction of new rail systems in search of discretionary riders, primarily suburban commuters, have worked to the detriment of busdependent populations in the central city. Overall, these critics argue, the effect has been to switch those riding buses to riding rail, with little net gain in transit patronage.[34] Even the environmental benefits of new rail lines have been called into question because many new rail riders must drive to a station to access the system. Consequently, the reduction in emissions from building new rail lines has been found in many cases to be negligible.[35] In the view of some, federal support for new transit capacity would be better spent on BRT, in which express buses run over roads with some sort of priority system ranging from signal preemption to an exclusive busway. Others argue that BRT projects, while cheaper than rail systems, are still more expensive and less effective than conventional bus service. For instance, one analyst contends that ―modest improvements to basic bus services combined with an attractive fares policy have shown they can secure substantially greater ridership increases than capital- intensive projects involving either light rail or busway construction.‖[36] Others note that BRT projects favor suburban commuters over more centrally located transit such as streetcars, a lighter, cheaper, but slower type of light rail.[37] A counter argument to these critics, and one in favor of increased transit spending, is that transit‘s worth must be analyzed in terms of economic value, not just transportation value.[38] The economic value argument includes economic development as well as mobility, such as mobility for non-drivers and congestion management. By this measure, according to proponents, transit investment is highly productive, often more productive than an alternative highway investment. The implication for transit‘s detractors is that ―the reality that transit cannot as a rule make it financially seems to have created a belief in some quarters that it cannot make it economically either.‖[39] This has been an issue in the New Starts program, as some have argued that federal funds should be used to support projects that provide the most transportation mobility benefits, such as bus rapid transit, and others have contended that funding ought to be available for projects that have fewer mobility benefits but may provide greater economic development benefits, such as light rail and streetcars.[40]

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HIGHWAY TRUST FUND ISSUES The amount of funding available for transit programs, at least in the short to medium term, is likely to depend on decisions surrounding the Highway Trust Fund. At the moment, about 80% of federal transit funding comes from the Mass Transit Account of the Highway Trust Fund, with the rest coming from general funds. In early 2008, the Congressional Budget Office (CBO) estimated that with current revenues and outlays at the level provided for in SAFETEA (with adjustments made for inflation after FY2009), the transit account would go into deficit in FY20 12.[41] Problems with the highway account are more immediate, however, as CBO estimates that this will go into deficit in FY2009. At funding levels provided for in SAFETEA, CBO estimates that expenditures from the Highway Trust Fund will exceed revenues by $6.6 billion in FY2009, with a $4.7 billion difference in the highway account and $1.9 billion difference in the transit account. Expenditures from the transit account do not become a problem until FY20 12, however, because of previously accrued unexpended balances. The unexpended balance in the highway account is being exhausted more quickly; hence, the more immediate problem this presents. Funding shortfalls in the highway and transit programs are related to a few key underlying factors. To begin with, the fuels tax has not been increased since 1993, when 4.3 cents per gallon were added as a general budget deficit reduction measure. This tax increment was redirected to the Highway Trust Fund beginning October 1, 1997. In addition, the fuels tax is not indexed to inflation. Consequently, since 1993, inflation has eroded about one-third of the purchasing power of the fuels tax.[42] One current estimate suggests that the fuels tax would need to be increased by about 10 cents per gallon to restore its 1993 purchasing power.[43] Despite no increase in the federal fuels tax and the problem of inflation, which has been especially severe in construction materials and fuel over the past few years, SAFETEA authorized funding increases based primarily on spending down the unexpended balances that had accrued in the Highway Trust Fund accounts. These balances have been eliminated more quickly than estimated when SAFETEA was enacted. Although receipts from the fuels tax are subject to a good deal of uncertainty, as they depend on projections of travel demand and fuel usage, the current rule of thumb is that a 1.0cent-per-gallon tax increase generates approximately $1.6 billion to $2 billion in revenue for the Highway Trust Fund as a whole and $0.3 billion to $0.4 billion for the transit account, assuming 20% of the increase goes to the transit account. At the funding level currently provided for in FY2009, with expenditures exceeding revenues by $6.6 billion in total and by $1.9 billion in the transit account, and assuming revenue at the higher end of the range, the fuels tax would need to be raised by approximately 5 cents per gallon to close the gap (with 1 cent per gallon dedicated to the transit account). This allows for no growth in the program to deal with growing needs or inflation. Indexing the fuels tax to inflation would allow the programs to remain at the FY2009 level in real terms. One estimate of indexing the fuels tax (beginning in FY20 10) predicts that this alone would raise the current 18.3- cent-per-gallon tax, excluding the 0.1 cents dedicated to the Leaking and Underground Storage Tank Trust Fund, to 21.8 cents per gallon by FY2017.[44] CBO estimates that expenditures from the transit account will exceed revenues by about $1.9 billion in FY2009, but, under the current assumptions, this gap is expected to continue

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widening over time. CBO estimates that the difference will be $4.0 billion by FY2012, $4.5 billion by FY2015, and $5.0 billion by FY2018.[45] Another way to look at fuel taxes and future funding needs is to assess the fuels tax in relation to the DOT needs assessment discussed above. There is no requirement that the federal government provide extra funding to alleviate deficiencies in highway and transit infrastructure identified in the DOT report. But at the level of its current share, the federal government would have to raise an extra $1.3 billion per year, from 2005 though 2024, for capital expenditures to maintain the current condition and performance of the system. To improve the current condition and performance would require an extra $3.6 billion annually. Assuming revenue at the higher end of the range again, these estimates suggest a 0.6- to 1.8cent-pergallon increase in the fuels tax for the transit account. At the current ratio, this would require a 3.0-cent to 9.0-cent-per-gallon increase in the fuels tax overall. This does not include any additional funding for non-capital expenses, currently about 30% of federal transit support. It should be emphasized that these are approximate calculations based on estimates of travel, fuel use, and other factors that may change in the future. Moreover, these calculations are based on assigning 20% of any fuels tax to the transit account, as has been the case since 1983, and which transit supporters are very keen to maintain in any future legislation.[46] A number of highway advocates, however, argue that highway user fees should be used to improve the condition and performance of highways. These highway advocates note that the trust fund was created in 1956 to provide money for the construction of the interstate highway system and for other highway programs. They note that over time, however, an increasing share of trust fund revenue has been diverted to other purposes, particularly to public transit, but also to historic preservation, recreational trails, air pollution mitigation, and, through earmarking, to projects that reward specific constituencies to the detriment of transportation mobility. Continued large-scale federal funding, they argue, has also come at the price of burdensome federal regulation in a number of areas that raises costs and stifles innovation.[47] Rate of Return. Aside from consideration of tax rates and receipts into the Highway Trust Fund, reauthorization may also involve greater debate about each state‘s ―rate of return‖ from the transit account, the so-called ―donor-donee‖ issue. This issue concerns the amount of funds each state receives from the trust fund relative to the amount paid in by a state‘s drivers. A state that pays in more than it receives is known as a donor state. A state that pays in less than it receives is known as a donee state. Highway legislation at least as far back as the Surface Transportation Assistance Act of 1982 has been marked by such concerns.[48] Transit funding, on the other hand, has generally been immune to this issue, mainly because of the heavy concentration of transit service and ridership in just a few states, and because such concerns have been assuaged with relatively large increases in highway and transit spending. In an era of fiscal austerity, however, the debate surrounding each state‘s share of transit funding may appear as an issue.[49]

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FEDERAL AND STATE/LOCAL FUNDING SHARES Federal funding for highways and transit, in most instances, is predicated on sharing project costs with states and localities. From very early on, federal funding for highway and, later, transit infrastructure was conceived as providing support to programs run by state and local government. Consequently, most ―federal aid‖ must be matched with state or local money in a ratio determined by federal law. These matching shares vary from program to program, and have occasionally been adjusted according to the goals of federal policy. Because of this, some suggest that one way to deal with the impending federal transportation funding shortfall is to shrink the size of the federal role. This is particularly true in the area of transit, which is often viewed as a local, not a national, mode of transportation. Why, it is sometimes asked, should a driver in South Carolina pay fuels taxes to subsidize a train rider in Philadelphia?[50] Proponents of turning back more responsibility to state and local governments sometimes argue that withdrawal of federal support for transit programs, and with it federal regulations, particularly the labor protection provisions enacted as Section 13(c) of the Urban Mass Transportation Act of 1964, now Section 5333(b) of Title 49, might even spur transit innovation and ridership, and lower costs. Under this labor protection provision, some argue, it is difficult for transit agencies to reduce the number of staff through the introduction of new technologies or by contracting out some or all agency functions (see the discussion under ―Transit System Productivity,‖ below).[51] Supporters of a continued, and in some cases an even greater, federal role in transit argue that transit is part of a national system, in that it provides a link at the beginning and end of intercity trips. Moreover, they argue, transit can provide congestion relief in major cities and in major travel corridors. Metropolitan areas with large transit systems are viewed as drivers of the national economy. For instance, the top 10 metropolitan areas in terms of transit ridership account for 25% of the nation‘s population and 30% of gross domestic product[52] Consequently, transit supporters argue that improvements in transit systems may predominantly improve local mobility, but will have national economic benefits. Other national benefits cited include improving the response to national emergencies, a cleaner environment, and energy conservation.[53]

Transit and Highway Matching Shares The federal matching share has typically varied by program, and these shares have been changed in authorizing legislation throughout the history of the federal-aid program. Before passage of ISTEA, transit advocates often complained that the federal matching share for transit projects was lower than that for highway projects, biasing state and local decisionmaking toward highway projects so as to receive the extra federal money. ISTEA did away with that supposed inequity by raising matching shares in various transit programs, including the New Starts program, to 80%. The great demand from transit agencies for federal funding from the New Starts program has led some to argue for lowering the cap on the federal share for such projects. Supporters of this view argue that lowering the cap would allow federal funding to be shared among more worthwhile projects. Moreover, supporters argue that a lower cap would encourage

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states and localities with more of their own money at stake to advance only the strongest projects. GAO found that more economic analysis of the costs and benefits of a project is typically done when more local funding is required.[54] In addition, supporters point out that although the maximum share is 80%, prior to SAFETEA it was FTA policy to rate a project as low if it sought a federal share of more than 60%. This policy was a response to House Appropriations Committee reports that a lower share was warranted because demand for funding help was outstripping the available resources.[55] Provisions in SAFETEA now prohibit the Secretary of Transportation from requiring more than 20% and FTA‘s policy, beginning in FY2007, no longer downgrades a project that seeks more than 60%.[56] Nevertheless, projects approved or with pending New Starts funding in FY2007 have a federal share ranging from 34% to 80%.[57] In FY2008, the federal share of New Starts projects ranges from 28% to 80%, and in FY2009 the share ranges from 30% to 80%.[58] Opponents of lowering the maximum federal share argue that lowering the cap might bias state and local decision-makers to favor highways projects that have an 80% match.[59] Others contend that lowering the match will result in a wider distribution of federal transit new starts investment, which will have the effect of diluting its effectiveness. Some also advocate reducing the federal share for both highways and transit, say to 50%, to encourage states and localities to focus on the most productive projects.[60]

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PRIVATE-SECTOR INVOLVEMENT Another idea for dealing with the potential federal funding shortfall in the transit program is to encourage more private participation in developing transit projects through publicprivate partnerships (PPPs) or private development. Two types of PPPs in the development of transit projects are joint development and turnkey procurements, such as design-buildoperate-maintain (DBOM). Joint development involves the construction of private facilities on or over transit agency land in exchange for some kind of benefit, such as a one-time payment, rent, or improvement of transit facilities.[61] The principal argument for these mechanisms is the increased ridership that results from the new uses and the direct financial benefits. A prominent example of joint development is the mixed-use facilities (offices, retail, and a hotel) surrounding the Washington Metropolitan Area Transit Authority‘s (WMATA) Bethesda, MD, station, completed in 1985. The air-rights lease for this development generates $1.6 million annually in rents for WMATA.[62] Turnkey procurements, such as DBOM, involve public-private agreements that turn over more control to private entities in exchange for a lower cost, faster project delivery, or both. In these types of procurements, the public sector contracts with a private contractor to deliver a construction project at a certain time for a certain price. The rationale for this is that the contractor is better able to manage the risks involved, whereby cost and time overruns reduce the contractor‘s profit, but delivering early and under budget increases profit. Projects can range from design-build-transfer, where the contractor designs and builds the project and then transfers it to the owner, to more complex agreements such as DBOM, where the contractor may be involved for decades in the operation and maintenance of the facility.[63] An example of DBOM is the construction and operation of the Hudson-Bergen Light Rail in New Jersey, which opened in 2000. In addition to construction of the project, the agreement with the

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contractor, 21st Century Rail Corporation, includes operation and maintenance of the system for 15 years. According to DOT, using this procurement method to build the project saved an estimated 30% ($345 million) over the more traditional design-bid-build procurement method, and the line was open almost five years ahead of projections.[64] Private development and operation of facilities are another possibility for greater privatesector involvement in transit. An example of predominantly private development of transit is the Las Vegas monorail, a four-mile system that connects hotels and other attractions on the Las Vegas Strip. The original segment operating between two hotels, opened in 1995, was expanded in 2004 by a nonprofit corporation financed by tax-exempt bonds and financial and in-kind contributions from hotels and resorts.[65] A proposal to extend the system to McCarren International Airport was approved by Clarke County in November 2006. Despite this approval, the project does not appear to have attracted the approximately $500 million needed to finance construction.[66] Financial problems with the existing system may be to blame. Newspaper reports have stated that the system is failing to meet its operating and debt expenses by about $30 million annually, and that the company may exhaust its reserve funds by 2010.[67] One estimate suggests that while the monorail carried about 22,000 passengers a day in late 2007, it needs to carry about 35,000 a day to break even.[68] A number of legislative and regulatory initiatives have improved the environment for private-sector involvement in transit. These include, among others, the explicit authorization for DBOM in ISTEA, a new joint development policy issued by FTA in 1997, and the PublicPrivate Partnership Pilot Program (known as Penta-P) in SAFETEA. Although there are some remaining issues in federal and state laws regarding the formation of PPPs, many believe that PPPs will be increasingly important in the future. Despite the potential for greater private-sector involvement and PPPs, the overall difference they may make to the financing of transit system services is likely to be relatively small. A study of joint development around transit stations contends that WMATA is a national leader, yet this aggressiveness only yields about $6 million in annual revenues.[69] While this is substantial, it is a relatively small amount compared with an annual budget of more than $1.9 billion (in FY2007).[70] Similarly, a study by GAO of private involvement in major highway and transit projects concluded that [u]nder current conditions and circumstances, private sector sponsorship and investment seems best able to finance a relatively small number of projects but seems unlikely to stimulate significant increases in the funding available for highways and transit.[71]

As noted earlier, however, financial accounting largely ignores the economic benefits that transit can generate for local areas through land development, job creation, and an increase in the tax base, among other benefits.[72] Others prefer, therefore, to focus on the wider economic benefits that joint development, and transit-oriented development more generally, can provide.

Innovative Financing Related to the discussion of private-sector involvement in infrastructure financing is the use of so-called ―innovative financing.‖ Several innovative financing mechanisms have been

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developed in the past two decades to leverage existing federal resources or to develop new revenue-generating assets. Federal laws have been modified to broaden the ways in which states can match and obligate federal funds. This has enabled states and localities to use their resources more efficiently, to use private funds for the non-federal share on a project, and for projects to be completed more quickly. Moreover, several mechanisms have been created to allow states to issue bonds against future federal aid, making it easier to complete large projects more quickly and cost effectively than would be possible on a pay-as-you-go basis. In transit, Grant Anticipation Notes (GANs) have been used in this way. State Infrastructure Banks (SIBs) have also been set up to create a mechanism to leverage other resources through lending instead of granting federal- aid funds. In the case of generating new revenuegenerating assets, state and local governments and nonprofit corporations are allowed to issue tax-exempt bonds on behalf of private project developers. For example, in the case of the Las Vegas monorail, the State of Nevada issued $600 million of tax-exempt bonds on behalf of the private developers. These bonds were secured by farebox and advertising revenue.[73] Again, although there have been successes in innovative financing in transportation, the ability of these mechanisms to generate extra resources is likely to be modest. This is particularly true in transit, where the possibilities for generating new revenue streams or profit from operations are limited. The tolling of roads, bridges, and tunnels is a much more likely source of new revenue to make these types of financing vehicles possible.[74]

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TRANSIT SYSTEM PRODUCTIVITY Despite rising patronage over the past decade, financial deficits in the transit industry have continued to rise. A financial deficit exists when system costs exceed system-generated revenue. In 2004, system-generated revenue, passenger fares and other income, accounted for 28% of all revenue sources for both operating and capital costs, down from 30% in 1995.[75] In terms of operating costs alone, system- generated revenue has declined, from 59% in 1975 to 41% in 2004 (Table 1). Table 1. Public Transit Revenue Sources for Operating Expenditures, 1975-2004 Type of Revenue

1975

1985

1995

2004

System-Generated

59%

44%

42%

41%

Passenger Fares

54%

38%

NA

NA

Other Operating Income

5%

6%

NA

NA

State/Local Government

32%

49%

53%

52%

Federal Government

9%

8%

5%

8%

Key: NA = Not Available. Sources: American Public Transit Association, 1990 Transit Fact Book (Washington, DC, 1990); U.S. Department of Transportation, Federal Highway Administration and Federal Transit Administration, 2006 Status of the Nation‘s Highways, Bridges, and Transit: Conditions and Performance (Washington, DC, 2007).

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A number of reasons have been put forward for the continuing and worsening problem of financial deficits. A major factor is the difficulty public transit has with maintaining market share when traveling by car is relatively easy and cheap. DOT‘s periodic national survey of personal travel found that in 2001, about 1.6% of all trips were made by transit, down from 3.4% in 1969.[76] Data from the decennial census shows a similar trend in the usual mode of commuting, with public transit declining from 8.9% in 1970 to 4.7% in 2000.[77] The struggle for market share has been exacerbated, in particular, by the growth of low-density suburbs that are relatively difficult to serve with transit. In 2000, about 50% of the nation‘s population lived in suburbs, up from 36% in 1970.[78] Although total transit ridership has grown to a level not seen since the late 1950s, the supply of transit service has grown more quickly, and productivity, output divided by input, has declined. Even if the costs of providing transit service had remained constant, therefore, total outlays would probably have risen faster than revenue. At the same time, the cost of producing transit service has not stayed constant, but has risen over time. The biggest drop in productivity most likely occurred between the mid-1960s and the mid-1980s. By one estimate, the cost of running a transit bus per hour nearly doubled, in real terms, between 1964 and 1985.[79] Over the past 15 years, according to FTA data, productivity improved until 1998, when productivity began to slowly decline again.[80] Several reasons are typically given for the drop in transit productivity over the past 40 years. First, there has been a lot of pressure to expand transit to areas that are costly to serve, particularly low-density suburbs, and to support a variety of social service needs and other community goals that often boost costs. Second, some argue that transit service is overcapitalized, as cities have been encouraged to build rail lines where buses would make more sense, and to use full-sized buses where small buses or vans would be more appropriate. Third, according to some, work rules and other labor protections have made it relatively costly to staff transit agencies. Fourth, governments have pushed to keep transit fares low in an effort to boost ridership. Additionally, transit agencies are increasingly using simple or flat fare structures, despite great variations in the cost of providing service, depending on location, direction of service, and time of day.[81] Fifth, large infusions of government support, including from the federal government, have tended to weaken the constraint on transit management to aggressively manage costs and revenues.[82] As noted earlier, some argue that transit should be evaluated in terms of all the economic benefits it generates for an area as a whole, including all the non-transportation benefits, not just on the basis of simple financial cost and revenue calculations. Nonetheless, the reasons proffered for the drop in transit productivity suggest that less public funding, including less federal funding, would be necessary if transit operations could be made more financially selfsustaining. Much of this comes down to policies pursued at the state and local level and by the transit agencies themselves. However, Congress may also want to consider several broad policy options during reauthorization that address the issue of financial sustainability. Some suggest that transit agencies should stop many of the expansions of fixed- route transit service, particularly in difficult-to-serve areas, and that the federal government should encourage them to do so.[83] According to this view, transit agencies may also need to consider cutting services that lose the most money, except perhaps paratransit service. In cases where new transit services are appropriate, such as along densely populated and congested corridors, agencies might look to invest in less costly transit modes, particularly buses and bus rapid transit.84] Others have suggested that public assistance, including federal

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funding, should go mainly to support transit‘s core mission of improving mobility, particularly for transit dependent populations, instead of supporting a profusion of policy goals in energy and the environment, economic development, and highway congestion.[85] For example, although about half of the funding in the Congestion Mitigation and Air Quality (CMAQ) Improvement Program goes to fund transit projects, the available evidence appears to show that such projects are not particularly effective in reducing vehicle emissions.[86] Another suggestion is for states and localities to inject more competition into the provision of transit service or to find other ways to reduce costs. This usually entails proposals to competitively bid transit service provision and to allow private operators to provide new services to compete with public transit agencies.[87] This could be accomplished, according to some advocates, by making the elimination of local barriers to privatization a condition of federal funding.[88] In many places, these local barriers take the form of state and local laws and regulations that ―provide local or regional monopoly powers over public transit service to RTAs [regional transportation agencies] or taxi companies.‖[89] Moreover, contracts with transit workers unions often do not allow transit agencies to employ part-time workers or to require split-shifts to cover the peaking of demand in the morning and evening.[90] In addition, some argue that federal labor protections in transit, commonly known as Section 13(c), should be abolished or modified, a position rejected by unions representing transit workers.[91] A GAO report released in 2001 found that 13(c) labor protections had minimal impact on labor costs and other factors in transit operations, except in the ability of transit agencies to contract out for fixed-route transit services.[92] A TRB report on contracting in the provision of bus service found that few transit managers mentioned federal or state laws or policies, including 13(c), as a reason to contract out or not.[93] Another potential way of reducing the need for public assistance is to increase fares, where possible, to cover costs. Fares need not necessarily be increased across the board, but could be adjusted to more accurately reflect the cost of providing a particular service. The federal government might encourage transit systems to do this, particularly with the use of electronic fare payment technology that makes it relatively easy to collect variable fares. It might also be possible to reduce the need for government assistance of public transit by making automobile use more expensive. One way to do this is to institute new highway tolls, particularly ones that vary based on traffic levels. Such road pricing schemes usually make the most sense in severely congested regions where good transit options exist. Congress, therefore, might encourage congested metropolitan areas to design comprehensive congestion management schemes that incorporate highway pricing and transit, as DOT is doing with its Urban Partnership Agreements (UPAs). In the summer of 2007, DOT announced UPAs with five cities, New York City (NYC), Minneapolis/St. Paul, Seattle, San Francisco, and Miami. The Minneapolis/St. Paul proposal, for example, involves, among other things, converting high-occupancy vehicle (HOV) lanes to high-occupancy toll (HOT) lanes, and, in the same corridor, expanding existing express bus service and instituting BRT. It is also proposed that new toll revenue will be used to provide reduced transit fares in the peak periods on the newly priced facilities. DOT has pledged to provide $133.3 million of federal funding to Minneapolis/St. Paul contingent on legislative and other actions at the state and local level.[94] Finally, some have proposed that the federal transit program include a performance incentive element that rewards transit agencies for providing more service per dollar of public

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subsidy. During the reauthorization of TEA-21, the Administration proposed a $1.3 billion incentive program with funding going to agencies with the largest increases in transit ridership.[95] Transit industry representatives argued against this proposal, noting that it might unfairly penalize agencies that cannot increase transit ridership because of factors beyond their control, such as capacity limitations or a local economic downturn. Moreover, they noted that several of the formula programs already include factors that reward systems with levels of ridership that are high relative to operating costs.[96] A new performance incentive program was not enacted in SAFETEA, but some observers maintain that it is an option worth considering again.

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FEDERAL PUBLIC TRANSIT PROGRAM PRIORITIES If federal funding for transit remains flat or possibly even declines over the next decade, Congress may opt to adjust the structure of the programs based on a reexamination of its priorities. Under SAFETEA, 43% of funds are authorized for the Capital Investment Program, 42% for the Urbanized Area Formula Grants Program, and 15% for several other formula programs, such as the Other Than Urbanized Area Formula Program (commonly referred to as the Rural Formula Program), state and metropolitan planning, research, and FTA operations.[97] Several possible ways of restructuring federal public transit programs, among many others, are outlined below, each an alternative to the possibility of leaving the existing system unchanged. One way to reorder federal priorities would be to focus more resources on major capital expenses for the rehabilitation and expansion of transit service in places that are best served by this mode, primarily the densely populated parts of large and often heavily congested cities. This would require expanding the programs that make up the Capital Investment Program (the New Starts Program, the Rail Modernization Program, and the Bus Capital Program) and cutting back on the more broadly spread grants under the Urbanized and NonUrbanized Formula Programs that are going for smaller and more routine types of expenses. This change would likely result in a concentration of resources in a few large cities where transit usage is already relatively high. Alternatively, Congress may decide that the era of retrofitting large and medium-sized cities with new transit rail systems is largely over, and that resources should now go to supporting and rehabilitating existing services. This could entail a reduction in spending on the New Starts program, currently about 18% of the federal transit program, and more support for the other capital programs and the formula grants programs. The effect of these changes on the distribution of funds is likely to be more mixed, and would depend on the share of funds dedicated to the Rail Modernization program, a program that includes relatively few cities, and the share dedicated to buses and formula programs that include a much larger number of places. A third alternative would be to eliminate the capital programs altogether, to be replaced with a simple ―block grant‖ that could be distributed based on transit ridership or population. This would allow state and local governments to decide how best to allocate transit funding support among existing and new services. Funds distributed according to transit ridership would reward areas that commit their own resources successfully to providing transit service.

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The distribution of funding in this way would again depend on how this program would be structured, but it might also depend on how states and localities react to the changes in terms of how aggressively they promote transit ridership. Much of this presupposes that federal transit funding may cease to grow or even decline in real terms in the next reauthorization, which might take surface transportation programs through FY2015. This need not be the case if the federal fuels tax is raised and some of this new revenue dedicated to transit, or if other types of dedicated revenues are created, or if Congress decides to fund transit programs at a higher level from the general fund. Revenue and spending growth may make programmatic decisions a good deal easier to make, but that does not necessarily preclude Congress from making changes in the way the federal government supports public transit provision.

REFERENCES [1]

[2]

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[3] [4]

[5]

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[9]

Revenues deposited in the Highway Trust Fund come from taxes on several fuels (gasoline, diesel, gasohol, and special fuels) as well as taxes on tires, sales of trucks and trailers, and heavy vehicle use. Although not named in law, the part of the Highway Trust Fund outside of the Mass Transit Account is typically called the highway account, a convention followed in this report. Estimates provided to CRS by the Congressional Budget Office, February 29, 2008. U.S. Department of Transportation, Federal Highway Administration and Federal Transit Administration, 2006 Status of the Nation‘s Highways, Bridges, and Transit: Conditions and Performance (Washington, DC, 2007), chapter 6. [http://www.fhwa.dot.gov/policy/2006cpr/ index .htm].of transit capital expenditures. As rail modes are generally more capital-intensive than non-rail modes, about 70% of this federal capital support goes to rail, with most of the remaining 30% used for bus and bus-related capital expenses. Since the Surface Transportation Assistance Act of 1982 (P.L. 97-424), it has been customary for 20% of federal fuels tax increases to be dedicated to the transit account. In 1983, the transit account was established with a dedicated 1.0 cent of a 5.0-cent-pergallon increase in the federal fuels tax. Increases in the fuels tax since then have seen the amount per gallon dedicated to transit increase to 1.5 cents in 1990, 2.0 cents in 1995, 2.85 cents in 1997, and to 2.86 cents in 1998 (retroactive to October 1, 1997). SAFETEA authorized approximately $53 billion for transit programs from FY2004 through FY2009. In nominal terms, this was a 46% increase in transit spending over the TEA-2 1, as amended, and more than double the amount authorized in the ISTEA. In addition to federal funding for transit from the transit programs themselves, federal funding is also available from several surface transportation programs that allow highway money to be spent on transit projects and vice versa. Most funds ―flexed‖ to the transit programs come from the Surface Transportation Program (STP) and the Congestion Mitigation and Air Quality Improvement Program (CMAQ). Flexing funds is largely the decision of state decision-makers; hence, the amount transferred can vary

Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

Public Transit Program Funding Issues in Surface Transportation Reauthorization

[10]

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19

widely from year to year. In 15 years, from FY1992 through FY2006, a total of $13.1 billion has been flexed from highways to transit, American Public Transportation Association, Public Transportation Fact Book 2007 (Washington, DC, 2007), table 44; and American Public Transportation Association, Public Transportation Fact Book 2006 (Washington, DC 2006), table 44. U.S. General Accounting Office (now the Government Accountability Office), Transportation-Disadvantaged Populations: Some Coordination Efforts Among Programs Providing Transportation Services, but Obstacles Persist, GAO-03-697 (Washington, DC, 2003). [http://www.gao.gov/new.items/d03697.pdf]. Federal Register, Vol. 69, No. 38, Executive Order 13330, of February 24, 2004: Human Services Transportation Coordination, pp 91 85-9187. [http://a257 .g.akamaitech.net/7/257/ 2422/14mar200 10800/edocket.access.gpo.gov/2004/pdf/04445 1 .pdf]. Coordinating Council on Access and Mobility, Report to the President: Human Service Transportation Coordination, Executive Order 13330 (Washington, DC, 2005). [http://www.unitedweride.gov/0216_LAYOUT_1 .3F_v6.pdf]. Coordinating Council on Access and Mobility, Progress Report: Implementation of Executive Order 13330, Human Services Transportation Coordination, 2005-2007 (Washington, DC, 2007). [http://www.unitedweride.gov/UWRProgress_report200520072_ 2_07.doc]. See, for instance, American Society of Civil Engineers, ―Report Card for America‘s Infrastructure 2005,‖ [http://www.asce.org/reportcard/2005/page.cfm?id=34]; American Association of State Highway and Transportation Officials (AASHTO), Surface Transportation Policy Recommendation (Washington, DC, March 2007) [http://www. transportation1.org/tif2report/]; National Chamber Foundation, Future Highway and Public Transportation Financing, Executive Summary (Washington, DC, 2005), [http://www. uschamber.com/ncf/publications/default.htm]. U.S. Department of Transportation, Federal Highway Administration and Federal Transit Administration, 2007, p. 8-8. Ibid., p. 7-18. Based on data supplied by Metropolitan Planning Organizations (MPOs), DOT estimates that passenger miles traveled (pmt) on transit will increase at an annual rate of 1.57%. Over the 20 years of the forecast, therefore, pmt will increase by a total of 37%. This is about twice the growth in the U.S. population forecast by the Census Bureau. MPOs are local government entities responsible for carrying out the metropolitan transportation planning process, and are required by federal law in urbanized areas with a population of 50,000 or more. National Surface Transportation Policy and Revenue Study Commission, Transportation for Tomorrow (Washington, DC, 2007). [http://www.transportationfortomorrow.org/final_ report/] Ibid., Volume II, p. 4-12. AASHTO, March 2007, p. 35. AASHTO, Future Needs of the U.S. Transportation System (Washington, DC, February 2007), p. 45. [http://www.transportation1 .org/tif 1report/TIF1- 1 .pdf]. U.S. Government Accountability Office, Public Transportation: Future Demand is Likely for New Starts and Small Starts Programs, but Improvements Needed to the

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William J. Mallett Small Starts Application Process, GAO-07-917 (Washington, DC, 2007). [http://www.gao.gov/new. items/d079 17 .pdf]. U.S. Department of Transportation, Federal Highway Administration and Federal Transit Administration, 2007, exhibit 6-22; American Public Transportation Association, ―Unlinked Passenger Trips by Mode, 1890-2004.‖ [http://www.apta.com/research/stats/ridership/trips. cfm]; U.S. Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics, National Transportation Statistics 2007 (Washington, DC, 2007), table 1-3. [http://www.bts.gov/publications/national_ transportation_ statistics/html/table_0 1_37.html]. CRS calculation using GDP implicit price-deflator based on U.S. Department of Transportation, Federal Highway Administration and Federal Transit Administration, 2007, exhibits 6-20, 6-23 Ibid., exhibit 2-25. Ibid., exhibit 4-17. Ibid., chapter 3. Cox, Wendell, ―Transit‘s Limited Capability and Promise,‖ in Wendell Cox, Alan Pisarski, and Ronald D. Utt (eds), 21st Century Highways: Innovative Solutions to America‘s Transportation Needs (Washington, DC, Heritage Foundation, 2005). U.S. Department of Transportation, Federal Highway Administration and Federal Transit Administration, 2007, exhibits 6-8, 6-20, 6-23. U.S. Department of Transportation, Bureau of Transportation Statistics, NHTS 2001 Highlights Report, BTS03-05 (Washington, DC, 2003), figure 6. 31 U.S. Census Bureau, ―Most of Us Still Drive to Work Alone: Public Transportation Commuters Concentrated in a Handful of Large Cities,‖ U.S. Census Bureau News, June 13, 2007. [http://www.census.gov/Press-Release/www/releases /archives/american _community_ survey_acs/0 1023 0.html]. 32 Cox, W. And R. O‘Toole, ―The Contribution of Highways and Transit to Congestion Relief: A Realistic View,‖ Heritage Foundation Backg rounder, No. 1721, January 24, 2004. [http://www.heritage.org/Research/UrbanIssues/bg 1721 .cfm]. Wachs, M., ―U.S. Transit Subsidy Policy: In Need of Reform,‖ Science, Vol. 244, pp. 1545-1549. Richmond, J., ―A Whole-System Approach to Evaluating Urban Transit Investments,‖ Transport Reviews, 2001, Vol. 21, No. 2, pp. 141-179. Ibid. Ibid., p. 161. Siggerud, K. Director of Physical Infrastructure, ―U.S. Government Accountability Office, Preliminary Analysis of Changes To and Trends in FTA‘s New Starts and Small Starts Programs,‖ Statement Before House Subcommittee on Highways and Transit, May 10, 2007, GAO-07-812T, [http://www.gao.gov/new.items/d078 12t.pdf]; Herrick, T., ―A Streetcar Named Aspire: Lines Aim to Revive Cities, Wall Street Journal, June 20, 2007, B 1. Lewis, D. and F.L. Williams, Policy and Planning as Public Choice: Mass Transit in the United States (Brookfield, VT, Ashgate, 1999).

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[39] Testimony of David Lewis, Consultant, in U.S. Congress, House Subcommittee on Highways and Transit, Implementation of New Starts and Small Starts Program, May 10, 2007. [40] See CRS Report RL34 171, Public Transit Program Issues in Surface Transportation Reauthorization, by William J. Mallett. [41] Estimates provided to CRS by the Congressional Budget Office, February 29, 2008. [42] Transportation Research Board, National Cooperative Highway Research Program, Future Financing Options to Meet Highway and Transit Needs, NCHRP Web-Only Document 102 (Washington, DC, 2006), pp. 2-16. [http:ionlinepubs.trb.org /onlinepubs/nchrp/nchrp_ w102.pdf]. [43] Ibid., p. 6-2. [44] Ibid., p. 6-1. [45] Estimates provided to CRS by the Congressional Budget Office, February 29, 2008. [46] Millar, W., President, APTA, U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Hearing on The Administration‘s Proposal for Reauthorization of the Federal Public Transportation Program, [http://frwebgate.access.gpo.gov/cgibin/getdoc. cgi?dbname= 108_senate_hearings&docid=f:96 194.pdf], June 10, 2003. [47] Utt., R, ―Reauthorization of TEA-2 1: A Primer on Reforming The Federal Highway and Transit Programs,‖ Heritage Foundation Backg rounder, No. 1643, April 7, 2003, [http://www.heritage.org/Research/SmartGrowth/upload/397 89_1 .pdf]; Utt, R., ―Proposal to Turn Federal Highway Program Back to the States Would Relieve Traffic Congestion,‖ Heritage Foundation Backg rounder, No. 1709, November 21, 2003, [http://www.heritage. org/Research/SmartGrowth/upload/5277 1_1 .pdf]. [48] See CRS Report RL3 1735, Federal-Aid Highway Program: ―Donor-Donee‖ State Issues, by Robert S. Kirk, Updated June 10, 2005. [49] Utt, R., ―Time for Congress to End the Regional Inequities in the Federal Highway Program,‖ Heritage Foundation WebMemo, #645, February 1, 2005. [http://www.heritage. org/Research/SmartGrowth/wm645.cfm]. [50] Ibid. [51] Utt. R., Heritage Foundation Backg rounder, No. 1643, April 7, 2003. [52] U.S. Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics, State Transportation Statistics 2006 (Washington, DC, 2007), table 4-3. [http://www.bts.gov/publications/state _transportation_statistics/state_ transportation_statistics_2006/index.html]; U.S. Department of Commerce, Bureau of Economic Analysis, Gross Domestic Product by Metropolitan Area. [http://www.bea.gov]. [53] American Public Transportation Association (APTA) ―The Benefits of Public Transportation — An Overview.‖ [http://www.apta.com/research /info /online/ben_overview. cfm#ltn]. [54] 54 U.S. Government Accountability Office, Highway and Transit Investments: Options for Improving Information on Projects‘ Benefits and Costs for Increasing Accountability for Results, GAO-05-172 (Washington, DC, January 2005). [http://www.gao.gov/new.items/ d05 172.pdf]. [55] See, for example, House Appropriations Report, Department of Transportation and Treasury and Independent Agencies Appropriations Bill, 2004, 108-243.

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[56] U.S. Government Accountability Office, New Starts Program Is in a Period of Transition, GAO-06-8 19 (Washington, DC, 2006). [http://www.gao. gov/new.items/d068 1 9.pdf]. [57] Ibid., p. 13. [58] U.S. Department of Transportation, Federal Transit Administration, Annual Report on Funding Recommendations, Proposed Allocations of Funds for Fiscal Year 2008, New Starts, Small Starts, Alternative Transportation in Parks and Public Lands (Washington, DC, 2007). [http://www.fta.dot.gov/documents/FY2008_Entire_NS_Report.pdf]; U.S. Department of Transportation, Federal Transit Administration, Annual Report on Funding Recommendations: Proposed Allocations of Funds for Fiscal Year 2009, New Starts, Small Starts, Alternative Transportation in Parks and Public Lands (Washington, DC, 2008). [http://www.fta.dot.gov/publications/reports/reports_ to_congress /publications_7753.html]. [59] Beimborn, E. and R. Puentes, ―Highways and Transit: Leveling the Playing Field in Federal Transportation Policy,‖ in Bruce Katz and Robert Puentes, eds., Taking the High Road: A Metropolitan Agenda for Transportation Reform. (Washington, DC. Brookings Institution Press, 2005.) [60] Luberoff, D., ― The Triumph of Pork Over Purpose,‖ Blueprint Magazine, September 10, 2001. [http://www.ndol.org/ndol_ci.cfm?contentid=3765&kaid= 14 1&subid=299]. [61] U.S. Department of Transportation, Report to Congress on Public-Private Partnerships (Washington, DC, 2004), p. 36. [http://www.fhwa.dot.gov/reports /pppdec2004 /pppdec2004. pdf]. [62] 62 Transportation Research Board, Transit Cooperative Research Program, TransitOriented Development in the United States: Experiences, Challenges, and Prospects, TCRP Report 102 (Washington, DC, 2004). [http://onlinepubs.trb.org onlinepubs/tcrp/tcrp_rpt_102.pdf]. [63] 63 U.S. Department of Transportation, Federal Transit Administration, Innovative Financing Techniques for America‘s Transit Systems (Washington, DC, 1998). [http://www.fta.dot. gov/planning/metro/planning_environment_3530.html]. [64] U.S. Department of Transportation, 2004, pp. 38-39. [65] General Accounting Office (now the Government Accountability Office), Highways and Transit: Private Sector Sponsorship of Investment in Major Projects Has Been Limited, GAO-04-419 (Washington, DC, 2004), pp. 52-53. [http://www.gao.gov /new.items/ d04419.pdf]. [66] McCabe, Francis, ―Monorail Extension Going Nowhere Fast,‖ Las Vegas ReviewJournal, January 13, 2008, p. B2. [67] McCabe, Francis, ―Monorail Tax Break Renewed,‖ Las Vegas Review-Journal, March 4, 2008, p. B2. [68] McCabe, Francis, ―Monorail Ridership Climbs in 2007,‖ Las Vegas Review-Journal, January 19, 2008, p. B3. [69] Transportation Research Board, 2004, p. 9. [70] Washington Metropolitan Area Transit Authority, Approved Fiscal 2007 Annual Budget (Washington, DC). [http://www.wmata.com/about/ board_gm/ FY2007_ Budget_B ook_final. pdf]. [71] Government Accounting Office, 2004, p. 6. [72] Lewis and William, 1999.

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[73] Transportation Research Board, 2006. [74] U.S. Department of Transportation, Federal Highway Administration, Innovative Finance Primer (Washington, DC). [http://www.fhwa.dot .gov/innovativefinance /ifp/ifprimer.pdf]. [75] U.S. Department of Transportation, Federal Highway Administration and Federal Transit Administration, 2007, exhibits 6-23, 6-25. [76] Polzin, S. and X. Chu, Public Transit in America: Results from the 2001 National Household Travel Survey (Tampa, FL, 2005), p. 61. [http://www.nctr.usf.edu/pdf/52709.pdf] [77] Ibid. [78] Pisarski, Alan. E, Commuting in America III (Washington, DC, Transportation Research Board, 2006), p. 27. [79] 79 Lave, C. ―It Wasn‘t Supposed to Turn Out Like This,‖ Access, No. 5, Fall 1994, pp. 2 1-25. [80] CRS calculation of operating costs per revenue hour using the implicit price deflator for GDP and U.S. Department of Transportation, Federal Transit Administration, National Transit Summaries and Trends (Washington, DC, various years). [http://www.ntdprogram. gov/ntdprogram]. [81] Transportation Research Board, Fare Policies, Structures, and Technologies: Update, Transit Cooperative Research Program (TCHRP) Report 94 (Washington, DC, 2003), table 2-6. [http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rpt_94.pdf]. [82] Lave, 2004; Taylor, B.D. ―The Geography of Urban Transportation Finance,‖ in Susan Hanson and Genevieve Giuliano (eds), The Geography of Urban Transportation, Third Edition (New York, Guilford Press, 2004). [83] Utt, R. ―Getting Urban Transit Systems Focused on Cost and Service,‖ Heritage Foundation Web Memo, #7 17, April 11, 2005. [http://www.heritage.org/Research/ SmartGrowth/wm7 17.cfm]. [84] O‘Toole, R. ―A Desire Named Streetcar: How Federal Subsidies Encourage Wasteful Local Transit Systems,‖ Policy Analysis, No. 559, January 5, 2006. [http://www.cato.org/ pubs/pas/pa559.pdf]. [85] Downs, 2006. [86] Transportation Research Board, The Congestion Mitigation and Air Quality Improvement Program: Assessing 10 Years of Experience, Special Report 264 (Washington, DC, 2002). [http://onlinepubs.trb.org/onlinepubs/sr/sr264.pdf]. [87] Winston, C. and C. Shirley, Alternate Route: Toward Efficient Urban Transportation (Brookings Institution Press, Washington, DC, 1998). [88] Testimony of Jim Seal, Consultant, in U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Hearing on The Administration‘s Proposal for Reauthorization of the Federal Public Transportation Program, [http://frwebgate.access. gpo.gov/cgibin/getdoc.cgi?dbname= 108_senate_hearings & docid=f:96 194.pdf], June 10, 2003. [89] Downs, p. 150. [90] Wachs, M., ―U.S. Transit Subsidy Policy: In Need of Reform,‖ Science, Vol. 244, pp. 1545-1549. [91] Testimony of R. Molofsky, General Counsel, Amalgamated Transit Union in U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Hearing on The

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[92]

[93]

[94]

[95]

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[96]

[97]

William J. Mallett Administration‘s Proposal for Reauthorization of the Federal Public Transportation Program, [http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname= 108_senate_ hearings &docid=f:96194.pdf], June 10, 2003. U.S. General Accounting Office (now the Government Accountability Office), Transit Labor Arrangements: Most Transit Agencies Report Impacts are Minimal, GAO-02-78 (Washington, DC, 2002). [http://www.gao.gov/new.items/d0278.pdf]. Transportation Research Board, Contracting for Bus and Demand-Responsive Transit Services, Special Report 258 (Washington, DC, 2001). [http://onlinepubs.trb.org/ onlinepubs/sr/sr258 .pdf]. U.S. Department of Transportation, ―Minneapolis Urban Partnership Agreement.‖ [http://www.upa.dot.gov/agreements/minneapolis.htm]. For more information on the Urban Partnership Agreements in general, see the DOT website: [http://www.upa.dot.gov/index. htm]. Testimony of Norman Y. Mineta, Secretary of Transportation, in U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Hearing on The Administration‘s Proposal for Reauthorization of the Federal Public Transportation Program, [http ://frwebgate. access. gpo .gov/cgi-bin/getdoc .cgi ?dbname= 108_senate_hearings &docid=f:96194.pdf], June 10, 2003. Testimony of William Millar in U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Hearing on The Administration‘s Proposal for Reauthorization of the Federal Public Transportation Program, [http://frwebgate.access .gpo.gov/cgibin/getdoc.cgi?dbname= 108_senate_hearings&docid=f:96 194.pdf], June 10, 2003; Molofsky, R., General Counsel, Amalgamated Transit Union, Response to Written Questions of Senator Shelby, in U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Hearing on The Administration‘s Proposal for Reauthorization of the Federal Public Transportation Program, [http://frwebgate.access.gpo.gov/cgi-bin/getdoc. cgi?dbname= 108_senate_ hearings &docid=f:96 194.pdf], June 10, 2003. For more information on the current structure of the federal transit program see CRS Report RL34 171, Public Transit Program Issues in Surface Transportation Reauthorization by William J. Mallett.

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Chapter 2

PUBLIC TRANSPORTATION: IMPROVEMENTS ARE NEEDED TO MORE FULLY ASSESS PREDICTED IMPACTS OF NEW STARTS PROJECTS 

Katherine Siggerud

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ABBREVIATIONS ANPRM Advanced Notice of Proposed Rulemaking BRT Bus Rapid Transit DOT Department of Transportation EPA Environmental Protection Agency FFGA full funding grant agreement FHWA Federal Highway Administration FTA Federal Transit Administration LRT Light Rail Transit MPO metropolitan planning organization NPRM Notice of Proposed Rulemaking SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users TRB Transportation Research Board TSUB transportation system user benefits

WHY GAO DID THIS STUDY Through the New Starts program, the Federal Transit Administration (FTA) evaluates and recommends new fixed guideway transit projects for funding using the evaluation criteria identified in law. In August 2007, FTA issued a Notice of Proposed Rulemaking (NPRM), in  This is an edited, excerpted and augmented edition of an United States Government Accountability Office publication GAO-08-844, dated July 2008.

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part, to incorporate certain provisions within the Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA-LU) into the evaluation process. SAFETEA-LU requires GAO to annually review FTA‘s New Starts process. This report discusses (1) the information captured by New Starts project justification criteria, (2) challenges FTA faces as it works to improve the New Starts program, and (3) options for evaluating New Starts projects. To address these objectives, GAO reviewed statutes, FTA guidance and regulations governing the New Starts program, and interviewed experts, project sponsors, and Department of Transportation (DOT) officials.

WHAT GAO RECOMMENDS GAO recommends that the Secretary of Transportation take steps to improve the New Starts evaluation process, including seeking additional resources to improve local travel models and seeking a legislative change to allow FTA to consider the dollar value of mobility improvements in evaluating projects. DOT officials generally agreed with the findings and recommendations in this report.

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WHAT GAO FOUND FTA primarily uses cost-effectiveness and land use criteria to evaluate New Starts projects, but concerns have been raised about the extent to which the measures for these criteria capture total project benefits. FTA‘s current transportation system user benefits measure, which assesses a project‘s cost effectiveness, focuses on how proposed projects will improve mobility by reducing the real and perceived cost of travel. FTA told GAO that such mobility improvements are a critical goal of all transit projects. While the literature and most experts that GAO consulted with generally agree with this assertion, they also raised concerns that certain benefits are not captured. As a result, FTA may be underestimating transit projects‘ total benefits, but it is unclear the extent to which this impacts FTA‘s evaluation and rating process. FTA officials acknowledged many of these limitations but noted that resolving these issues would be difficult without a substantial investment of resources by all levels of government to improve and update local travel models. FTA faces several systemic challenges to improving the New Starts program, including addressing multiple program goals, limitations in local travel models, the need to maintain the rigor while minimizing the complexity of the evaluation process, and developing clear and consistent guidance for incorporating qualitative information. The evaluation criteria identified in the law reflect multiple goals for the program, which has led to varying expectations between FTA and project sponsors about what types of projects should be funded. Also, models that generate local travel demand forecasts are limited and may not provide all of the information needed to properly evaluate transit projects. FTA has taken steps to mitigate the modeling limitations, such as incorporating proxy measures to account for certain project impacts and developing a request for proposals to improve local travel models so that they can better predict changes in highway user benefits. However, according

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to FTA officials, the request for proposals is only a first step in improving local travel models, and additional resources are needed. Experts and project sponsors GAO interviewed discussed different options for evaluating proposed transit projects but identified significant limitations of each option. One option is to revise the current New Starts evaluation process as proposed by FTA in the August 2007 NPRM. While some experts GAO spoke to appreciated the rigor of the current evaluation process, others noted that the NPRM may still underestimate total project benefits. For example, FTA‘s measure of mobility improvements does not account for benefits accruing to highway users, and its measures of environmental benefits may not properly distinguish among projects. Experts also discussed other options for evaluating proposed transit projects, including benefit-cost analysis. Unlike FTA‘s current evaluation process, benefit-cost analysis would attempt to monetize all benefits and costs, which experts told GAO would be a more comprehensive approach to evaluating projects. FTA is currently prohibited by statute from considering the dollar value of mobility improvements in evaluating projects. Since the early 1970s, a significant portion of the federal government‘s share of new capital investment in mass transportation has come through the Federal Transit Administration‘s (FTA) New Starts program. Through this program, FTA identifies and recommends new fixed-guideway transit projects for grants, typically through full funding grant agreements (FFGA).[1] Over the last decade, the New Starts program has provided state and local agencies with over $10 billion to help design and construct transit projects throughout the country. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) authorized the New Starts program through fiscal year 2009. Although SAFETEA-LU maintained a number of program requirements imposed by previous authorizing legislation, it also made some changes to the program.[2] For example, FTA must continue to prioritize projects for funding by evaluating, rating, and recommending potential projects on the basis of specific local financial commitment and project justification criteria, including cost-effectiveness, operating efficiencies, land use, mobility improvements, and environmental benefits. SAFETEA-LU, however, also added economic development as a project justification criterion. We have previously identified FTA‘s use of a rigorous and systematic evaluation process to distinguish among proposed New Starts investments as a model for other transportation programs.[3] However, we and others have also identified challenges facing the New Starts program. For example, our past reviews found that many program stakeholders thought that FTA‘s process for evaluating New Starts projects was too complex and costly and did not effectively use all of the criteria outlined in SAFETEA-LU and previous legislation to account for different project benefits, such as economic development. This latter issue is of particular concern, given that FTA‘s evaluation process is intended to provide a meaningful and transparent approach for distinguishing between proposed projects by assessing a range of project benefits. As a result, by not measuring or underestimating certain benefits, the relative rankings of proposed projects could change and subsequently impact FTA‘s funding recommendations. In August 2007, FTA issued a Notice of Proposed Rulemaking (NPRM)[4] to implement SAFETEA-LU provisions into the evaluation process and make additional changes that FTA believes will improve the New Starts program. However, FTA‘s proposed changes to the current evaluation framework were not well received by Members of Congress and the transit

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industry, and the Consolidated Appropriations Act of 2008 prohibited FTA from spending money to issue the final rule this fiscal year.[5] These issues and the upcoming reauthorization of all surface transportation programs, including the New Starts program, have led stakeholders and policymakers to re-examine the existing evaluation process and consider potential modifications and other options for evaluating New Starts projects in the future. We are required by SAFETEA-LU to report each year on FTA‘s processes and procedures for evaluating, rating, and recommending New Starts projects for federal funding and on FTA‘s implementation of these processes and procedures. This report discusses the (1) information captured by New Starts project justification criteria, (2) challenges FTA faces as it works to improve the New Starts program, and (3) options for evaluating New Starts projects. In addition, appendix I contains an overview of FTA‘s fiscal year 2009 New Starts Annual Report and budget request. To address these objectives, we reviewed SAFETEA-LU, FTA guidance and regulations governing the New Starts program and other FTA documents, including the annual New Starts report; reviewed and summarized research about the impacts of transit projects; attended New Starts Listening Sessions in Washington, D.C. and Charlotte, N.C. to learn more about the NPRM; interviewed experts, consultants, project sponsors, industry associations, and Department of Transportation (DOT) officials about the current and proposed New Starts evaluation frameworks, as well as other options for evaluating projects; and analyzed a sample of comments to FTA‘s docket on the NPRM for New Starts and Small Starts. Appendix II contains additional information about our scope and methodology. We conducted this performance audit from October 2007 to June 2008 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

RESULTS IN BRIEF FTA primarily uses cost-effectiveness and land use criteria to evaluate New Starts projects, but concerns have been raised about the extent to which the measures for these criteria capture total project benefits. To assess the land use criterion, FTA uses three evaluation measures, including land use in the project area, the extent to which the area has transit supportive plans and policies, and the performance and impacts of these policies. FTA‘s current transportation system user benefits (TSUB) measure, which is used along with costs to assess a project‘s cost- effectiveness, focuses on how proposed projects will improve mobility by reducing the real and perceived cost of travel. FTA told us that such mobility improvements are a critical goal of all transit projects and that most secondary project benefits, including economic development, are derived from improvements that reduce users‘ travel times. While the literature and most experts we consulted with generally agree with this contention, they also raised concerns that certain benefits are not captured by the existing cost-effectiveness measure. For example, experts and project sponsors we spoke to noted that FTA‘s TSUB measure does not account for benefits to nontransit users, such as highway

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users, or capture any economic development benefits that are not directly correlated to mobility improvements, such as benefits to people who are willing to pay more to live near transit stations in order to preserve their option to use it in the future.[6] As a result, FTA may be underestimating transit projects‘ total benefits, particularly in areas looking to use these projects as a way to relieve congestion or promote more high-density development. In these cases, it is unclear the extent to which FTA‘s current approach to estimating benefits impacts how projects are ranked in FTA‘s evaluation and ratings process. FTA officials acknowledged many of these limitations. However, they also noted that resolving these issues would be difficult without a substantial investment of resources to improve and update local travel models, particularly since these models generate the travel forecasts required to calculate TSUB and estimate other project benefits. FTA faces several systemic challenges to improving the New Starts program, including multiple program goals that are reflected in the evaluation criteria, limitations in travel modeling capacity, the need to maintain the rigor while minimizing the complexity of the evaluation process, and developing clear and consistent guidance for incorporating qualitative information into the evaluation process. The New Starts evaluation criteria, which have been delineated in previous transportation legislation and recently were augmented by SAFETEALU to include economic development, establish multiple goals for the program. The establishment of multiple goals has led to varying expectations between FTA and project sponsors about what types of projects should be funded through the program. For example, experts and project sponsors told us that transit projects may emphasize multiple goals, including economic development and mobility improvements, while FTA told us that the primary emphasis of the New Starts program is to fund transit projects that create significant mobility improvements and has designed the evaluation framework to reflect this goal. As a result, some project sponsors may be devoting substantial resources to apply for New Starts funding for projects that are incompatible with FTA‘s interpretation of the program goals and, thus, will not rate well under FTA‘s current evaluation process because they do not seek to achieve substantial travel time savings. Additionally, models used to generate local travel demand forecasts are limited. This affects a model‘s ability to accurately represent travel behavior, and as a result, current models may not provide all of the information needed to properly evaluate transit projects. FTA has taken some steps to mitigate the modeling limitations, such as incorporating proxy measures to account for project impacts like land use and developing a request for proposals to seek approaches for predicting changes in highway user benefits, but faces challenges in doing so. The Federal Highway Administration (FHWA) declined to be involved in the request for proposals because it deemed the issue to be only relevant to transit, although FTA officials stated that travel model improvements would affect how all planning is done and, thus, have impacts on numerous local, state, and federal programs, including highway programs. Furthermore, they also noted that the request for proposal is only a first step to improving local travel models, and additional resources are needed to ensure that these changes can be implemented in the future. The upcoming reauthorization of all transportation programs, including the New Starts program, provides an opportunity to seek additional resources to improve local travel models. Finally, experts and some project sponsors we spoke with support FTA‘s rigorous process for evaluating proposed transit projects but are concerned that the process has become too burdensome and complex. In response to such concerns, FTA has tried to simplify and balance the evaluation process in several ways, including developing the Very Small Starts eligibility category within the Small

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Startsprogram[7] and incorporating qualitative information into its assessments. However, project sponsors we spoke to emphasized the continued need for clear, consistent guidance on how such qualitative information will be used. Experts and project sponsors we interviewed discussed different options for evaluating proposed transit projects, but identified significant limitations of each option. Furthermore, all of these options are impacted by the systemic challenges discussed above, including limitations of local travel models and the need to balance the rigor of the evaluation process with minimizing its complexity. The options identified by experts and project sponsors include the following:

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







One option is to revise the current New Starts evaluation process in order to improve the program and respond to SAFETEA-LU provisions, as proposed by FTA in its August 2007 NPRM and proposed policy guidance. While some experts we spoke to appreciated FTA‘s efforts to maintain the rigor of the current evaluation process, others noted that the proposed revisions outlined by the NPRM may still underestimate total project benefits. For example, FTA‘s measure of mobility improvements does not account for benefits accruing to highway users, and its measures of environmental benefits may not properly distinguish among projects. FTA acknowledged that some benefits may not be captured by their proposed measures and told us that they hope to resolve these issues through collaborative efforts to improve local travel models and measures of environmental benefits. In particular, FTA officials are working with officials from the Office of the Secretary on a request for proposals that would identify ways to better estimate highway speeds, which could improve the accuracy of local travel models. FTA also plans to initiate a long-term effort, in consultation with the transit community, to develop more robust environmental measures. However, FTA has not yet set timelines for completing these efforts. Until this latter effort is completed, project sponsors will continue to develop and submit information on environmental benefits that is not useful for evaluation and rating purposes. A second option is using benefit-cost analysis to evaluate projects. Unlike FTA‘s current measures, benefit-cost analysis would attempt to monetize all benefits and costs, which experts told GAO would be a more comprehensive approach. While many experts we spoke to said that benefit-cost analysis is a useful tool for comparing projects‘ benefits and costs over time, others noted the difficulty of quantifying certain benefits, particularly given limitations of local travel models. FTA officials told us that they do not support using benefit-cost analysis because of these challenges. In addition, FTA is currently prohibited by statute from considering the dollar value of mobility improvements in evaluating projects.[8] A third option is evaluating projects differently based on their primary goal, so that federal transit investments better support local transit goals. However, many experts and project sponsors said that New Starts projects should go through an evaluation process designed to evaluate projects on the basis of national priorities. A fourth option is devolving the evaluation process to the state level by making New Starts a formula grant program. Under this framework, though, the ability of the federal government to influence and hold projects accountable could be limited.

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To improve the New Starts evaluation process and the measures of project benefits, which could change the relative ranking of projects, we are recommending that the Secretary of Transportation take the following five actions: (1) seek additional resources to improve local travel models in the next authorizing legislation; (2) legislative change to allow FTA to consider the dollar value of mobility improvements in evaluating projects, developing regulations, or carrying out any other duties; (3) direct the Administrator of FTA to establish a timeline for issuing, awarding, and implementing the result of its request for proposals on short- and longterm approaches to measuring highway user benefits from transit improvements; (4) direct the Administrator of FTA to establish a timeline for completing its longer term effort to develop more robust measures of transit projects‘ environmental benefits that are practically useful in distinguishing among proposed projects including consultation with the transit community; and (5) direct the Administrators of FTA and FHWA to collaborate to improve the consistency and reliability of local travel models, including the aforementioned request for proposals on approaches to measuring highway user benefits.

We provided a draft of this report to DOT for review and comment. DOT generally agreed with the findings and recommendations in this report, and provided clarifying comments and technical corrections, which we incorporated, as appropriate.

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BACKGROUND FTA generally funds New Starts projects through FFGAs, which are required by statute to establish the terms and conditions for federal participation in a New Starts project. FFGAs may also define a project‘s scope, including the length of the system and the number of stations; its schedule, including the date when the system is expected to open for service; and its cost. For projects to obtain FFGAs, New Starts projects must emerge from a regional, multimodal transportation planning process. The first two phases of the New Starts process— systems planning and alternatives analysis—address this requirement. The systems planning phase identifies the transportation needs of a region, while the alternatives analysis phase provides information on the benefits, costs, and impacts of different options, such as rail lines or bus routes, in a specific corridor versus a region. The alternatives analysis phase results in the selection of a locally preferred alternative, which is the New Starts project that FTA evaluates for funding. After a locally preferred alternative is selected, the project sponsor submits an application to FTA for the project to enter the preliminary engineering phase.[9] When this phase is completed and federal environmental requirements are satisfied, FTA may approve the project‘s advancement into final design,[10] after which FTA may approve the project for an FFGA and proceed to construction. FTA oversees grantees‘ management of projects from the preliminary engineering phase through the construction phase. To help inform administration and congressional decisions about which projects should receive federal funds, FTA currently distinguishes between proposed projects by evaluating and assigning ratings to various statutory evaluation criteria—including both project justification and local financial commitment criteria—and then assigning an overall project

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rating.[11] (See figure 1.) These evaluation criteria reflect a broad range of benefits and effects of the proposed project, such as cost-effectiveness, as well as the ability of the project sponsor to fund the project and finance the continued operation of its transit system. FTA has developed specific measures for each of the criteria outlined in the statute. On the basis of these measures, FTA assigns the proposed project a rating for each criterion and then assigns a summary rating for local financial commitment and project justification. These two ratings are averaged together, and then FTA assigns projects a ―high,‖ ―medium-high,‖ ―medium,‖ ―medium-low,‖ or ―low‖ overall rating, which is used to rank projects and determine what projects are recommended for funding. Projects are rated at several points during the New Starts process—as part of the evaluation for entry into the preliminary engineering and the final design phases, and yearly for inclusion in the New Starts Annual Report. As required by SAFETEA-LU, the administration uses the FTA evaluation and rating process, along with the phase of development of New Starts projects, to decide which projects to recommend to Congress for funding.[12] Although many projects receive a summary rating that would make them eligible for an FFGA, only a few are proposed for an FFGA in a given fiscal year. FTA proposes FFGAs for those projects that are projected to meet the following conditions during the fiscal year for which funding is proposed:  

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

All nonfederal project funding must be committed and available for the project. The project must be in the final design phase and have progressed far enough for uncertainties about costs, benefits, and impacts (e.g., financial or environmental) to be minimized. The project must meet FTA‘s tests for readiness and technical capacity, which confirm that there are no remaining cost, project scope, or local financial commitment issues.

SAFETEA-LU introduced a number of changes to the New Starts program, including some that affect the evaluation and rating process.[13] For example, given past concerns that the evaluation process did not account for a project‘s impact on economic development and FTA‘s lack of communication to sponsors about upcoming changes, the statute added economic development to the list of project justification criteria that FTA must use to evaluate and rate New Starts projects, and requires FTA to issue notice and guidance each time significant changes are made to the program.[14] SAFETEA-LU also established the Small Starts program, a new capital investment grant program, simplifying the requirements imposed for those seeking funding for lower-cost projects such as bus rapid transit, streetcar, and commuter rail projects.[15] This program is intended to advance smaller-scale projects through an expedited and streamlined evaluation and rating process. FTA also subsequently introduced a separate eligibility category within the Small Starts program for ―Very Small Starts‖ projects.[16] Small Starts projects that qualify as Very Small Starts are simple, lowcost projects that FTA has determined qualify for a simplified evaluation and rating process.

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Source: GAO analysis of FTA data. aThe overall project rating is determined by averaging the rating for project justification and local financial commitment, each of which is assigned a 50 percent weight. bAccording to FTA‘s July 2007 policy guidance on New Starts, these criteria are not assigned a weight in the evaluation framework. For more information on how FTA measures and uses these criteria in the ratings process, see table 1 of this report.

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Figure 1: FTA‘s Current New Starts Evaluation Process

In addition to implementing the Small Starts program, FTA has taken other steps to implement SAFETEA-LU changes to the New Starts evaluation process. For example, FTA incorporated economic development into the existing evaluation framework by considering the information provided by project sponsors as an ―other factor.‖ FTA also sought public comments on different proposals for revising the evaluation process to better reflect the statute through the Advanced Notice of Proposed Rulemaking (ANPRM) and the final NPRM for the New Starts and Small Starts programs. However, following concerns voiced by Members of Congress and the transit industry about the weights placed on different project benefits, FTA was prohibited from using funds to proceed with the rulemaking process, with the exception of reviewing comments, under the fiscal year Consolidated Appropriations Act of 2008. Figure 2 shows a timeline of FTA‘s efforts to date to implement SAFETEA-LU changes to New Starts evaluation and ratings process.

Source: GAO analysis. Figure 2. Timeline of FTA‘s Implementation of SAFETEA-LU Changes. Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

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FTA’S PROJECT EVALUATION MEASURES INCLUDE A RANGE OF INFORMATION, BUT NOT ALL PROJECT BENEFITS ARE FULLY CAPTURED

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FTA primarily uses the cost-effectiveness and land use criteria to evaluate New Starts projects, but concerns have been raised about the extent to which the measures for these criteria capture total project benefits. Specifically, FTA‘s TSUB measure considers how the mobility improvements from a proposed project will reduce users‘ travel times. According to FTA officials, experts, and the literature we consulted, the TSUB measure accounts for most secondary project benefits, including economic development, because these benefits are typically derived from mobility improvements that reduce users‘ travel times. However, project sponsors and experts raised concerns about how FTA currently measures and weights different project justification criteria, noting that these practices may underestimate some project benefits. For example, some experts and project sponsors we spoke to said that the TSUB measure does not account for benefits for nontransit users or capture any economic development benefits that are not directly correlated to mobility improvements. As a result, FTA may be underestimating projects‘ total benefits, particularly in areas looking to use these projects as a way to relieve congestion or promote more high-density development. In these cases, it is unclear the extent to which FTA‘s current approach to estimating benefits impacts how projects are ranked in FTA‘s evaluation and ratings process. FTA officials acknowledged these limitations, but noted that improvements in local travel models are needed to resolve some of these issues.

FTA EMPHASIZES COST- EFFECTIVENESS AND LAND USE IN DEVELOPING PROJECT JUSTIFICATION RATINGS FTA currently relies on the cost-effectiveness and land use criteria to evaluate and rate New Starts projects.[17] Specifically, FTA assigns a weight of 50 percent to both the costeffectiveness and land use criteria when developing project justification ratings. Table 1 provides a summary of all project justification criteria that FTA is required to review, the measures it uses to evaluate these criteria, and how this information is used to rate projects. To evaluate the land use criterion, FTA has developed and uses three qualitative land use measures: land use in the project area, the extent to which the area has transit supportive plans and policies, and the performance and impacts of these policies. For example, to determine whether a project‘s surrounding area has transit supportive plans and policies, FTA examines whether there are growth management strategies and transit supportive corridor policies in place, the extent to which zoning regulations near stations are transit supportive, and the tools available to implement land use policies.

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Table 1. FTA’s Current Project Justification Criteria and Measures for Evaluating and Rating New Starts Projects Criterion Costeffectiveness

Information evaluated •Incremental annualized capital and operating costs of the transit system with the project •Projected transportation system user benefits associated with the project (including travel time and cost savings, and improvements in comfort, convenience, and reliability)

Land use

•Existing land use •Transit supportive plans and policies •Growth management •Transit supportive corridor policies •Supportive zoning regulations near stations •Tools to implement land use policies •Performance and impact of policies •Performance of land use policies •Potential impact of transit project on regional land use

50 %

•FTA evaluates existing land use, transit supportive plans and policies, and performance and impact of policies by the factors noted under each category. Projects receive a numerical rating (1 to 5) for each of these factors, and then these individual factor ratings are averaged to determine a category-specific rating. FTA then combines these category-specific ratings into a descriptive rating on FTA‘s five-level scale (i.e., high, medium-high, medium, medium-low, and low) to determine the overall land use rating. •In rare cases, when based on unusually compelling ―other‖ land use considerations, FTA may increase the land use rating by one point.

Environmental benefits

•Environmental Protection Agency air quality designation

0%

•FTA does not explicitly weight this measure in the framework because the measure does not meaningfully distinguish among projects. As a result, projects receive ratings based on the following: •Projects in nonattainment areascfor any transportation-related pollutants receive a high rating. •Projects that are in attainment areascreceive a mediumrating.

50 %

Weight How FTA uses this information •FTA establishes five breakpoints, each of which reflects a dollar range for different ratings of a project‘s cost-effectiveness (i.e., high, mediumhigh, medium, medium-low, and low). FTA assigns a cost-effectiveness rating to each project, and annually updates these breakpoints to reflect inflation. •Proposed projects with a lower cost per hour of projected user benefits are deemed more cost effective than those with a higher cost per hour of projected user benefits. Projects generally must receive a medium or higher cost-effectiveness rating to be recommended for funding.

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Table 1. (Continued) Criterion

Information evaluated

Mobility improvements

•Projected user benefits per passenger mile of the project •Projected number of transit dependents using the project •Projected user benefits for transit dependents per passenger mile of the project •Projected share of user benefits received by transit dependents compared to share of transit dependents in the region

0%

Weight How FTA uses this information

Other factors

•Project‘s effect on economic developmentd •Nature and extent of the transportation problem or opportunity in the project corridor, as described in the make-the-case documente •Extent to which the project is a principal element of a congestion management strategy, in general, and a pricing strategy, in particulard •Any other factor that articulates project benefits but is not captured within the criteriad

0%

•FTA evaluates projected user benefits per passenger mile of the project; projected number of transit dependents using the project; projected user benefits for transit dependents per passenger mile of the project; and projected share of user benefits received by transit dependents compared to share of transit dependents in the region. Projects receive a numerical rating (1 to 5) for each of these measures. FTA then develops the mobility rating by averaging the rating for the first measure (which applies to all riders of the New Starts project) and the combined ratings for the subsequent three (that apply onlyto transit dependents). •FTA does not use the rating for this criterion in determining the project justification rating, except in certain cases as a tiebreaker when the average of the cost-effectiveness and land use ratings falls equally between two categories (e.g., medium and medium-high). The project rating is ―rounded up‖ unless mobility improvements are rated low. Each factor will be considered based on different criteria, andthen the rating will be introduced after the initial project justification rating is determined. If the ―other factors‖ rating ishigher than the initial project justification rating, FTA may increase this initial justification rating by a maximum of one step (e.g., from medium to medium-high). If it is lower, FTA may decrease this initial rating.

Source: GAO summary of FTA guidance. aIn FTA‘s most recent guidance on New Starts, FTA asserted that the cost-effectiveness criterion captures operating efficiencies, and as a result, this criterion is no longer evaluated separately. bAccording to FTA‘s July 2007 policy guidance on New Starts, these criteria are not assigned a weight in the evaluation framework. (See FTA‘s July 2007 guidance on the fiscal year 2009 New Starts evaluation and ratings process for more information.) cNonattainment areas refer to areas of the country where air pollution levels persistently exceed the national ambient air quality standards, whereas attainment areas are areas that meet the ambient air quality standards for the pollutant.

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dRating of these factors can only positively affect the project justification rating, as the absence of a strategy has no effect on the project justification rating. eThe make-the-case document provides sponsors with the opportunity to discuss the merits of their projects in an essay form and present additional information not captured by the evaluation process. A high rating for the make-the-case document may result in an increase in the overall project justification rating. A low rating for the make-the-case document may reduce the overall project justification rating.

To evaluate cost-effectiveness, FTA relies on the TSUB measure and costs. The TSUB measure captures predicted improvements in mobility caused by the implementation of a project. In particular, TSUB captures transit users‘ cost and travel time savings, as well as improvements in comfort, convenience, and reliability of travel. Project sponsors use local travel models to forecast ridership and simulate trips taken in 2030, the forecast year used to estimate savings over time for two alternatives.[18] To evaluate the benefits for these two alternatives, FTA uses the outputs from these models to consider and weigh a range of attributes, such as time spent waiting at and walking to the transit station, and calculates the perceived level of time savings associated with a given project. The first alternative, known as the baseline alternative, assumes low-cost improvements to the project area‘s current transportation network, while the second alternative-—the ―build alternative‖—assumes the proposed New Starts transit project is constructed. As outlined in figure 3, FTA uses the forecasts for these two alternatives to calculate the predicted TSUB value for the proposed project.[19] To determine a project‘s final cost-effectiveness rating, FTA divides the project‘s annual capital and operating costs by its predicted TSUB value and compares the computed figure to established cost-effectiveness breakpoints.[20] FTA officials that we interviewed noted that the TSUB measure used to assess the costeffectiveness criterion in the New Starts evaluation framework emphasizes predicted mobility improvements because most project benefits are realized only when transit users perceive that their time and cost of travel has been reduced. For example, the introduction of new transit service may reduce users‘ overall travel time to a given destination. These reductions in travel time usually occur because a project offers faster travel times as a result of travel on the project‘s fixed guideway, which does not incur the degree of congestion faced by buses operating in mixed travel. According to FTA, such transit user benefits are the distinct and primary benefit of transit investments. Most other benefits of transit projects, such as economic development, are considered secondary benefits because they are still directly related to mobility improvements. For example, transportation investments that improve the accessibility and attractiveness of certain locations can result in higher property values in those areas, which can affect the type and density of development that occurs in the area of the investment. The transportation literature and different experts we consulted agreed that such increases in property values are generally the result of mobility improvements. As such, they noted that conducting a separate evaluation of secondary benefits, such as economic development, may be inappropriate because it can result in double counting certain project impacts. For example, in a 2002 report, the Transportation Research Board (TRB) reported that secondary benefits like economic development ―are double counts‖ of mobility improvements and must be carefully measured and presented ―in such a way that decision makers are aware of the potential for double counting.‖[21]

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Source: GAO and FTA. aThe baseline alternative assumes low-cost improvements are made to the transportation network. bThe build alternative assumes the proposed New Starts project (i.e., fixed guideway transit infrastructure investment) is constructed. cFor more information on how TSUB is calculated, including why user benefits are valued differently for new transit travelers, see appendix III. Figure 3. Example of a TSUB Calculation.

FTA also considers information on environmental benefits,[22] mobility improvements, and other factors (including economic development), but these criteria are not weighted in the current evaluation framework. As a result, they are not used to calculate the project justification rating, except under certain circumstances. For example, FTA currently evaluates information on mobility improvements, but this criterion is not used in determining the project justification rating, except in certain cases as a tiebreaker when the average of the cost-effectiveness and land use ratings falls equally between two categories.[23]

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EXPERTS AND OTHER PROGRAM STAKEHOLDERS EXPRESSED CONCERNS THAT FTA’S CURRENT EVALUATION MEASURES COULD BE UNDERESTIMATING TOTAL PROJECT BENEFITS Project sponsors and experts we interviewed raised concerns about how FTA uses and measures different New Starts project justification criteria in the evaluation framework, which could potentially result in certain project benefits being underestimated. Some project sponsors we spoke with expressed frustration that FTA does not include certain criteria in the initial calculation of project ratings, such as economic development and environmental benefits. They noted that this practice limits the information captured on projects, particularly since these are important benefits of transit projects at the local level and were required to be evaluated under SAFETEA-LU. In addition to these concerns, we have previously reported that FTA‘s reliance on two evaluation criteria to calculate a project‘s overall rating is not aligned with the multiple-measure evaluation and rating process outlined in statute and current New Starts regulations.[24] As a result, we recommended that FTA improve the measures used to evaluate New Starts projects or provide a crosswalk in the regulations showing clear linkages between the criteria in the statute and the criteria used in the evaluation process. FTA‘s current guidance on the New Starts evaluation process states that environmental benefits are not weighted presently because the current measure does not meaningfully distinguish among projects. Furthermore, FTA officials we interviewed told us that they had not yet developed a reliable way to incorporate economic development into the framework, had not received any reasonable suggestions for measuring this criterion, or had project sponsors submit information demonstrating the impacts of their projects on economic development. Despite these issues, however, they acknowledged that the current approach for evaluating projects does not align with SAFETEA-LU and noted that the revised evaluation process described in the NPRM and proposed policy guidance was developed to meet these requirements. Different experts and project sponsors we interviewed also disagreed with FTA‘s emphasis on mobility in the cost-effectiveness measure, noting that it does not account for other important project benefits. Specifically, experts and project sponsors, as well as members of the transit industry and DOT officials, stated that FTA‘s TSUB measure does not capture the benefits that accrue to highway users as user benefits when more people switch to the improved transit service and highway congestion decreases. The omission of these nontransit user benefits means that the benefits accruing to motorists are not accounted for in the evaluation process. In cases where a project‘s predicted impact on congestion is significant, this omission may lead FTA to underestimate a project‘s total user benefits. Given FTA‘s focus on cost-effectiveness in the evaluation process, underestimating user benefits for certain projects could impact the overall project ratings and change the relative ranking of proposed transit projects. In response to this issue, FTA officials told us that although the TSUB measure and existing software have the capacity to capture highway user benefits, they do not currently accept estimates of nontransit user benefits because local travel models do not reliably predict changes in travel speeds resulting from transit investments. Instead, FTA currently adjusts the cost-effectiveness breakpoints upward, which has the effect of giving all projects the same credit for highway travel time savings. As a result, some projects are being credited with

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achieving these benefits, even when the project has no impact at all on highway travel time savings, while other projects may not be receiving enough credit for their impact on highway travel time savings. FTA officials noted that they would prefer to estimate the predicted impact of projects on highway congestion rather than using a rough proxy for these benefits, particularly since their current approach does not distinguish among projects in a meaningful way. Officials at FTA and the Office of the Secretary of Transportation also told us that they are conducting research on ways to improve the estimation of highway speeds (and thus, the calculation of nontransit user benefits) by local travel models, but a significant investment of resources by different levels of government will likely be required to do so. A few experts we spoke with also commented that FTA‘s cost- effectiveness measure does not capture any project benefits, such as economic development effects, that are unrelated to mobility improvements. As noted earlier, FTA contends that its emphasis on mobility improvements is appropriate, since most secondary project benefits—including economic development—are derived from this measure. Although our work, the transportation literature we reviewed, and experts we consulted generally support this contention, these sources also indicated that some secondary project benefits, namely certain economic development effects, may not always accrue in direct proportion to mobility improvements. Some studies we reviewed and experts we spoke with noted that property value increases near a project may occur due to option value or agglomeration effects, both of which are indirect results of transit investments and not explicitly related to mobility improvements.[25] In such cases, FTA‘s existing TSUB measure would understate the total benefits that result from providing enhanced access to a dense urban core, rather than transporting commuters from longer distances (e.g., light or heavy rail) due to its emphasis on travel time savings.[26] Furthermore, our previous work on measuring costs and benefits of transportation investments has stated that there could be some residual benefit from these indirect effects that is not accounted for in travel time benefits or other direct impacts.[27] This lack of accounting for certain secondary benefits in the TSUB measure may prevent FTA from capturing all project benefits and developing accurate project rankings. In interviews with FTA officials about this issue, they acknowledged that some benefits may accrue in varying proportions to mobility improvements—that is, certain benefits may not be directly related to changes in mobility improvements. In such cases, the current evaluation process may not favor certain types of projects—such as streetcars—that are not designed to create travel time savings, but rather create other benefits. Such benefits could include changes in land use that are not captured by the TSUB measure. In the future, FTA officials told us that they would prefer to improve local models, so that they can consistently and reliably assess projects‘ impact on nontransit users and economic development. Finally, some project sponsors also expressed concern about FTA‘s requirement to use fixed land use assumptions [28] when estimating the predicted user benefits resulting from the implementation of a proposed project. According to sponsors, this practice prevents FTA from explicitly counting some future benefits that may arise due to an area‘s increased accessibility. For example, some transit projects‘ primary goal is to change land use around transit stations in order to capitalize on the area‘s enhanced accessibility. Such changes could also lead to increases in future transit ridership, resulting in higher user benefits for the project. Furthermore, a recent panel of experts convened by FTA noted that it was unrealistic to evaluate only the incremental impacts of the proposed transit project, since local governments often find it difficult to justify high-density, mixed-use zoning in the absence of

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transit. Thus, by assuming that no such land use changes will occur, FTA may be underestimating projects‘ predicted user benefits.[29] FTA officials told us they have two reasons for fixing land use assumptions when calculating user benefits. First, it is difficult to determine the magnitude of the additional land use changes, including economic development that will result from a project. Most localities do not have analytical methods for these projections, and the methods that do exist are often more unreliable than the local models used to forecast travel demand. Second, even with a reasonable estimate of additional development, it is difficult to value the benefits of the additional development. Officials from FTA told us that significant changes to local travel models would be required before they could allow project sponsors to vary their assumptions about future land use when estimating user benefits.

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FTA FACES SEVERAL SYSTEMIC CHALLENGES TO IMPROVING THE NEW STARTS PROGRAM FTA faces several systemic challenges to improving the New Starts program, including addressing multiple program goals, limitations of local travel models, the need to maintain the rigor while minimizing the complexity of the evaluation process, and developing clear and consistent guidance for incorporating qualitative information into the evaluation process. FTA and project sponsors we spoke with have interpreted the emphasis of the New Starts program differently because the evaluation criteria, which have been delineated in previous and existing transportation legislation, establish multiple goals for the program.[30] Additionally, models used to generate local travel demand forecasts have limited capabilities and may not provide all of the information needed to properly evaluate transit projects. FTA has taken some steps to mitigate the modeling limitations but faces challenges in doing so, including a lack of resources to invest in local travel model improvements. Finally, experts, transportation consultants, and some project sponsors we spoke with support FTA‘s rigorous process for evaluating proposed transit projects but are concerned that the process has become too burdensome and complex. FTA has taken some steps to streamline its evaluation process and incorporate qualitative information into the assessment, but project sponsors we spoke to emphasized the continued need for clear, consistent guidance on how such qualitative information will be used.

FTA AND PROJECT SPONSORS HAVE INTERPRETED EMPHASIS OF NEW STARTS PROGRAM DIFFERENTLY FTA and project sponsors we spoke with have interpreted the emphasis of the New Starts program differently. Although the goals have not been explicitly articulated in legislation, the evaluation criteria outlined within the law express various goals of the New Starts program. These include mobility improvements, environmental benefits, operating efficiencies, costeffectiveness, economic development, and land use. The presence of multiple program goals within the statute, as articulated by the evaluation criteria, has led to different interpretations by FTA and project sponsors about what project benefits should be emphasized in the New

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Starts evaluation process. As noted earlier, FTA focuses on mobility improvements in its evaluation process because it contends that those benefits are a critical goal of all transit projects and that most secondary project benefits, including economic development, are derived from improvements that reduce users‘ travel times. Many of the experts and some of the project sponsors we spoke to agreed that transit projects can work toward a number of different goals, including mobility improvements, though some project sponsors told us that creating nontransportation benefits, such as generating local economic development, can be the primary goal of a project. In the latter case, the primary goal of a project is not to create significant mobility improvements, but rather to stimulate high-density development and change land use patterns around a transit station. Accordingly, such projects may not generate the mobility improvements needed to qualify for New Starts funding under the current New Starts evaluation process. Some project sponsors, therefore, could devote substantial resources to apply for New Starts funding for projects that are incompatible with FTA‘s emphasis on mobility improvements.

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LOCAL MODELING LIMITATIONS PREVENT FULL EVALUATION OF PROJECT IMPACTS The models used to generate local travel forecasts are limited and may not provide sufficient or reliable information to properly evaluate transit projects. According to a recent report by TRB, the demands on local models have grown significantly in recent years as a result of new policy concerns, such as the need to estimate motor vehicle emissions and evaluate alternative land use policies, and existing models are inadequate to address many of these new concerns.[31] The current models used by most MPOs are generally able to represent aggregate and corridor-level travel demand, but they are not dynamic. That is, they are based on average travel speeds over discrete areas and cannot represent the conditions that would be expected by an individual traveler choosing how, when, and where to travel. This limitation affects a model‘s ability to accurately represent travel behavior, nonauto (e.g., walking or biking) or transit travel, and transit‘s impacts on highway congestion, thereby limiting a model‘s ability to provide all of the information needed to properly evaluate transit projects. Some of the experts, as well as FTA and Office of the Secretary officials we interviewed, agreed that local modeling capacity is limited and should be updated to better reflect travel behavior. For example, one expert maintained that transit projects‘ estimated impacts on all travel in the region can be tested with estimates that are ―sensitive‖ enough to pick up projects‘ impacts, but noted that most MPOs do not have the capacity to generate such estimates. In addition, the TRB report and some experts we spoke with have expressed concerns that many MPOs have inadequate traffic and household data to validate their models and provide information on the travel behavior of different populations. Our past work has also cited the difficulties of accurately predicting changes in traveler behavior, land use, or usage of highways resulting from a transit project with current travel models, as well as concerns about the quality of data inputs into local travel models.[32]

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FTA has taken some steps to mitigate the modeling limitations—which TRB recognized in its report on the state of the practice—but faces challenges in doing so. As previously discussed, FTA has developed proxy measures to account for certain project benefits that cannot be accurately modeled at the present time, such as projects‘ impacts on highway congestion. FTA officials told us that they would prefer to improve local models so that they can consistently and reliably assess projects‘ impacts on nontransit users and economic development. To that end, FTA has recently developed a request for proposals to seek approaches for predicting changes in highway user benefits that can be used in the short- term (within 5 years). However, the request for proposals has not yet been issued or awarded, and there is no timeline for doing so. Additionally, according to officials from FTA and the Office of the Secretary, FTA approached FHWA to help with this effort, but FHWA declined to be involved because it deemed the issue to be only relevant to transit.[33] As a result, the Office of the Secretary provided the other half of the funding for the request for proposals. Officials from FTA and the Office of the Secretary stated that the improvements to travel models would affect the way all planning is done and, thus, have impacts on numerous local, state, and federal programs, including highway programs. Officials from FTA and the Office of the Secretary emphasized that the request for proposals is just a small step forward to improve modeling. In the long-term, larger, more fundamental changes are needed to create dynamic travel models. For example, current models would need to be adjusted to capture the movement of individuals rather than parts of the transportation system, such as a highway segment. Additionally, models need to be altered so that they produce second-by-second results rather than results by groups of hours. These long-term improvements would allow for reliable and accurate estimates of highway user benefits resulting from transit-related mobility improvements and would also improve travel speed estimates at both the regional and micro levels. Like the efforts to improve approaches for predicting changes in highway user benefits, FTA and Office of the Secretary officials said that these long-term changes in modeling will benefit many transportation programs beyond the New Starts program. However, FTA and Office of the Secretary officials told us that a significant investment of resources by all levels of government will likely be required to overcome current modeling limitations. In its 2007 report, TRB called for $20 million annually to update local travel models across the country. Currently, DOT invests about $2.4 million annually to improve modeling capabilities. Approximately $500,000 per year is allocated to DOT‘s Travel Model Improvement Program, which is designed to assist MPO model development efforts, and another $1.9 million is set aside annually through SAFETEA-LU for the development of TRAN SIMS.[34] TRB also reported that MPOs face similar challenges. Specifically, MPO budgets for model development have not grown commensurately with travel modeling and forecasting requirements at the federal level, and staffing levels often limit the extent to which MPOs can focus on improvements to travel models in addition to their typical obligations.

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STRIKING APPROPRIATE BALANCE BETWEEN MAINTAINING A ROBUST EVALUATION PROCESS AND MINIMIZING THE COMPLEXITY IS CHALLENGING Experts and some project sponsors we spoke with generally support FTA‘s quantitatively rigorous process for evaluating proposed transit projects but are concerned that the process has become too burdensome and complex, and as noted earlier, may underestimate certain project benefits. For example, several experts and transportation consultants told us that although it is appropriate to measure the extent to which transit projects create primary and secondary benefits, such as mobility improvements and economic development, it is difficult to quantify all of these projected benefits. Additionally, several project sponsors noted that the complexity of the evaluation process can necessitate hiring consultants to handle the data requests and navigate the application process—which could increase the project‘s costs. Our previous reviews of the New Starts program have noted similar concerns from project sponsors. For example, in 2007, we reported that a majority of project sponsors told us that the complexity of the requirements—such as the analysis and modeling required for travel forecasts—creates disincentives for entering the New Starts pipeline.[35] Sponsors also said that the expense involved in fulfilling the application requirements, including the costs of hiring additional staff and consultants, discourages agencies with fewer resources from applying for this funding. In response to such concerns, FTA has tried to simplify the evaluation process in several ways. For example, following SAFETEA-LU‘s passage, FTA established the Very Small Starts eligibility category within the Small Starts program for projects less than $50 million in total cost. This program further simplifies the application requirements in place for the Small Start program, which funds lower-cost projects, such as bus rapid transit, streetcar, and commuter rail projects. Additionally, in its New Starts program, FTA no longer rates projects on the operating efficiencies criterion because, according to FTA, operating efficiencies are already sufficiently captured in FTA‘s cost-effectiveness measures, and the measure did not adequately distinguish among projects.[36] Thus, projects no longer have to submit information on operating efficiencies. Likewise, FTA no longer requires project sponsors to submit information on environmental benefits because it found that the information gathered did not adequately distinguish among projects and that EPA‘s ambient air quality rating was sufficient. FTA also commissioned a study by Deloitte in June 2006 to review the project development process and identify opportunities for streamlining or simplifying the process.[37] This study identified a number of ways that FTA‘s project development process could be streamlined, including revising the policy review and issuance cycle to minimize major policy and guidance changes to every 2 years and conducting a human capital assessment to identify skill gaps and opportunities for reallocating resources in order to enhance FTA‘s ability to review and assist New Starts projects in a timely and efficient manner. FTA is working to implement these recommendations

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INCORPORATING QUALITATIVE INFORMATION INTO THE EVALUATION PROCESS IS CHALLENGING Incorporating qualitative information into the New Starts evaluation process can provide a more balanced approach to evaluating transit projects, but developing clear and consistent guidance for incorporating qualitative information can be challenging. Though a quantitative evaluation process can be both rigorous and transparent, it does have limitations. Our past work and some experts and project sponsors we interviewed expressed concern about using a strictly quantitative process when evaluating proposed transportation investments because, as discussed above, certain benefits cannot be easily quantified. For example, some project sponsors and experts said that because certain impacts, such as economic development, cannot be easily quantified, a qualitative approach is needed to ensure that those project impacts are included in the New Starts evaluation process. Additionally, experts and project sponsors we spoke with raised concerns about FTA‘s heavy reliance on quantitative measures in the New Starts evaluation process, noting that it can be very costly to run multiple iterations of travel models (which a quantitative-focused evaluation process requires) and that some transit agencies do not have the expertise to refine their models to FTA‘s specifications. In recognition of the limitations of a quantitative analysis, FTA has integrated some qualitative information into its current evaluation process. For example, FTA currently uses three qualitative land use measures to evaluate a transit project‘s potential land use impacts. The NPRM also proposes to incorporate some qualitative information into the evaluation process, including measures of a transit project‘s impact on economic development. Additionally, FTA incorporated the make-the-case document into its evaluation process in 2003, which allows project sponsors to submit an essay that justifies why the New Starts project is the best possible alternative and why it is needed. Although the fiscal year 2009 rating cycle was the first time that FTA planned to rate the make-the-case documents for the evaluation process, it ultimately decided not to because agency officials were generally dissatisfied with the quality of the makethe-case documents submitted.[38] FTA officials attributed the overall unsatisfactory quality of the make-the-case documents to insufficient guidance about what information to include in the document and how this information would be evaluated. FTA told us that they are working to improve the guidance for the next rating cycle. According to a few project sponsors we spoke to, FTA‘s recent experience with the make-the-case document illustrates the need for consistent, transparent guidance for using qualitative information in its evaluation process. To help FTA incorporate qualitative information into the evaluation and rating process in a transparent and consistent manner, a few experts we spoke with suggested that FTA convene an external panel of transportation experts to rate qualitative information, such as the make-the-case document and the economic development criterion.

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DIFFERENT OPTIONS FOR EVALUATING PROPOSED NEW STARTS PROJECTS EXIST, BUT ALL HAVE LIMITATIONS Different options for evaluating proposed transit projects exist. However, all have limitations and are impacted to varying degrees by the systemic challenges previously identified, including local modeling limitations and the need to balance the rigor of the evaluation process with an interest in minimizing complexity. One option is to revise the current evaluation process as proposed by FTA in the August 2007 NPRM and proposed policy guidance. A second option is to use benefit-cost analysis as the evaluation framework for projects. A third option is to use evaluation frameworks that vary by project goal in order to better support local transit priorities. A fourth option is to eliminate the federal evaluation process and devolve these responsibilities to the state level by making New Starts a formula grant program.

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FTA’S PROPOSED REVISIONS TO EXISTING EVALUATION PROCESS ADDRESS SOME CONCERNS BUT MAY CONTINUE TO INACCURATELY ESTIMATE TOTAL PROJECT BENEFITS One option to evaluate proposed transit projects is to revise the existing New Starts evaluation process, as proposed by FTA. In response to provisions in SAFETEA-LU and to improve the New Starts program, FTA proposed to revise the current process by introducing new evaluation measures and weights, as described in its August 2007 NPRM and proposed policy guidance. The proposed process revises the current evaluation process to reflect the multiple measure approach to evaluating transit projects described in SAFETEA-LU. As in the current process, FTA‘s proposed evaluation process assigns ratings to projects on the basis of various evaluation criteria to determine summary ratings for both local financial commitment and project justification (see fig. 4). In contrast to the current process, however, the proposed process places weights on measures that were previously not used to calculate initial project justification ratings, including environmental benefits, economic development, and mobility improvements Under the proposed evaluation process, project justification criteria are grouped into categories of ―cost-effectiveness‖ and ―effectiveness.‖ The cost-effectiveness category accounts for 50 percent of the overall project justification rating and is based on the current measure of cost- effectiveness with no proposed changes. The effectiveness category accounts for the other 50 percent of the project justification rating and is based on measures of (1) mobility improvements,[39] (2) economic development and land use, and (3) environmental benefits. See table 2 for descriptions of all the proposed project justification measures.

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Source: GAO analysis of FTA data. aThe overall project rating is determined by averaging the rating for project justification and local financial commitment, each of which is assigned a 50 percent weight. bAccording to FTA‘s August 2007 Proposed Policy Guidance on New Starts, this criterion will not be assigned an explicit weight in the evaluation framework. For more information on how FTA plans to use the information captured under this criterion in the ratings process, see the last row of table 2. cIf the amount of New Starts funding requested is less than 50% of the total project cost and the project has an overall local financial commitment rating of ―medium‖ or ―medium-high,‖ the rating would be increased one level. Figure 4. FTA‘s Proposed New Starts Evaluation Process.

Table 2. FTA’s Proposed Project Justification Measures for Evaluating and Rating New Starts Projects Criterion

Information evaluated

Costeffectivenessb

•Annualized capital and operating costs of project •Projected benefits for users of transit system (including travel time and cost savings, and improvements in comfort, convenience, reliability)

Weight How FTA uses this information 50%

•FTA establishes breakpoints to assign a cost-effectiveness rating to each project, and annually updates these breakpoints to reflect inflation. •Proposed projects with a lower cost per hour of projected user benefits are deemed more cost-effective than those with a higher cost per hour of projected user benefits.

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Table 2 (Continued) Criterion

Information evaluated

Land use and economic development

•Current population, employment, and development patterns •Development and land use policies and plans •Population, employment, and property value growth in project corridor over previous5 years •Projected benefitsfor usersof transit system (including travel time and cost savings, and improvementsin comfort, convenience, reliability) •Value of fixed assets, such astransit stations, in the corridor divided by the total cost of the proposed project

20%

Weight How FTA uses this information •FTA will use a combination of quantitative and qualitative measures of likely economic development and land use benefits. •The measures are based on the circumstances in which the projects would be implemented, such asthe strength of the real estate and employment markets, rather than forecasts of projects‘ specific impacts on development and land use patterns because FTA contends that few appropriate predictive tools are available in standard practice.

Environmental benefits

•Projected environmental impact of project •Proposalsfor minimizing environmental impact of project •Extent of air pollution in project‘sservice area

5%

•FTA will give equal weight to the three environmental factors in determining the overall rating for environmental benefits.

Mobility improvements

•Projected user benefits per passenger mile of the project •Current congestion levelsin project corridor •Projected average weekday ridership •Projected user benefits for transit dependents per passenger mile of the project •Projected number of transit dependents using the project •Projected share of user benefits received by transit dependents compared to share of transit dependents in the region

25%

•General mobility will be calculated based on three equally weighted factors: (1) user benefits per passenger mile on the project (as currently calculated); (2) severity of current congestion in the project corridor; and (3) average weekday ridership. •Transit dependent mobility will be calculated basedon modified versions of the three current transit dependent measures, as well as on the extent to which previous projects in the region have benefited transit dependents. •FTA will evaluate projects on the basis of predictedgeneral mobility benefits (weighted as 20 percent of the overall project justification rating) and predicted transit dependent mobility benefits (weighted 5 percent).

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Table 2 – Continued Criterion

Information evaluated

Other factors

•Nature and extent of the transportation problem or opportunity in the project corridor as described in the make-the-case document •Extent to which the project is a principal element of a congestion management strategy, in general, and a pricing strategy, in particular •Any other factor that articulates the benefits of the proposed project but is not captured within the other criteria

Weighta How FTA uses this information 0%c

•FTA will assign a rating of ―high,‖ ―medium,‖ or ―low‖ to the strength of the information contained inthe make-the-case document. FTA will use make-the-case ratings of ―high‖ and ―low‖ to determine the project justification rating of projects that are at the margin between two overall rating outcomes. •The project justification summary rating may be increased if a project is part of a congestion or pricing strategy and the rating is near a breakpoint.Because the magnitude of the effect is not well captured by travel forecasts, consideration of pricing strategies under the general mobility measure allows FTA to account for the expected increase in transportation benefits, even if they are not readily verifiable.

Source: GAO analysis of FTA guidance. Note: Italics indicate new measures introduced in FTA‘s August 2007 Proposed Policy Guidance. aThe weights noted in the table are for the criterion‘s contribution to the overall project justification rating and not to the cost-effectiveness and effectiveness ratings. Projects must achieve a medium cost-effectiveness rating to be approved, regardless of the ratings for the other criteria. bThe NPRM framework seeks to formalize that the cost-effectiveness criterion captures operating efficiencies. As a result, the operating efficiencies criterion is no longer a separate evaluation criterion, despite 49 U.S.C. § 5309(d)(2)(B). cAccording to FTA‘s August 2007 Proposed Policy Guidance, no weight is assigned to the other factors criterion. However, as described in the table, information submitted under this criterion can affect the project justification summary rating.

EXPERTS AND PROJECT SPONSORS GENERALLY DISAGREE ON WEIGHTS PLACED ON PROJECT BENEFITS IN PROPOSAL, BUT AGREE THAT REVISIONS PRESERVE RIGOR OF EVALUATION PROCESS Although experts and project sponsors had differing opinions, many experts we spoke to generally thought that the weights proposed for the project justification criteria were appropriate. In particular, many said it was appropriate that FTA retained its emphasis on mobility improvements in the proposed evaluation framework by weighting the costeffectiveness criterion heavily. They generally agreed with FTA‘s assumption that societal benefits from transit projects generally result from user benefits— that is, reductions in the real and perceived cost of travel. As such, FTA‘s measure of predicted user benefits accounts for many project benefits. Under the proposed process, FTA would measure different dimensions of user benefits as part of its cost-effectiveness, mobility improvements, and economic development criteria. In addition, as called for by many project sponsors and

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experts we spoke to, the proposed framework places weights on measures of economic development, environmental benefits, and other factors, such as congestion impacts. Many of those experts said that the weights placed on economic development and environmental benefits are appropriate. In particular, the experts said that the relatively low weight placed on the measures of economic development is appropriate because transit-related development benefits are generally transfers of economic activity from one area to another and not net benefits to a region. They also said that many economic development benefits result from user benefits, and as such, they are captured in the cost-effectiveness criterion. As we have reported in the past, these benefits represent real benefits for the jurisdiction making the transportation improvement but are considered transfers and not real economic benefits from a regional or national perspective.[40] Further, although SAFETEA-LU lists economic development effects and transit supportive land use as separate project justification criteria, most of the experts we spoke to agreed with FTA that combining measures of economic development and land use into a single evaluation criterion is appropriate because the two criteria are strongly related. Although many experts generally agreed with the weights proposed, some project sponsors we spoke to disagreed with the weights placed on the evaluation criteria. In particular, they told us that transit user benefits, as measured under the cost-effectiveness and mobility improvements criteria, continue to be weighted too heavily under the proposed evaluation process. They stated that mobility improvements are emphasized at the expense of other project benefits, such as economic development. A provision in the SAFETEA-LU Technical Corrections Act of 2008[41] amended the language of 49 U.S.C.§ 5309 to require that FTA give comparable, but not necessarily equal, numerical weight to each project justification criteria in calculating the overall project rating. This provision could potentially address the foregoing concerns, as FTA is now required to capture project benefits in a comparable manner. However, an FTA official told us that the evaluation process proposed in their August 2007 NPRM and proposed policy guidance would have made the change now expressed in law by proposing to weight each of the different criteria included in the statute. Furthermore, according to experts and project sponsors we spoke with, the proposed revisions to the current evaluation process preserve the rigor of FTA‘s existing evaluation framework. Unlike the Federal Aid Highway Program, in which funds are automatically distributed to states via formulas, the New Starts program‘s evaluation process requires local transit agencies to compete for project funds based on specific financial and project justification criteria. As noted by some experts we spoke with and in our past work, the use of such a rigorous and systematic evaluation process helps to properly distinguish among different projects and could serve as a model for other transportation programs.[42] Further, some project sponsors also noted that use of the make-the-case document, as proposed under the ―other factors‖ criterion, could be an effective way to incorporate additional qualitative information into the evaluation process.

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PROPOSED REVISIONS MAY STILL INACCURATELY ESTIMATE TOTAL PROJECT BENEFITS BECAUSE OF MODELING LIMITATIONS AND USE OF PROXY MEASURES Although experts and project sponsors had differing opinions, many experts and project sponsors noted that the revised process may still inaccurately estimate total project benefits because of how certain benefits are measured. As a result, without improvements to the way FTA measures certain project benefits, it risks ranking proposed projects inaccurately. In particular, some experts and project sponsors we spoke with expressed continued concern about how FTA measures user benefits for the purposes of rating projects‘ cost-effectiveness, noting the lack of accounting for nontransit user benefits, such as highway users, and the use of fixed land use assumptions when calculating transit user benefits. As previously discussed, FTA maintains that its measure of transit user benefits is the best that can be done given local modeling limitations and recognizes that these limitations may impact the relative ranking of proposed projects. Many project sponsors and experts we spoke to also expressed concern about how FTA measures project costs when determining the cost-effectiveness rating. As required by FTA, the cost used for this rating must include ―all essential project elements necessary for completion of the project.‖ According to FTA, there has been much discussion in the past as to what constitutes an essential element of the project versus a project ―betterment.‖[43] In its August 2007 NPRM, FTA sought industry comment on how the concept of essential project elements should be addressed in the evaluation process. Many of the stakeholders we consulted, as well as comments submitted to FTA‘s docket, said that betterments should be excluded from the project cost when calculating cost-effectiveness. This could result in better cost- effectiveness scores for some proposed projects, according to FTA. Some stakeholders we spoke to also noted that defining what an essential project element is can be difficult. Although many experts we spoke to agreed with the weight placed on cost-effectiveness in the evaluation process, some also said that FTA should not rely solely on the TSUB measure as a proxy for all other benefits, which they maintained is the practical effect of both the current and proposed evaluation processes. Some benefits, such as economic development unrelated to mobility improvements, are not captured by the TSUB measure or the proposed new measures of project benefits, according to many experts we spoke to. FTA‘s continued emphasis on its measures of mobility in the revised evaluation process may lead to underestimating projects‘ total benefits and, thus, inappropriately ranking proposed projects. FTA acknowledged this concern in its August 2007 Proposed Policy Guidance, noting that not all transit-related economic development is the result of improvements in mobility. FTA is currently studying the magnitude of benefits unrelated to mobility improvements that result from projects and told us that local modeling limitations have made it difficult to estimate projects‘ land use impacts. In particular, FTA convened an expert panel on October 17, 2007, to discuss methods for evaluating the economic development benefits of transit projects. FTA‘s intended objective is to develop, to the extent possible, a standardized, empirically based, and rational method for evaluating the potential economic development benefits of New Starts projects. (See table 3 for more information on the proposed evaluation measures.)

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Table 3. Extent to Which FTA’s Proposed Evaluation Measures Address NPRM Stakeholder Concerns

Criteria

Concern with current process as expressed by stakeholders in NPRM

Costeffectiveness and mobility improvements

Does not include nontransit user benefits, such as highway travel improvements

Incorporates a measure of current congestion levels in the project corridor as a proxy for highway user benefits

Does not capture benefits that do not accrue in proportion to mobility improvements, such as economic development impacts Does not allow for varying land use assumptions over time when calculating transit user benefits

Incorporates new measures of economic development

Land use

Does not capture economic development benefits of projects

Incorporates new measures of economic development

Environmental benefits

Does not capture predicted project impacts on air quality and greenhouse gas emissions

None

FTA response in NPRM

None

Source: GAO analysis. Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

FTA explanation FTA does not use estimates of nontransit user benefits because local travel models do not reliably predict changes in highway travel speeds; FTA officials acknowledged that the congestion benefits measure is an imperfect proxy but is appropriate given modeling limitations FTA acknowledges that there may be variation among projects in the extent towhich other benefits accrue in proportion to mobility improvements FTA fixes current land use patterns when calculating user benefits because it is difficult to determine which land use changes are appropriate to allow and local land use models are not reliable FTA‘s proposed measures are based on current conditions, rather than forecasts of projects‘ impacts, because FTA contends that few predictive tools are available in standard practice Measures of the predicted impacts on air quality and greenhouse gas emissions have not been proposed in order to avoid placing additional burden on project sponsors

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Some experts and project sponsors also expressed concern that the proposed evaluation process introduces evaluation measures that will not appropriately distinguish among projects. In particular, they said that FTA‘s proposed measures of economic development, congestion, and environmental benefits are crude proxy measures of the real benefits and will not meaningfully distinguish among projects. FTA officials acknowledged that the proposed measures of environmental benefits are imperfect proxies but said that they are the most appropriate measures available to distinguish among projects, given the difficulties in forecasting the impact of projects on the environment. Further, they said that they decided not to propose measures of the predicted impact of projects on the environment, including air quality and greenhouse gas emissions, in order to avoid placing additional burden on project sponsors. The officials also said that they are conducting research to identify other technically appropriate measures. In particular, FTA‘s August 2007 Proposed Policy Guidance states that the agency is initiating a long-term effort, in consultation with the transit community and environmental experts, to develop more robust environmental measures that will be effective at distinguishing among candidate projects. However, FTA has not established a timeline for this effort and, according to transit associations we spoke with, has not contacted them to publicize this long-term project. FTA officials also acknowledged that the proposed measure of congestion impacts, as part of the mobility improvements criterion, is an imperfect proxy, but is appropriate given difficulties in forecasting the impact of projects on nontransit users. Also, as noted earlier, FTA is collaborating with the Office of the Secretary to develop methods of measuring transit‘s impact on highway users. Given local travel modeling limitations and SAFETEA-LU provisions, FTA officials told us that their proposed measures of congestion and environmental benefits are appropriate, respond to the intent of SAFETEALU, and minimize the burden on project sponsors. However, some experts and project sponsors told us that these proxy measures make the evaluation process more complicated without improving the relative ranking of projects. To appropriately balance the rigorous evaluation of projects with the complexity of the process, many experts and project sponsors said that FTA should include only those evaluation measures that help properly distinguish among projects. Furthermore, some experts and project sponsors we spoke with said FTA‘s proposed measures of economic development are not appropriate because they will not capture projects‘ impacts on local development patterns. They noted that the measures should be of predicted impacts and not of current conditions. Because local models do not reliably predict the complex interaction between transit projects and land use, some experts and project sponsors we spoke to said that FTA should rely on both quantitative and qualitative measures to evaluate projects‘ predicted economic development impacts. For example, a project sponsor told us that local economic models along with surveys of local real estate experts can be used to help assess the future impact of a transit project on a corridor‘s development. FTA officials told us that the proposed measures of economic development and land use are drawn from research identifying the causal factors for economic development and therefore are the most appropriate and reliable measures available given difficulties in forecasting the impact of transit projects on economic development and land use. FTA officials also noted that they have solicited feedback about measuring these benefits in the past and have not received any practical or appropriate suggestions.

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BENEFIT-COST ANALYSIS IS ANOTHER EVALUATION OPTION, THOUGH IMPLEMENTATION CHALLENGES EXIST A second option to evaluate proposed transit projects is benefit-cost analysis. Benefit-cost analysis, a process that attempts to quantify and monetize benefits and costs accruing to society from an investment, can be used to identify investment alternatives with the greatest net benefit to the locality, region, or nation. This analysis examines the immediate and longterm effects of the investment for both users and nonusers. Because benefit-cost analysis can be used to systematically assess proposed investments, it may be a useful tool for evaluating New Starts projects. Although using this approach to evaluate other federal investments is commonly advocated, FTA is currently prohibited from considering the dollar value of mobility improvements in evaluating projects, developing regulations, or carrying out any other duties.[44] This prohibition has the practical effect of precluding FTA from conducting benefit-cost analysis of proposed transit projects. Despite this prohibition, benefit-cost analysis could help FTA better organize and evaluate information about proposed transit projects. Some experts we spoke to said that benefit-cost analysis, in conjunction with other qualitative evaluation measures, would be an ideal framework for evaluating New Starts projects. Most experts we spoke to agreed that, conceptually, benefit-cost analysis offers a full comparison of transit projects‘ benefits and costs. One expert said that it is appropriate to have an evaluation process that produces detailed estimates of all benefits and costs so that projects with the highest net benefits can be identified and funded because the New Starts‘ program budget is limited. In the past, we have encouraged the use of benefit-cost analysis in other areas, such as freight transportation, and noted the usefulness of the analysis for federal transportation decision makers.[45] Some experts also maintained that most of the information necessary for benefit-cost analysis is already produced or available to project sponsors. Most experts we spoke to who advocated using benefit-cost analysis, however, maintained that the quantitative results of the analysis should be used in concert with qualitative measures to account for those factors that cannot be monetized. We have noted in the past that guidance on benefit-cost analysis advises decision makers to augment the results of the analysis with consideration of other factors, such as the equitable distribution of benefits.[46] Executive Order 12893 directs agencies to assess benefits and costs of proposed infrastructure investments. In addition, we and others, including the Office of Management and Budget and DOT, have also identified benefit-cost analysis as a useful tool for integrating the social, environmental, economic, and other effects of investment alternatives and for helping transportation decision makers identify projects with the greatest net benefits.[47] In this way, benefit-cost analysis could provide FTA with a systematic and comprehensive assessment of proposed projects‘ impacts. In addition to the legal prohibition on FTA monetizing certain project benefits, there are many short-term challenges to implementing benefit- cost analysis. First, according to some experts we spoke to and our previous work, because local travel models produce outputs that become inputs for benefit-cost analysis, this approach to evaluating projects is limited by the previously mentioned limitations of local travel models. Accordingly, some experts we spoke to maintained that the results of benefit-cost analysis would not be reliable. FTA officials also told us that many project sponsors do not have the technical capacity to conduct benefit-cost analysis. A second challenge identified by many experts and project sponsors is the difficulty

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of monetizing certain project benefits and considering the distribution of predicted benefits. For example, determining how to quantify and monetize reductions in emissions and travel time can be challenging. Although agency guidance exists, researchers do not always agree on the appropriate methods for valuing these impacts. Additionally, while benefit-cost analysis attempts to determine the net benefits of projects, it does not usually consider the distribution of those benefits across locations or populations or other equity concerns that may exist. As two experts told us, and as we have noted in the past, these distributional issues could be addressed within benefit-cost analysis by, for example, weighting the benefits and costs to a disadvantaged group differently than those to other segments of the population. However, it can be difficult in practice to determine the appropriate weights to assign to particular groups. Some experts and project sponsors said that FTA should not adopt this approach to evaluating projects because of these particular weaknesses. An FTA official told us that they do not support using benefit-cost analysis because of the challenges associated with monetizing benefits. FTA officials also maintained that their current evaluation process captures information similar to a formal benefit-cost analysis. They also said that their current process is appropriate because the goal of the New Starts evaluation process, given funding constraints, is to produce a relative ranking of proposed projects, not to identify all projects with positive net benefits. As we have previously stated, FTA‘s emphasis on mobility improvements and reliance on certain proxy measures in the current and proposed evaluation processes may underestimate total project benefits, thereby impacting the relative ranking of projects. In contrast, benefit-cost analysis would attempt to monetize all benefits and costs, which experts told us would be a more comprehensive approach to evaluating projects. Finally, an FTA official we spoke with also noted that the statutory prohibition on monetizing mobility improvements when evaluating projects prevents FTA from using benefit-cost analysis for the New Starts program.

EVALUATION PROCESS COULD DIFFER BY PROJECT GOAL, BUT THIS OPTION MAY NOT SUPPORT NATIONAL PRIORITIES A third option to evaluate proposed transit projects is to evaluate them differently based on their primary goal. Experts and projects sponsors told us that transit projects have different and multiple goals, from improving mobility to reducing greenhouse gas emissions. (See figure 5 for examples of transit project goals.) Some experts and project sponsors said that the New Starts program could focus more on facilitating local transit goals, such as economic development, by using different evaluation processes for projects with different goals. They advocated for options that would emphasize local goals because they said the practical effect of FTA‘s current evaluation process is the exclusion of certain transit projects from funding consideration. More specifically, projects with the goal of fostering high-density development through the construction of transit stations often cannot achieve a successful ranking under the New Starts process because they generally are not predicted to create significant transit user benefits. According to one expert we spoke to, this goal- focused option could either involve different evaluation criteria for different types of projects or consistent criteria but different weights for the criteria based on the goal of the project. For example, projects with the primary goal of catalyzing and managing local economic development could be evaluated

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mainly on the basis of predicted economic development effects and the extent of transitsupportive policies and characteristics in the project corridor. Experts and project sponsors we spoke to said the main weakness of using different evaluation frameworks is that federal transit spending should reflect national priorities. More specifically, they said that because the New Starts program is funded by the federal government, projects should go through a national evaluation process designed to support those projects that serve particular national goals. One expert in particular said that FTA should retain its primary focus on funding projects that improve mobility and not on those designed to change the structure of cities.[48]

Source: GAO analysis. Figure 5. Examples of Potential Goals for Transit Projects.

FTA officials also maintained that projects should not be evaluated differently because the New Starts program is a national program and, as such, should have an evaluation process that reflects national priorities and is consistently applied to all projects. Additionally, some experts we spoke to said that establishing defensible and appropriate measures for different evaluation processes could be difficult. Some experts also said that it may be hard to separate projects into different categories, given the fact that most projects have overlapping goals. Finally, some experts expressed concern that project sponsors would self-select into the evaluation process under which they score best. Such self-selection could increase the total number of projects qualifying for New Starts funding, while potentially decreasing the rigor of the selection process. FTA officials also expressed this concern because potential measures associated with certain goals, such as economic development, are relatively subjective. The officials maintained that it would be difficult to develop appropriate and defensible metrics to assess projects with goals other than mobility improvements.

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EVALUATION PROCESS COULD BE DEVOLVED TO THE STATES UNDER FORMULA GRANT PROGRAM BUT COULD LACK FEDERAL ACCOUNTABILITY According to some experts we spoke to, a fourth option is to eliminate the evaluation process at the federal level and devolve this responsibility to the states. In particular, these experts suggested using a formula grant program to distribute New Starts funds, noting that this option would result in projects that better reflect local transit priorities. One expert we spoke to maintained that most transit projects only have local or regional benefits and no national impacts, and thus, should be controlled by states. A formula grant program in particular, according to some of those experts, could ensure that local areas build projects that meet their needs, as opposed to those that meet FTA‘s expectations. According to experts we spoke to, shifting the federal investment in fixed guideway transit from a discretionary grant program to a formula grant program would devolve the evaluation of projects to the state or local levels. Formula grant programs allocate funds to states or their subdivisions in accordance with a distribution formula prescribed in law or regulation. Grant recipients may then allocate these funds to specific projects based on program eligibility guidelines. One expert we spoke to also suggested developing a largescale transportation formula grant program that would include money for New Starts projects. Such a program could use performance-based indicators to make state allocations. Other experts we spoke to, however, said that establishing accountability mechanisms for project performance under a formula program could be difficult. Formula grant programs lodge decision power, and thus accountability, at the state and local levels to varying degrees and with varying constraints. The practical result of this, as we have noted in our past work, is often that program-specific performance information is collected through program operations, which limits the ability of the federal government to hold grantees accountable.[49] Some formula grant programs‘ designs inherently limit the prospect of collecting program-wide performance data through program operations. As we have also previously reported, many current surface transportation projects funded through formula grant programs are not effective at addressing key transportation challenges.[50] They generally do not address these challenges because the federal role is unclear and programs lack links to needs or performance. Furthermore, devolving the evaluation process for proposed transit projects would also eliminate the rigorous, national, evaluation process FTA has developed—through the New Starts program—which we have previously recognized as a model for other programs. More specifically, we have noted that while the New Starts program requires project sponsors to justify their proposed transit projects on the basis of cost- effectiveness and other criteria, there are no similar federal requirements for analyses of highway project benefits because those projects are funded under a formula program.

CONCLUSION FTA‘s New Starts program is often cited as a model for other federal transportation programs. FTA‘s recommendations for funding are based on a rigorous examination of the benefits and costs of proposed projects, and Congress has generally followed FTA‘s funding

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recommendations. However, there is growing lack of confidence among Members of Congress and the transit industry about the process and the results it produces. For instance, FTA may be underestimating projects‘ benefits because existing and proposed evaluation measures do not fully capture all potential benefits, such as benefits to highway users and environmental benefits. Capturing these other benefits potentially could change the relative rankings of proposed projects and FTA‘s funding recommendations. According to FTA officials and some experts we interviewed, local models must be improved in order to develop and employ better measures of project impacts. These models produce the data necessary to measure potential benefits of transit projects, such as the projects‘ impacts on highway congestion. However, due to technical limitations, current models cannot be counted on to accurately and reliably produce this information. Without improvements to these models, FTA will have to continue using proxies for certain benefits—which could lead to inaccurate assessments of projects‘ benefits. Improving these models is a complex and costly endeavor—and will likely require support from all levels of the government. However, given that New Starts projects cost hundreds of millions of dollars, it seems prudent that FTA and other federal, state, and local agencies take steps to improve the models used to provide critical information to policymakers about the merits of the projects and ultimately, whether the projects should be implemented. Furthermore, the benefits of improving local travel models would extend beyond transit projects, as data from these models are used to inform regional transportation planning for other modes, as well. The upcoming reauthorization of all transportation programs, including the New Starts program, provides an opportunity to seek additional resources to improve local travel models. FTA is working to improve the New Starts evaluation process and, in particular, address the limitations associated with its current measures. For example, FTA has issued a request for proposals to develop approaches for predicting changes in highway user benefits, which could help eliminate the need to use crude proxies in the evaluation process and, therefore, more accurately measure project benefits. However, FTA has not established a timeline for completing this effort. Furthermore, FHWA has declined to participate in this effort, even though the results could benefit all kinds of transportation planning. In addition, although FTA has committed to work with environmental experts to improve the environmental benefits measures, FTA has not begun this effort, or established time frames for initiating or completing this effort. Given that there is general consensus that FTA‘s existing and proposed environmental benefits measures do not meaningfully distinguish among projects, FTA should work expeditiously to improve these measures before having project sponsors develop and submit information that is not useful for evaluation and rating purposes. In addition, FTA has worked to incorporate qualitative information about certain project benefits in the evaluation process, which can help ensure that all project benefits are fully considered. However, the inclusion of qualitative information in the evaluation process does not negate the need for FTA to work to improve existing or develop new quantitative measures for the different evaluation criteria. There are a number of alternatives FTA can consider as it explores options for revamping the New Starts program. The NRPM presents one way to modify the existing evaluation framework, but there are also several different options that could serve as a means to determine which transit projects should receive New Starts funding. In particular, our past work and some of the experts we spoke to identified benefit-cost analysis as a viable tool that could provide a comprehensive analysis of projects‘ costs and benefits over time. However,

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FTA‘s ability to consider this approach is constrained by the current prohibition on placing dollar values on mobility improvements. Going forward, it is important that FTA have the flexibility to consider a wide range of approaches for evaluating transit projects, including benefit-cost analysis, as it seeks to improve the New Starts program.

RECOMMENDATIONS FOR EXECUTIVE ACTION To improve the New Starts evaluation process and the measures of project benefits, which could change the relative ranking of projects, we recommend that the Secretary of Transportation take the following five actions: 1 2

3

4

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5

Seek additional resources to improve local travel models in the next authorizing legislation; Seek a legislative change to allow FTA to consider the dollar value of mobility improvements in evaluating projects, developing regulations, or carrying out any other duties; Direct the Administrator of FTA to establish a timeline for issuing, awarding, and implementing the result of its request for proposals on short- and long-term approaches to measuring highway user benefits from transit improvements; Direct the Administrator of FTA to establish a timeline for initiating and completing its longer-term effort to develop more robust measures of transit projects‘ environmental benefits that are practically useful in distinguishing among proposed projects, including consultation with the transit community, and; Direct the Administrators of FTA and FHWA to collaborate in efforts to improve the consistency and reliability of local travel models, including the aforementioned request for proposals on approaches to measuring highway user benefits.

APPENDIX I. SUMMARY OF NEW STARTS AND SMALL STARTS PROJECTS EVALUATED, RATED, AND RECOMMENDED FOR FUNDING FOR FY 2009 Administration Requests $1.62 Billion for New Starts and Small Starts Projects for Fiscal Year 2009 The Federal Transit Administration (FTA) evaluated and rated 29 New Starts, Small Starts, and Very Small Starts projects for funding during the fiscal year 2009 evaluation cycle. FTA evaluated and rated 13 New Starts projects, 2 of which had pending full funding grant agreements (FFGA) and were recommended for funding. FTA did not recommend any new New Starts projects for funding this year. FTA also evaluated and rated 16 Small Starts and Very Small Starts projects and recommended 13 of these projects for funding. The fiscal year 2009 President‘s budget requests $1.62 billion in New Starts funding, the majority of which is for 15 projects with existing FFGAs.

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FTA Evaluated and Rated 13 New Starts Projects but Did Not Recommend Any New Projects for Funding FTA identified 16 New Starts projects during the fiscal year 2009 cycle, including 2 projects with pending FFGAs and 14 projects in preliminary engineering and final design. (See table 4 for a full list of these projects.) Of the 16 total projects, 13 projects were evaluated and rated using the newly instituted five-level scale, and 3 projects were statutorily exempt from being rated.[51] Table 4. Pending FFGAs and Projects in Final Design and Preliminary Engineering

Project name

Location

Total capital cost (dollars in millions)

Federal share of total capital costs (percent)

Overall project rating

$656.8

44%

Mediumhigh

1,798.1

42

High

458.8

60

Medium

48.3

51

Exempt

78.4

32

Exempt

49.2

51

Exempt

226.2

50

Mediumhigh

1,289.8

59

Mediumhigh

1,605.4

44

Mediumlow

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a

Pending FFGAs West Corridor Denver, Colo. Light Rail Transit (LRT) University Link Seattle, Wash. LRT Extension Final design Hartford Hartford, Busway Conn. Urban Stamford, Transitway Conn. Phase II Wilmington to Wilmington, Newark Del. Commuter Rail Improvements South County Providence, Commuter Rail R.I. Preliminary engineering South Sacramento, Sacramento Calif. Corridor Phase 2 Central San Subway LRT Francisco, Calif. Orange Line Miami, Fla. Phase 2: North Corridor Metrorail Extension

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Table 4. (Continued) Project name

Location

Total capital cost (dollars in millions) 416.7

Federal share of total capital costs (percent) 50

Overall project rating Mediumhigh

Central Florida Commuter Rail Transit – Initial Operating Segment Silver Line Phase III Central Corridor LRT Northeast Corridor Light Rail Project Access to the Region‘s Core Mid-Jordan LRT Dulles Corridor Metrorail Project – Extension to Wiehle b Avenue

Orlando, Fla.

Boston, Mass.

1,167.3

60

Medium

St. Paul, Minn. Charlotte, N.C.

932.3

50

Medium

749

50

Mediumhigh

Northern New Jersey Salt Lake City, Utah Northern Virginia

7,263.5

41

553.7

78

2,960.8

30

Mediumhigh Mediumhigh Medium

Source: GAO summary of New Starts fiscal year 2009 Annual Report. aPending FFGAs refer to projects that FTA expects will execute an FFGA within the upcoming fiscal year. According to FTA, all projects seeking a funding recommendation, including pending FFGAs, are evaluated and rated during the evaluation cycle. Both Seattle and Denver were evaluated and rated because they were seeking recommendations for an FFGA in the fiscal year 2009 report. bThe Dulles Corridor Metrorail Project was not rated in FTA‘s fiscal year 2009 Annual Report on New Starts projects that was released in February 2008. However, following FTA‘s review of additional documentation related to the project‘s costs, financial plan, and management processes, the project was evaluated and received its final overall rating in May 2008.

Although they evaluated and rated fewer New Starts projects during the fiscal year 2009 cycle than in previous years, FTA officials told us that this decrease does not indicate that there are fewer projects in the pipeline. They stated that the Annual Report only provides a snapshot of the total portfolio of projects in development or under construction. As a result, projects that have existing FFGAs or those that are currently in alternatives analysis are not included in this list. Since last year‘s New Starts evaluation and rating cycle, four projects in the pipeline ―graduated‖ from final design and received FFGAs, and one sponsor withdrew two projects from the process after changing the project type in both corridors from bus rapid transit to light rail rapid transit. FTA expects that the revised projects will return to the

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pipeline and progress toward an FFGA in the future. FTA officials also anticipate that several other projects that are currently in alternatives analysis will move into preliminary engineering at some point in the near future, at which point they will be evaluated and rated. FTA did not recommend any new projects for funding in the current evaluation cycle but did recommend funding for two projects with pending FFGAs: the West Corridor Light Rail Transit (LRT) in Denver and the University Link LRT Extension in Seattle. In its Annual Report, FTA states that both of these projects meet the New Starts criteria, are at an advanced stage of development with few remaining uncertainties, and are expected to be ready for an FFGA prior to or during fiscal year 2009. The total capital cost of these two projects is estimated to be $2.46 billion, with the total federal New Starts share for the West Corridor LRT at 44 percent and the University Link LRT extension at 42 percent of the total cost, respectively. FTA also recommended reserving $78 million [52] in New Starts funding for final design activities for projects that will reach final design prior to the development of the fiscal year 2009 appropriations bill.[53] Unlike in previous years, FTA has not specified which projects will be eligible for this funding or allocated a particular amount for any given project. According to the Annual Report and officials we spoke to at FTA, this approach will allow the agency to make ―real time‖ funding recommendations as project uncertainties are mitigated and Congress makes final appropriations decisions. FTA does not expect that all of the projects in preliminary engineering will advance to final design in fiscal year 2009 (see table 4).

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FTA EVALUATED AND RATED 16 SMALL STARTS AND VERY SMALL STARTS PROJECTS AND RECOMMENDED FUNDING FOR 13 PROJECTS FTA evaluated and rated 16 eligible Small Starts and Very Small Starts projects, including 12 projects that were advanced into project development during this cycle and 4 existing Small Starts projects that were not fully funded in fiscal year 2008.[54] Ten projects received a ―medium‖ rating and 6 projects received a ―medium-high‖ rating. FTA recommended 13 of these 16 projects for funding.[55] (See table 5 for a list of FTA‘s funding recommendations for fiscal year 2009.) The total capital cost of the 13 projects that FTA recommended for funding is estimated to be $771.6 million, and the total Small Starts, including Very Small Starts, share is expected be about $451.6 million. Most of these projects are proposed to be funded under a multiyear Project Construction Grant Agreement. However, three projects, which have requested less than $25 million in total Small Starts funding, are proposed in this budget to be funded under one-year capital grants. Table 5. Fiscal Year 2009 Small Starts and Very Small Starts Funding Recommendations Project name

Location

Mountain Links Bus Rapid Transit (BRT) Flagstaff, Ariz.

Total capital cost (dollars in millions) $10.4

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Federal share of capital cost (percent)

Type of project

60%

Very Small Starts

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Table 5. (Continued) Project name

Location

Total capital cost (dollars in millions)

Federal share of capital cost (percent)

Type of project

Livermore-Amador Route 10 BRT

Livermore, Calif.

21.7

51

Very Small Starts

Metro Rapid Bus System Gap Closure

Los Angeles, Calif.

25.7

65

Very Small Starts

Wilshire Boulevard Bus-Only Lane

Los Angeles, Calif.

31.5

74

Very Small Starts

Perris Valley Line

Riverside, Calif.

168.3

45

Small Starts

Mid-City Rapid

San Diego, Calif.

43.3

50

Very Small Starts

Mason Corridor BRT

Fort Collins, Colo.

74.2

80

Small Starts

Commuter Rail Improvements

Fitchburg, Mass.

150

50

Small Starts

Troost Corridor BRT

Kansas City, Mo.

30.7

80

Very Small Starts

Streetcar Loop

Portland, Ore.

126.9

59

Small Starts

Pioneer Parkway EmX BRT

Springfield, Ore.

37.0

80

Very Small Starts

Bellevue-Redmond BRT

King County, Wash.

27.0

75

Very Small Starts

Pacific Highway South BRT

King County, Wash.

25.1

56

Very Small Starts

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Source: GAO summary of information in the New Starts fiscal year 2009 Annual Report.

ADMINISTRATION’S FISCAL YEAR 2009 BUDGET RECOMMENDS $1.62 BILLION FOR THE NEW STARTS PROGRAM The administration‘s fiscal year 2009 budget proposal recommends that $1.62 billion be made available for the New Starts program. This amount is $51.7 million more than the program‘s fiscal year 2008 appropriation. Figure 6 illustrates the planned uses of the administration‘s proposed request for the New Starts fiscal year 2009 budget, including the following:      

$1,146.62 million would be allocated among the 15 projects with existing FFGAs; $160 million would be allocated among 2 projects with pending FFGAs; $78 million would be allocated to projects that will reach final design before the end of this fiscal year; $200 million would be allocated for Small Starts projects; $20 million for ferry capital projects (Alaska and Hawaii) and Denali Commission; and $16.2 million for oversight activities.

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Source: GAO analysis of FTA data. Notes: FTA is authorized to use up to 1 percent of amounts made available for the New Starts program for project management oversight activities. Federal statute requires that specified amounts of New Starts funds be set aside annually for projects in Alaska and Hawaii, for fixed guideway ferry systems and extension projects utilizing ferry boats, ferry boat terminals, or approaches to ferry boat terminals. FTA is also authorized to provide $5 million for each fiscal year from 2006 to 2009 for the Denali Commission, which provides critical utilities, infrastructure, and economic support throughout Alaska, particularly in remote communities. Percentages do not add to 100 percent due to rounding. Figure 6. Allocation of Administration‘s Proposed Fiscal Year 2009 Budget for New Starts.

APPENDIX II. SCOPE AND METHODOLOGY To address our objectives, we reviewed previous GAO reports, FTA‘s existing and proposed New Starts policy guidance, FTA‘s August 2007 Notice of Proposed Rulemaking (NPRM) for New Starts, and the provisions of SAFETEA-LU that address the New Starts program to identify the information captured by the current and proposed New Starts project justification criteria. We also reviewed various pieces of legislation, including SAFETEA-LU and New Starts authorizing legislation, along with legislative history, to determine the extent to which New Starts program goals have been expressed or defined in law. Furthermore, we reviewed FTA‘s Annual Report on New Starts for fiscal year 2009 to determine the number of projects evaluated, rated, and recommended for funding, the amount of funding requested for these projects, and the total costs of proposed projects.

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We also examined a sample of public comments submitted in response to the proposed revisions to FTA‘s current evaluation process, as described in the NPRM.[56] First, we reviewed all 104 comments submitted to the docket to understand the range of perspectives on the proposed revisions described in the NPRM. Second, following this review, we conducted a more in-depth review of 13 comments submitted by (1) project sponsors we interviewed; (2) professional and advocacy groups we interviewed; and (3) organizations submitting extensive and relevant comments, as determined by team members. Third, upon completion of this analysis, we also reviewed 27 of the remaining 91 comments. After sorting the remaining comments, we randomly selected comments in proportion to the total number of comments received by (1) geographic diversity; (2) relevance of comment to FTA‘s proposals; and (3) diversity of opinion. We categorized and analyzed comments to determine the frequency of particular perspectives and opinions about FTA‘s proposed revisions, as well as other options for evaluating projects. Because the comments were selected as a nonprobability sample, the results cannot be generalized to all comments. We interviewed FTA and transit industry officials to get an in-depth assessment of the information captured by the current and proposed New Starts project justification measures as well as how FTA‘s current evaluation process influences projects‘ cost, schedule, and design. We also interviewed FTA officials to discuss how the design and use of these measures impacts the calculation of project benefits, how the proposed revisions respond to SAFETEALU and past concerns voiced by the transit industry, and what other options they have considered to measure different project justification criteria. To learn more about the ongoing rulemaking process, we also attended New Starts Listening Sessions in Washington, D.C., and Charlotte, North Carolina, in October 2007. We also attended FTA‘s expert panel discussion to identify approaches for incorporating land use and economic development into the New Starts evaluation framework. In addition, we interviewed three industry associations (that represent project sponsors) that participate closely in these programs: the American Public Transportation Association, New Starts Working Group, and Reconnecting America. We also interviewed 11 project sponsors, including both Small Starts projects in the project development phase and New Starts projects in the preliminary engineering or final design stages for the fiscal year 2009 evaluation cycle. We conducted semistructured interviews with the project sponsors to gather additional information on FTA‘s current evaluation process; how FTA‘s evaluation measures influence projects‘ cost, schedule, and design; and other options for evaluating proposed transit projects. We selected these projects based on the following criteria: (1) projects seeking different types of funding (e.g., New Starts or Small Starts); (2) projects involving different modes of transit (e.g., rail, light rail, or bus); (3) projects in different stages of project development (e.g., preliminary engineering or final design); (4) projects of different sizes (based on the total capital cost and ridership projections); and (5) projects from different geographic areas. Because the 11 projects were selected as a nonprobability sample, the results cannot be generalized to all projects. Table 6 lists the New Starts and Small Starts project sponsors we interviewed for our review. Table 6. New Starts and Small Starts Project Sponsors Interviewed Name of project sponsor Charlotte Area Transit System Massachusetts Bay Transit Authority

Location Charlotte, N.C. Boston, Mass.

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Table 6. Continued Name of project sponsor Metropolitan Miami-Dade County Transit Authority

Location Miami, Fla.

Project type New Starts

New Jersey Transit Sound Transit Metropolitan Washington Airports Authority City of Portland City of Stamford Northern Arizona Intergovernmental Public Transportation Authority Riverside County Transportation Commission Sacramento Regional Transit District

Northern New Jersey Seattle, Wash. Northern Virginia Portland, Ore. Stamford, Conn. Flagstaff, Ariz.

New Starts New Starts New Starts Small Starts Small Starts Small Starts

Riverside, Calif. Sacramento, Calif.

Small Starts Small Starts

Source: GAO.

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To further address our objectives, we interviewed a variety of transportation experts and consultants to obtain their perspectives on FTA‘s current evaluation process and other options for evaluating proposed transit projects. We used a semistructured interview guide and followed up by e-mail to collect comparable information from all experts. We selected an initial group of transportation experts to interview based on their past participation in GAO and FTA expert panels on similar topics and their research on transit issues, including the New Starts program.[57] During these initial interviews, we solicited recommendations of other experts we should interview. Using this snowballing technique, we selected the most frequently recommended experts for interviews, as well as those with the most relevant expertise. Table 7 lists the experts we interviewed. Table 7. Experts Interviewed for Fiscal Year 2009 New Starts Review Name Chandra Bhat

Robert Cervero Elizabeth Deakin Genevieve Giuliano

José A. Gómez Ibanéz

Title Adnan Abou-Ayyash Centennial Professor in Transportation Engineering Professor of City and Regional Planning Professor of City and Regional Planning/Director of the University of California Transportation Center Professor and Senior Associate Dean for Research and Technology, School of Policy, Planning, and Development Professor of Urban Planning and Public Policy

Affiliation University of Texas at Austin, Department of Civil,Architectural and Environmental Engineering University of California, Berkeley University of California, Berkeley

University of Southern California

Harvard University

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Table 7. (Continued) Name Ronald Kirby

Title Director of Transportation Planning

Kara Kockelman

Associate Professor and William J. Murray Jr. Fellow

David Lewis Eric Miller

Chief Economist Bahen-Tanenbaum Professor of Transportation Engineering and Planning Chief Economist

Don Pickrell

John Pucher

Michael Roschlau Frederick Salvucci Martin Wachs

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Nigel Wilson

Professor of Urban Planning, Research Associate in the Alan M. Voorhees Transportation Center President and Chief Executive Officer Senior Lecturer and Senior Research Associate Director, Transportation, Space, and Technology Program Professor of Civil and Environmental Engineering

Affiliation Metropolitan Washington Council of Governments University of Texas at Austin, Department of Civil,Architectural and Environmental Engineering HDR Inc. University of Toronto

Volpe Center, Research and Innovative Technology Administration, U.S. Department of Transportation Rutgers University

Canadian Urban Transit Association Center for Transportation and Logistics, Massachusetts Institute of Technology RAND Corporation Massachusetts Institute of Technology

Source: GAO.

Following the interviews, team members categorized and analyzed the experts‘ comments to determine the frequency of particular perspectives about FTA‘s current evaluation process and other options for evaluating projects. To supplement the perspectives of these experts, we also interviewed other scholars and consultants with specific knowledge of the New Starts project evaluation process, including Don Emerson, Principal Consultant, Parsons Brinckerhoff Consulting; Laurie Hussey, Consultant, Cambridge Systematics, Inc.; Terry Moore, Planning Director, Land-Use and Transportation Planning, ECONorthwest; Kenneth Orski, Editor and Publisher, Innovation Briefs; Randy Pozdena, Senior Economist, Monetary Policy and Industrial Organization, ECONorthwest; Michael Replogle, Transportation Director, Environmental Defense; and Ronald Utt, Herbert and Joyce Morgan Senior Research Fellow, Heritage Foundation. We also reviewed academic and professional literature about the impact of public transit on mobility, economic development, and the environment. The purpose of our literature review was to assess the accuracy of particular assertions made by experts, project sponsors, and government officials we interviewed. Our literature review included articles identified through searches of research databases and the Internet, as well as suggestions of experts we

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interviewed. Team members analyzed and summarized the evidence from these articles in consultation with a GAO methodologist and economist. We conducted this performance audit from October 2007 to June 2008 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

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APPENDIX III. EXPLANATION OF FTA’S CALCULATION OF TRANSPORTATION SYSTEM USER BENEFITS The transportation system user benefits (TSUB) measure is intended to capture all the significant user benefits of a proposed transit project. The measure includes predicted travel time savings and accounts for other benefits by quantifying the effect of nontravel time factors that influence travel behavior. The unit of the TSUB measure is equivalent to minutes of in-vehicle travel time. Project sponsors use local travel demand models to forecast ridership and simulate trips taken in 2030, which is the forecast year used for estimating benefits over time, for two alternatives. The baseline alternative assumes low-cost improvements to the transportation network, while the second alternative (the ―build alternative‖) assumes the proposed New Starts transit project (e.g., fixed guideway transit infrastructure investment) is constructed. Travel time savings from a proposed transit project can result from a shorter wait, a shorter walk, or shorter in-vehicle times. To adequately account for the time saved for each of these, the predicted travel time savings for wait and walk times are weighted by a factor of two or three, compared to in-vehicle time savings, because behavioral surveys have shown that travelers perceive these out-of-vehicle times as more onerous. The exact weighting factor is usually derived from local travel models calibrated based on local travel surveys. Other factors beyond travel time—namely, travel time reliability and the convenience and comfort of the travel mode—are also incorporated into the measure of user benefits through what is commonly referred to as a modal constant. The modal constant varies by locality based on the results of the model‘s calibration. Local models are generally calibrated by adjusting the modal constant until the model accurately predicts current travel patterns. Once a model is calibrated with a particular constant, it is used to forecast future travel times, and thus travel time savings, for the baseline and build alternatives. These travel time savings, reflecting both actual time savings and nontravel time factors, are referred to as user benefits. The TSUB measure values user benefits differently for different individuals. More specifically, it values the benefits of predicted users of the project differently based on the travel mode they are switching from (e.g., automobile or transit). Behavioral surveys have shown that automobile users react differently to the user benefits created by a transit project. Some require very small reductions in transit travel time to change their travel mode from automobile to transit (i.e., the build alternative) because they are relatively indifferent between the existing transit option and automobile travel. These travelers receive benefits, which economists call gains in consumer surplus, because the reduction in transit travel times

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is greater than what is required to induce their change in travel mode.[58] Others require the transit project‘s full measure of time savings before they perceive any advantage to transit and change their mode. These travelers, even though they choose to switch modes, receive little gain in consumer surplus. In between these two kinds of travelers are those with a range of preferences. Accordingly, the ―average‖ traveler that changes to the proposed transit project from automobile travel requires half of the time savings created by the project to change, and thus receives half of the project‘s benefits as a gain in consumer surplus. For example, if a transit project is introduced that makes travel in a particular corridor 10 minutes faster than driving an automobile, the average benefit to an automobile user switching to transit will be 5 minutes because some will require time savings of less than 5 minutes to change modes and some will require more. To account for this variation, FTA divides the total predicted time savings for new transit riders by two when calculating user benefits because, on average, only half of the benefits are received by those travelers as gains in consumer surplus while the other half of the benefits are needed to induce the change in mode and do not represent a net benefit gain. Alternatively, individuals who switch transit modes— from bus in the baseline alternative to a new light rail, for example—would get the full 10 minute benefit of the switch because no benefit is needed to induce a mode shift since they are already transit users. These transit users take advantage of the full travel time savings. Transit projects can also create benefits for those who do not choose to use them. For example, a transit project that reduces the number of automobile travelers may reduce overall highway congestion. FTA does not currently credit proposed projects with predicted benefits to highway users because (1) FTA has found that most travel models around the country do not predict plausible changes in highway speeds resulting from transit improvements and (2) the absence of a consistent method for highway speed prediction leads directly to potentially large differences in the predicted benefits of transit projects with similar impacts. To account for benefits to highway users, such as reduced congestion as the result of more transit users, PTA raises the breakpoints for the cost-effectiveness criterion by 20 percent, since they are only using the transit user benefits as the denominator of cost-effectiveness. After accounting for factors that influence travel behavior as noted above, travel times are compared between the baseline alternative and build alternatives to produce the estimate of user benefits. That measure of user benefits, TSUB, becomes the denominator in the calculation of PTA‘s cost- effectiveness criterion.

REFERENCES [1]

[2]

Fixed guideway systems use and occupy a separate right-of-way for the exclusive use of public transportation services. These fixed guideway systems include fixed rail, exclusive lanes for buses and other high-occupancy vehicles, and other systems. An FFGA establishes the terms and conditions for federal funds available for the project, including the maximum amount of federal funds available. For more information on changes SAFETEA-LU made to the New Starts program and the status of their implementation, see GAO, Public Transportation: New Starts Program in a Period of Transition, GAO-06-819 (Washington, D.C.: Aug. 30, 2005) and GAO, Public Transportation: Future Demand Is Likely for New Starts and Small

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[3] [4] [5]

[6]

[7] [8] [9]

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[10]

[11]

[12]

[13] [14]

Katherine Siggerud Starts Programs, but Improvements Needed to the Small Starts Application Process, GAO-07-917 (Washington, D.C.: July 27, 2007). GAO-07-917. 72 Fed. Reg. 43328 (Aug. 3, 2007) Pub. L. No. 110-161, Division K, Title I, Sec. 170, 121 Stat. 2401, Dec. 26, 2007. ―None of the funds provided or limited under this Act may be used to issue a final regulation under section 5309 of title 49 [i.e., New Starts], United States Code, except that the Federal Transit Administration may continue to review comments received on the proposed rule (Docket No. FTA-2006-25737).‖ According to FTA officials, the TSUB measure and existing software are designed to capture benefits that accrue to highway users, but the forecasts used by local models are not reliable and as a result, are not used. The Very Small Starts program is a project eligibility category introduced by FTA in 2006 for projects with a total capital cost of less than $50 million. 49 U.S.C. § 5309. Pub. L. No. 105-178, Section 3010, 112 Stat. 357, June 9, 1998. The legislative record is silent as to why this provision was enacted. During the preliminary engineering phase, project sponsors refine the design of the proposal, taking into consideration all reasonable design alternatives and estimating each alternative‘s costs, benefits, and impacts (e.g., financial or environmental). According to FTA officials, to gain approval for entry into preliminary engineering, a project must (1) be identified through the alternatives analysis process, (2) be included in the region‘s longterm transportation plan, (3) meet the statutorily defined project justification and financial criteria, and (4) demonstrate that the sponsors have the technical capability to manage the project during the preliminary engineering phase. Some federal New Starts funding is available to projects for preliminary engineering activities, if so appropriated by Congress. Final design is the last phase of project development before construction and may include right-of-way acquisition, utility relocation, and the preparation of final construction plans and cost estimates. The exceptions to the evaluation process are statutorily ―exempt‖ projects, which are those with requests for less than $25 million in New Starts funding. Sponsors of these projects are not required to submit project justification information (although FTA encourages the sponsors to do so). FTA does not rate these projects. As a result, the number of projects in the preliminary engineering or final design phases may be greater than the number of projects evaluated and rated by FTA. The administration‘s funding recommendations are made in the President‘s budget and are included in FTA‘s annual New Starts report to Congress, which is released each February in conjunction with the President‘s budget. 13For more information on the changes SAFETEA-LU made to the New Starts program and the status of their implementation, see GAO-06-819 and GAO-07-917. The legislation also requires that projects be funded only if they are justified based on a comprehensive review of its (1) mobility improvements, (2) environmental benefits, (3) cost-effectiveness, (4) operating efficiencies, (5) economic development effects, and (6) public transportation supportive land use policies and future patterns. The legislation also lists a number of factors to be analyzed, evaluated, and considered, including congestion relief, improved mobility, air and noise pollution, and energy consumption.

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[15] Small Starts projects are defined as those that are requesting less than $75 million in federal funding and have a total estimated net capital cost of less than $250 million. According to FTA‘s guidance, Small Starts projects must (a) meet the definition of a fixed guideway for at least 50 percent of the project length in the peak period or (b) be a corridor-based bus project with the following minimum elements: substantial transit stations; traffic signal priority/pre-emption, to the extent, if any, that there are traffic signals on the corridor; low-floor vehicles or level boarding; branding of the proposed service; and 10 minute peak/15 minute off-peak running times (i.e., headways) or better while operating at least 14 hours per weekday. [16] Very Small Starts projects must meet the same eligibility requirements as Small Starts projects and be located in corridors with more than 3,000 existing riders per average weekday who will benefit from the proposed project. In addition, the projects must have a total capital cost of less than $50 million (for all project elements) and a per-mile cost of less than $3 million, excluding rolling stock (e.g., train cars). [17] FTA is revising its evaluation and ratings process to comply with SAFETEA-LU through the rulemaking process previously discussed. However, as previously stated, Congress prohibited FTA from issuing the final rule this fiscal year. [18] Under federal planning requirements, states and metropolitan planning organizations (MPOs) are required to establish a process for collecting and analyzing data to evaluate different transportation alternatives and use the resulting information to establish priorities for improving local assets. As part of this process, planners may develop local travel models and performance measures to evaluate existing or proposed projects. Local travel models estimate future travel demand and analyze the impacts of alternative transportation investment scenarios. [19] See appendix III for a more detailed description of how TSUB is determined. [20] FTA uses the following breakpoints to assign projects a cost-effectiveness rating: $11.99 and under are rated high; $12.00 to $15.49 are rated medium-high; $15.50 to $23.99 are rated medium; $24.00 to $29.99 are rated medium-low; and $30.00 and over are rated low. These breakpoints are adjusted annually for inflation. [21] TRB, Transit Cooperative Research Program Report 78, Estimating the Benefits and Costs of Public Transit Projects: A Guidebook for Practitioners (Washington, D.C., 2002). [22] FTA considers the current air quality designation by the Environmental Protection Agency (EPA) for the metropolitan region in which the proposed project is located, indicating the severity of the metropolitan area‘s noncompliance with the health-based EPA standard for the pollutant or its compliance with that standard as the current measure of environmental benefits [23] Specifically, FTA‘s July 2007 guidance notes that when mobility improvements are rated Low, the summary rating will ―round down‖ to the lower of the two ratings; for all other mobility improvement ratings (and for all Small Starts projects, which are not rated for mobility improvements), the rating is ―rounded-up‖ to establish the summary project justification rating. For example, a New Starts project with a cost-effectiveness rating of medium-high and a land use rating of low—along with a mobility improvements rating of medium—would receive a summary project justification rating of medium.

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[24] GAO, Opportunities Exist to Improve the Communication and Transparency of Changes Made to the New Starts Program, GAO-05-674 (Washington, D.C.: June 28, 2005) [25] Option value refers to the benefit that some transit users receive by having transit service as an option for the future or in certain circumstances. Agglomeration effects arise when the clustering of business activity creates economies of scale or if infrastructure cost savings result from compact development, both of which can be indirect results of transit investments. [26] GAO-07-917. [27] See GAO, Highway and Transit Investments: Options for Improving Information on Projects‘ Benefits and Costs and Increasing Accountability for Results, GAO-05-172 (Washington, D.C.: Jan. 24, 2005). [28] FTA requires agencies to hold land use and travel patterns constant when comparing user benefits under the baseline alternative (which assumes low-cost improvements are made to the transportation network) to the user benefits under the build alternative (which assumes the proposed New Starts project is constructed). [29] FTA officials acknowledged that some benefits may not be counted under the fixed land use assumptions; however, the magnitude of these benefits is unknown [30] Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), Pub. L. No. 102240, Section 3010, 105 Stat. 2093, Dec. 18, 1991; Transportation Equity Act for the 21st Century (TEA-21), Pub. L. No. 105-178, Section 3009, 112 Stat. 352, June 9, 1998; and SAFETEA-LU, Pub. L. No. 109-59, Section 3011, 119 Stat. 1573, Aug. 10, 2005. [31] TRB, Special Report 288, Metropolitan Travel Forecasting: Current Practice and Future Direction (2007). [32] GAO-05-172. [33] Although FHWA has declined to be involved in the request for proposals, FHWA has worked with FTA to improve the state of the practice in travel demand modeling and conducts research to advance the state of the art. For example, the Federal Aid Highway Program has contributed funds for travel model improvements in recent years, including funding a significant portion of the TRB study. FHWA officials strongly agree that models need to be improved, but they indicated that their tight research budget prevented them from funding the request for proposals. [34] TRANSIMS is a set of travel modeling procedures designed to meet state DOTs‘ and MPOs‘ need for more accurate and more sensitive travel forecasts for transportation planning and emissions analysis. The amount specified in SAFETEA-LU for TRANSIMS was $2.625 million per year, but due, in part, to the obligation limitation of FHWA‘s research budget, the actual amount was $1.9 million. [35] GAO-07-917. [36] 72 Fed. Reg. 30907 (June 4, 2007). [37] Deloitte, New Starts Program Assessment, February 12, 2007. [38] For more information on the project ratings in the fiscal year 2009 pipeline, see appendix I. [39] Mobility improvements include two categories of measures: mobility improvements for the general population and mobility improvements for transit dependents. [40] GAO-05-172.

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[41] Pub. L. No. 110-244, Section 201(d), June 6, 2008 [42] GAO-07-917. [43] Betterments are generally defined as project elements that are not essential to the operation of the project but may nevertheless enhance the operation of the transit service. Examples of such improvements include additional station entrances to subway stations, substantial improvements to a station‘s design beyond the design standards used for other stations in the system, and changes in the vertical or horizontal alignment of the project. [44] Pub. L. No. 105-178, Section 3010, 112 Stat. 357, June 9, 1998. [45] See GAO, Freight Transportation: Strategies Needed to Address Planning and Financing Limitations, GAO-04-165 (Washington, D.C.: Dec. 19, 2003) and GAO, Surface Transportation: Many Factors Affect Investment Decisions, GAO-04-744 (Washington, D.C.: June 30, 2004). [46] GAO-04-744. [47] GAO-04-744. [48] The participants in GAO‘s 2007 forum on transforming transportation policy also maintained that the most important goal of transportation policy should be to enhance mobility. Further, they noted that economic development was less important as a goal of federal transportation policy. See GAO, Highlights of a Forum: Transforming Transportation Policy for the 21st Century, GAO-07-1210SP (Washington, D.C.: Sept. 19, 2007). [49] GAO, Grant Programs: Design Features Shape Flexibility, Accountability, and Performance Information, GGD-98-137 (Washington, D.C.: June 22, 1998). [50] GAO, Surface Transportation: Restructured Federal Approach Needed for More Focused, Performance-Based, and Sustainable Programs, GAO-08-400 (Washington, D.C.: Mar. 6, 2008). [51] 1In June 2007, FTA replaced the previous three-tiered overall project rating scale of high, medium, and low with a five-tiered rating scale of high, medium-high, medium, medium- low, or low as directed by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Projects requesting less than $25 million in New Starts funding were not evaluated and rated during the fiscal year 2009 cycle; however, these projects will be evaluated and rated as ―Small Starts‖ in future cycles, as noted in Section 5309(e) of SAFETEA-LU. [52] FTA originally recommended $85 million for final design activities, but subsequently learned that additional funding was required for an existing FFGA (Los Angeles Metro Gold Line Eastside project). As a result, additional funding was allocated to this project, and less funding was set aside for the final design activities category. [53] This proposal is similar to FTA‘s previous set aside of funding for other New Starts projects. As in past years, projects that qualify for this funding must meet the following criteria: (1) received a medium or higher rating; (2) received a medium or higher costeffectiveness rating; and (3) would advance to final design before the end of the fiscal year. [54] Due to the 2 percent budget rescission in the fiscal year 2008 Consolidated Appropriations Act (P.L. 110-161), the following four existing Small Starts projects were not fully funded in fiscal year 2008 as anticipated: Pioneer Parkway EmX Bus Rapid Transit (BRT), Pacific Highway South BRT, Troost Corridor BRT, and Metro

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[55]

[56] [57]

Rapid Bus System Gap Closure. Consequently, FTA proposed these projects for small amounts of funding in fiscal year 2009 to complete the agency‘s commitment to these projects. At present, FTA is still working with Portland to develop new forecasts for its streetcar project because the project did not receive a medium cost-effectiveness rating. If the Streetcar Loop cannot achieve a sufficient cost-effectiveness rating by summer 2008, then FTA will recommend to Congress the reallocation of the project‘s fiscal year 2009 Small Starts proposed funding to other emerging Small Starts projects that demonstrate both the readiness and merit necessary to meet the administration‘s goal of funding cost-effective Small Starts projects. These comments were accessed through http://www.regulations.gov/fdmspublic /component/main, docket number FTA-2006-25737, accessed November 13, 2007 See GAO, Highway and Transit Investments: Options for Improving Information on Projects‘ Benefits and Costs and Increasing Accountability for Results, GAO-05-172 (Washington, D.C.: Jan. 24, 2005) and GAO, Highlights of a Forum: Transforming Transportation Policy for the 21st Century, GAO-07-1210SP (Washington, D.C.: Sept. 19, 2007). Consumer surplus is a measure of the benefit consumers derive from using a particular good. It is calculated by taking the difference between the price consumers are willing to pay and the actual price.

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[58]

Katherine Siggerud

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Chapter 3

PUBLIC TRANSPORTATION FUTURE DEMAND IS LIKELY FOR NEW STARTS AND SMALL STARTS PROGRAMS, BUT IMPROVEMENTS NEEDED TO THE SMALL STARTS APPLICATION PROCESS



Katherine Siggerud

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ABBREVIATIONS FFGA full funding grant agreement FTA Federal Transit Administration PCGA project construction grant agreement SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users

WHY GAO DID THIS STUDY Through the New Starts program, the Federal Transit Administration (FTA) identifies and recommends new fixed-guideway transit projects for funding. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) created a separate program, commonly called Small Starts, which is intended to offer a streamlined evaluation and rating process for smaller-scale transit projects. FTA subsequently introduced a separate eligibility category within the Small Starts program for ―Very Small Starts‖ projects. These are simple, low-risk projects that qualify for a simplified evaluation and rating process. SAFETEA-LU requires GAO to annually review FTA‘s New Starts process. This report presents information on (1) FTA‘s fiscal year 2008 funding recommendations, (2) the extent to which the New Starts pipeline has changed over time, and (3) future projected trends  This is an edited, excerpted and augmented edition of an United States Government Accountability Office publication GAO-07-91 7, dated July 2007.

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for the New Starts and Small Starts pipelines. To address these objectives, GAO surveyed 215 project sponsors—78 percent of which responded—and interviewed FTA officials, 15 project sponsors, and 3 industry groups.

WHAT GAO RECOMMENDS GAO recommends that FTA make several program improvements, including further streamlining the Small Starts application process. FTA officials agreed to consider GAO‘s recommendations.

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WHAT GAO FOUND For the fiscal year 2008 evaluation cycle, FTA recommended to Congress 10 New Starts and 4 Small Starts projects for funding. The administration‘s budget request of $1.40 billion is primarily allocated to New Starts projects with existing and pending full funding grant agreements. SAFETEA-LU made several changes to the New Starts evaluation and rating process, which FTA is implementing. Since the fiscal year 2001 evaluation and rating cycle, the New Starts pipeline—that is, projects in the preliminary engineering and final design phases—has changed in size and composition, responding to a variety of factors. The number of projects in the New Starts pipeline has decreased by more than one-half, and the types of projects in the pipeline have changed, with bus rapid transit replacing commuter or light rail as the most common type of project. FTA officials attributed the decrease in the number of projects to FTA‘s increased scrutiny of applications to help ensure that only the strongest projects enter the pipeline, and to FTA‘s efforts to remove projects from the pipeline that were not advancing or did not adequately address identified problems. Project sponsors that GAO interviewed cited other reasons for the pipeline‘s decrease, including the complexity, lengthiness, and cost of the New Starts process. The lengthy nature of the New Starts process is due, in part, to the rigorous and systematic evaluation and rating process established by law—which GAO has previously noted could serve as a model for other programs. Other reasons cited by project sponsors for the decrease in the pipeline include finding alternative sources of funding or opting not to apply because they realize their projects are unlikely to receive funding. FTA is considering different ideas on how to improve the New Starts process, some of which may address the concerns identified by project sponsors. Despite these concerns, GAO‘s survey of project sponsors indicated future demand for New Starts funding. Project sponsors reported having 141 planned New Starts, Small Starts, and Very Small Starts projects and will likely seek New Starts funding for almost threefourths of these projects. Of these planned projects, project sponsors indicated that they intend to seek New Starts funding for 57 New Starts projects, 30 Small Starts projects, and 14 Very Small Starts projects. Project sponsors GAO surveyed also reported considering a range of alternative project types in their planning. Although project sponsors expressed appreciation for the creation of the Small Starts program, noting it filled a funding gap, they said the Small Starts application process is not tailored to the Small Starts program and is

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time-consuming, costly, and duplicative. GAO also found that the application is not always tailored for Small Starts applicants and, in several instances, requests duplicative information. FTA officials acknowledged that the Small Starts application process could be further streamlined, and they are working to decrease the burden. Since the early 1970s, a significant portion of the federal government‘s share of new capital investment in mass transportation has come through the Federal Transit Administration‘s (FTA) New Starts program. Through this program, FTA identifies and recommends new fixed-guideway transit projects—including heavy, light, and commuter rail; ferry; and certain bus projects—for grants, typically through full funding grant agreements (FFGA).[1] An FFGA establishes the terms and conditions for federal funds available for the project, including the maximum amount of federal funds available. Over the last decade, the New Starts program has provided state and local agencies with over $10 billion to help design and construct transit projects throughout the country. More recently, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) created, and FTA implemented, what is commonly called the Small Starts program.[2] This program is intended to advance smaller-scale projects through an expedited and streamlined evaluation and rating process. Small Starts projects are defined as those with a need for less than $75 million in funding from this program and a total capital cost of less than $250 million.[3] FTA subsequently introduced a new eligibility category within the Small Starts program called Very Small Starts, which is for projects with a total capital cost of less than $50 million. Very Small Starts projects will qualify for an even simpler and more expedited evaluation and rating process than other Small Starts projects. In July 2006, FTA issued interim guidance on Small Starts, including Very Small Starts, to govern the administration of the program until the final rule is issued. FTA expects to issue the final rule in April 2008. Although SAFETEA-LU made a number of changes to the New Starts program, including the creation of the Small Starts program, it also maintained many program requirements imposed by previous authorizing legislation. For example, FTA must continue to prioritize projects for funding by evaluating, rating, and recommending potential projects on the basis of specific financial commitment and project justification criteria— including mobility improvements, cost-effectiveness, economic development, land use, environmental benefits, and operating efficiencies. Using these statutorily identified criteria, FTA evaluates potential projects annually and as a condition for advancement into each phase of the process, including preliminary engineering, final design, and construction. FTA refers to projects in the preliminary engineering or final design phases as the ―pipeline‖ through which successful projects advance to receive funding. FTA determines which projects to fund through an evaluation and rating process, whereby projects are evaluated on the basis of various criteria and then are assigned a ―high,‖ ―medium,‖ or ―low‖ rating. We are required to report each year on FTA‘s processes and procedures for evaluating, rating, and recommending New Starts projects for federal funding and on FTA‘s implementation of these processes and procedures.[4] This report examines (1) how many and what types of projects FTA evaluated, rated, and recommended for funding in the fiscal year 2008 evaluation and rating cycle, and the extent to which FTA has implemented SAFETEA-LU‘s changes to the New Starts evaluation and rating process; (2) the extent to which, if any, the New Starts pipeline has changed since the fiscal year 2001 evaluation and

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rating cycle, and the factors that contributed to any such trends; and (3) any projected trends for the New Starts and Small Starts pipelines and the views of project sponsors on the Small Starts program. To address these objectives, we surveyed all project sponsors that are located in urbanized areas with a population of over 200,000 and that have an annual transit ridership of over 1 million.[5] In total, we surveyed 215 project sponsors, asking them about their experience to date with the New Starts program and plans to apply for the program in the future. Of the 215 project sponsors, 168 responded to the survey—for a survey response rate of 78 percent. The survey and a more complete tabulation of the results can be viewed at www.gao.gov/cgi-bin/getrpt?GAO-07-927SP. We also interviewed 15 project sponsors, including the 10 sponsors that applied for funding for Small Starts projects, including Very Small Starts projects, for the fiscal year 2008 evaluation cycle. We selected the other 5 project sponsors that we interviewed on the basis of their agencies‘ experience with the New Starts processes, size, and location. In addition, we interviewed FTA officials and representatives from transportation industry associations. We also reviewed FTA‘s New Starts and Small Starts guidance, the Advanced Notice of Proposed Rule Making for Small Starts, and the statutory provisions that address the New Starts program. In May 2007, we reported on preliminary findings from our work.[6] We conducted our work from November 2006 through July 2007 in accordance with generally accepted government auditing standards. (See app. I for more information about our scope and methodology.)

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RESULTS IN BRIEF For the fiscal year 2008 evaluation cycle, FTA evaluated and rated 18 projects— including 14 New Starts, 1 Small Starts, and 3 Very Small Starts projects—and recommended to Congress 14 of these projects for funding. Of the 14 New Starts projects rated, 2 were rated as ―high,‖ 12 were rated as ―medium,‖ and none were rated as ―low.‖ FTA recommended 10 of the 14 New Starts projects for funding. Specifically, FTA recommended 2 New Starts projects for proposed FFGAs and 2 projects for pending FFGAs.[7] In addition, FTA identified 6 ―other‖ New Starts projects that may be eligible for funding outside of FFGAs in fiscal year 2008. FTA received 12 requests to enter project development for Small Starts and Very Small Starts projects, and evaluated and rated 4 of them. FTA rated these 4 projects as ―medium‖ and recommended them for funding. The administration‘s fiscal year 2008 budget request for the New Starts program is $1.40 billion. A majority of the requested funding is allocated to New Starts projects with existing and pending FFGAs and to those proposed for new FFGAs. SAFETEA-LU made several changes to the New Starts evaluation and rating process, including adding economic development as an evaluation criterion and changing the rating scale. FTA is in the process of addressing these SAFETEA-LU changes and expects to have them implemented by the completion of its upcoming rulemaking. The New Starts pipeline has changed in size and composition since the fiscal year 2001 evaluation and rating cycle, and a variety of factors have contributed to these changes. Since the fiscal year 2001 evaluation and rating cycle, the number of projects in the New Starts pipeline has decreased by more than one-half (from 48 to 19). The level of funding per project has grown since fiscal year 2001, from about $20 million to about $103 million on average. In addition, the types of projects in the pipeline have changed, as bus rapid transit

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projects are now more common than commuter or light rail projects, although bus rapid transit projects account for a small portion of the total cost (13 percent) for all projects in the pipeline. FTA officials and project sponsors offered different reasons for the decrease in the New Starts pipeline. FTA officials said that they had increased their scrutiny of applications to help ensure that only the strongest projects enter the pipeline. According to these officials, they took steps to remove projects from the pipeline that were not advancing or that did not adequately address identified problems—although the officials noted that most project sponsors voluntarily withdrew projects from the pipeline, rather than have FTA remove them. Project sponsors we interviewed provided other reasons for the decrease in the New Starts pipeline. In particular, they maintained that the New Starts process is complex, timeconsuming, and costly. In addition, project sponsors said they found alternative sources of funding or decided not to apply because the process is well-established and they realize their projects are unlikely to receive funding. Our survey identified similar reasons offered by project sponsors. For example, the project sponsors we surveyed with completed transit projects most often said they did not apply to the New Starts program because the process was lengthy or they wanted to move the project along faster than could be done in the New Starts process. About two-thirds of these project sponsors reported that their most recent project was eligible for the New Starts program, yet more than one-fourth of them did not apply to the program.[8] The lengthiness of the New Starts process is due, at least in part, to the rigorous and systematic evaluation and rating process established by law—which we have previously noted could serve as a model for other transportation programs. FTA has recognized that the process can be lengthy and, in 2006, commissioned a study to examine, among other issues, opportunities for accelerating and simplifying the process for implementing the New Starts program. FTA is currently reviewing the study‘s findings and recommendations. Despite these concerns, our survey of project sponsors indicated that there is likely to be a future demand for New Starts funding. The project sponsors we surveyed reported having 141 planned projects—that is, projects currently undergoing an alternatives analysis or another type of corridor-based planning study.[9] According to the project sponsors, they plan to seek New Starts funding for almost three-fourths (72 percent) of these 141 New Starts, Small Starts, or Very Small Starts projects. The project sponsors we surveyed also indicated that they were considering a range of project alternative types in their planning. The most commonly cited types were bus rapid transit and light rail. Our survey results further indicated that, through its Small Starts and Very Small Starts programs, FTA is attracting project sponsors that would not otherwise apply for the New Starts program or that have not previously applied to the New Starts program. For example, of 30 project sponsors that intend to seek New Starts funding for their planned Small Starts or Very Small Starts projects, 13 have not previously applied for New Starts funding.[10] Although project sponsors we interviewed expressed appreciation for the creation of the Small Starts program, noting that it fulfilled a funding gap, they said the Small Starts application process is not tailored to the Small Starts program and is time-consuming, costly, and duplicative. They suggested, for example, that FTA further streamline the Small Starts application process by eliminating requests for information already requested in required worksheets. We also found that the application is not always tailored for Small Starts applicants and, in several instances, requests duplicative information. FTA officials acknowledged that the Small Starts application process could be further streamlined, and they are working to decrease the burden.

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The project sponsors we interviewed, especially those that have never applied for New Starts funding, would also like more assistance from FTA on how to complete the application process. According to FTA, 8 of the 12 applications for fiscal year 2008 were incomplete or the proposed projects were ineligible. In some instances, project sponsors did not understand what constitutes an eligible project. We found that although FTA‘s Small Starts guidance outlines the elements required for a project to receive funding, such as traffic signal priority/preemption, level boarding, or branding of the proposed service, it does not explicitly identify as ineligible those projects that have already begun to incrementally incorporate certain Small Starts elements. This report contains three recommendations to the Secretary of Transportation to improve the Small Starts program. To facilitate information sharing about the program, FTA should develop a Small Starts working group and conduct training for applicants. To ensure that project sponsors better understand what types of projects are eligible for funding as Small Starts, FTA should clarify in its guidance that a project must include all of the required elements listed in the program guidance and must also be providing new service. Finally, to ensure that the Small Starts program provides a streamlined application process for applicants, FTA should continue to refine its Small Starts application process. The Department of Transportation, including FTA, reviewed a draft of this report. FTA generally agreed with the report‘s findings and conclusions, and agreed to consider our recommendations. They also provided technical clarifications, which we incorporated as appropriate.

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BACKGROUND SAFETEA-LU authorized over $45 billion for federal transit programs, including $8 billion for the New Starts program, from fiscal years 2005 through 2009. Under the New Starts program, FTA identifies and recommends fixed-guideway transit projects for funding—including heavy, light, and commuter rail; ferry; and certain bus projects (such as bus rapid transit). SAFETEA-LU also made changes to the New Starts program, including changes to its evaluation and rating process. FTA already has implemented some of these changes and has undertaken efforts to address the remaining changes. FTA generally funds New Starts projects through FFGAs, which establish the terms and conditions for federal participation in a New Starts project. FFGAs also define a project‘s scope, including the length of the system and the number of stations; its schedule, including the date when the system is expected to open for service; and its cost. For a project to obtain an FFGA, it must progress through a local or regional review of alternatives and meet a number of federal requirements, including requirements for information used in the New Starts evaluation and rating process (see figure 1). As required by federal statute, New Starts projects must emerge from a regional, multimodal transportation planning process. The first two phases of the New Starts process—systems planning and alternatives analysis—address this requirement. The systems planning phase identifies the transportation needs of a region, while the alternatives analysis phase provides information on the benefits, costs, and impacts of different options, such as rail lines or bus routes, in a specific corridor versus in a region. The alternatives analysis phase results in the selection of a locally preferred alternative, which

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is intended to be the New Starts project that FTA evaluates for funding, as required by statute. After a locally preferred alternative is selected, the project sponsor submits an application to FTA for the project to enter the preliminary engineering phase.[11] When this phase is completed and federal environmental requirements are satisfied, FTA may approve the project‘s advancement into final design,[12] after which FTA may approve the project for an FFGA and proceed to construction, as provided for in statute. FTA oversees grantees‘ management of projects from the preliminary engineering phase through the construction phase and evaluates the projects for advancement into each phase of the process. FTA also evaluates the projects annually for the New Starts report to Congress.

Alternatives Analysis

Systems Planning

Planning

Select LPA, MPO action, develop criteria, PMP

FTA decision on entry into preliminary engineering

Preliminary Engineering Complete NEPA process, refinement of financial plan Preliminary engineering

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FTA decision on entry into final design

Final design

Final Design Commitment of nonfederal funding, construction plans, ROW acquisition, before-after data collection plan, FTA evaluation for FFGA, begin negotiations

Project management oversight

FFGA

Construction

Construction

Legend Decision point

Major development stage

FFGA = full funding grant agreement FTA = Federal Transit Administration LPA = locally preferred alternative MPO = metropolitan planning organization

NEPA = National Environmental Policy Act of 1969 PMP = project management plans ROW = right-of-way

Source: FTA. Figure 1. Planning and Development Process for New Starts Projects. Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

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To help inform administration and congressional decisions about which projects should receive federal funds, FTA assigns ratings on the basis of various statutorily defined evaluation criteria—including both local financial commitment and project justification criteria—and then assigns an overall rating (see figure 2).[13] These evaluation criteria reflect a broad range of benefits and effects of the proposed project, such as cost- effectiveness, as well as the ability of the project sponsor to fund the project and finance the continued operation of its transit system. FTA assigns the proposed project a rating for each criterion and then assigns a summary rating for local financial commitment and project justification. Lastly, FTA develops an overall project rating. Projects are rated at several points during the New Starts process—as part of the evaluation for entry into the preliminary engineering and the final design phases, and yearly for inclusion in the New Starts annual report to Congress.

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Source: GAO analysis of FTA data. Note: This figure outlines the criteria FTA currently uses to evaluate New Starts projects, but the criteria are subject to change as a result of SAFETEA-LU changes that FTA has yet to make. Figure 2. Project Evaluation Criteria for New Starts Projects.

As required by statute, the administration uses the FTA evaluation and rating process, along with the phase of development of New Starts projects, to decide which projects to recommend to Congress for funding.[14] Although many projects receive a summary rating that would make them eligible for an FFGA, only a few are proposed for an FFGA in a given fiscal year. FTA proposes a project for an FFGA when it believes that the project will be able to meet the following conditions during the fiscal year for which funding is proposed:  



All nonfederal project funding must be committed and available for the project. The project must be in the final design phase and have progressed far enough for uncertainties about costs, benefits, and impacts (i.e., environmental or financial) to be minimized. The project must meet FTA‘s tests for readiness and technical capacity, which confirm that there are no remaining cost, project scope, or local financial commitment issues.

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1. For example, SAFETEA-LU added economic development to the list of evaluation criteria that FTA must use in evaluating and rating New Starts projects and required FTA to issue notice and guidance each time significant changes are made to the program. SAFETEA-LU also established the Small Starts program, a new capital investment grant program, simplifying the requirements imposed for those seeking funding for lower-cost projects, such as bus rapid transit, streetcar, and commuter rail projects. This program is intended to advance smaller-scale projects through an expedited and streamlined evaluation and rating process. Small Starts projects require less than $75 million in federal funding and have a total cost of less than $250 million. According to FTA‘s guidance, Small Starts projects must also (1) meet the definition of a fixed guideway for at least 50 percent of the project length in the peak period [15] or (2) be a corridor-based bus project with the following minimum elements:  

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  

substantial transit stations; traffic signal priority/preemption, to the extent, if any, that there are traffic signals on the corridor; low-floor vehicles or level boarding; branding of the proposed service; and 10-minute peak/15-minute off-peak running times (i.e., headways) or better while operating at least 14 hours per weekday.

FTA has also subsequently introduced a separate eligibility category within the Small Starts program for ―Very Small Starts‖ projects. Small Starts projects that qualify as Very Small Starts are simple, low-cost projects that FTA has determined qualify for a simplified evaluation and rating process. These projects must meet the same eligibility requirements as Small Starts projects and be located in corridors with more than 3,000 existing riders per average weekday who will benefit from the proposed project. In addition, the projects must have a total capital cost of less than $50 million (for all project elements) and a per-mile cost of less than $3 million, excluding rolling stock (e.g., train cars). FTA evaluates Small Starts and Very Small Starts projects using various financial and project justification criteria, including cost-effectiveness and land use. For Small Starts and Very Small Starts, SAFETEA-LU condensed the New Starts processes used for large projects. Preliminary engineering and final design are combined into one phase, referred to as ―project development.‖ FTA may recommend proposed Small Starts and Very Small Starts for funding after such projects have been approved to enter into project development, are ―ready‖ to implement their proposed project, and continue to be rated at least ―medium‖ for both project justification and local financial commitment. FTA intends to provide funding for Small Starts and Very Small Starts projects through project construction grant agreements (PCGA), which are similar to FFGAs (see figure 3).

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Source: FTA. Note: The National Environmental Policy Act of 1969, Pub. L. No. 91-190, codified at 42 U.S.C. chapter 55, requires detailed statements assessing the environmental impact of and alternatives to major federal actions significantly affecting the environment, including grants funding fixedguideway projects. Figure 3. Planning and Development Process for Small Starts and Very Small Starts Projects .

FTA RECOMMENDED 14 PROJECTS FOR FISCAL YEAR 2008 FUNDING; SAFETEA-LU CHANGES TO EVALUATION AND RATING PROCESS REMAIN FTA evaluated and rated 18 New Starts, Small Starts, and Very Small Starts projects for funding during the fiscal year 2008 evaluation cycle. Of the 14 New Starts projects that FTA

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evaluated and rated, FTA recommended to Congress funding for 10 projects, including 2 new projects, 2 pending projects, and 6 ―other‖ projects. FTA also evaluated and rated 4 Small Starts and Very Small Starts applications, and recommended all of these projects for funding. The fiscal year 2008 President‘s budget requests $1.40 billion in New Starts funding, including $100 million for the Small Starts program. Although SAFETEA-LU authorized $200 million each year for the Small Starts program, no funds have yet been allocated to the program, due, in part, to its newness.

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FTA EVALUATED AND RATED 14 NEW STARTS PROJECTS, AND RECOMMENDED FUNDING FOR 10 PROJECTS FTA‘s Annual Report on New Starts: Proposed Allocations of Funds for Fiscal Year 2008 (annual report) identified 19 New Starts projects in preliminary engineering and final design. FTA evaluated and rated 14 of these projects, rating 2 as ―high,‖ 12 as ―medium,‖ and none as ―low.‖[16] Five additional projects were statutorily exempt from being rated because their sponsors requested less than $25 million in federal funding. FTA recommended 10 New Starts projects for funding. Specifically, FTA recommended 2 New Starts projects for proposed FFGAs. The total capital cost of these 2 projects is estimated to be $6.30 billion, with the total federal New Starts share expected to about onethird of this total. In addition, FTA recommended funding for 2 projects with pending FFGAs. The total capital cost of these 2 projects is estimated to be $1.13 billion, and the total federal New Starts share is expected to be about one-half of the total cost. FTA also recommended reserving $72.08 million in New Starts funding for 6 ―other‖ projects. FTA selected these ―other‖ projects using the decision rules that the projects have a ―medium‖ or higher rating; have a ―medium‖ or higher cost-effectiveness rating; and is expected to advance to final design as of June 2008. According to FTA, no other project in preliminary engineering or final design met these decision rules. Similar to last year, FTA did not specify how much would be set aside for the 6 ―other‖ New Starts projects because it wanted to ensure that the projects were moving forward as anticipated before making specific funding recommendations to Congress. Reserving funds for these projects without specifying a particular amount for any given project will allow the administration to make ―real time‖ funding recommendations when Congress is making appropriations decisions. FTA does not expect that all 6 ―other‖ projects will be recommended for funding in fiscal year 2008 (see table 1).[17] Table 1. Projects Recommended for an FFGA and Other Funding, Fiscal Year 2008 Dollars in millions Project name

Location

Proposed FFGA Second Avenue Subway Phase I New York, NY University Link LRT Extension Seattle, WA Total

Total capital costs

$4,655.40 1,645.90 $6,301.30

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Table 1. (Continued) Dollars in millions New Starts share of total capital costs

Project name

Location

Total capital costs

Pending FFGA West Corridor LRT South Corridor I-205 / Portland Mall TotalLRT

Denver, CO Portland, OR

$574.20 557.40 $1,131.60

51% 60

$458.78 307.31

60% 49

275.30 169.80 232.10 2,065.00

50 50 55 44

Other project New Britain - Hartford Busway Northstar Corridor Rail

Hartford, CT Minneapolis-Big Lake, MN North Corridor BRT Houston, TX Southeast Corridor BRT Houston, TX Norfolk LRT Norfolk, VA Dulles Corridor Metrorail Project – Northern Extension to Wiehle Ave. Virginia, VA Total

$3,508.29

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Legend BRT = bus rapid transit LRT = light rail transit Source: GAO analysis of FTA data.

FTA EVALUATED AND RATED 4 SMALL STARTS AND VERY SMALL STARTS PROJECTS, AND RECOMMENDED FUNDING FOR ALL 4 PROJECTS In the fall of 2006, FTA received 12 Small Starts and Very Small Starts requests to enter project development for the fiscal year 2008 evaluation cycle.[18] A majority of these Small Starts and Very Small Starts requests to enter project development were from project sponsors in the western and southern regions of the country and all but 2 were for bus rapid transit projects. FTA determined that only 1 Small Starts project and 3 Very Small Starts projects were complete, ready, and eligible to be approved into project development. FTA subsequently proposed these projects for a PCGA. We found that the reasons for ineligible projects and incomplete applications ranged from unclear program guidance to inconsistent information provided by FTA. (See table 2 for more information on the Small Starts and Very Small Starts projects for fiscal year 2008.)

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Table 2. Small Starts and Very Small Starts Projects, Fiscal Year 2008

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Dollars in millions

SS VSS VSS VSS

New Starts share $36.99 $29.59 25.07 14.08 30.73 24.58 25.66 16.68

Project eligible Yes Yes Yes Yes

Applic ation compl Yes ete Yes

VSS VSS VSS SS VSS VSS SS SS

8.00 31.72 37.00 68.28 17.73 46.70 140.15 N/A

No No No Yes Maybe No Maybe No

Yes Yes Yes No No No No No

Project name

City

SS/VSS

Pioneer Parkway BRT Pacific Hwy So BRT Troost Corridor BRT Metro Rapid System Bus Gap Closure Project Van Nuys Corridor Rapid Bus Mountlake Terrace BRT Station Sepulveda Corridor Rapid MasonBus Transportation Corridor (BRT) Mountain Links BRT

Springfield, OR King County, WA Kansas City, MO Los Angeles, CA

Los Angeles, CA Seattle, WA Los Angeles, CA Fort Collins, CO Flagstaff, AZ Bus/Gondola Station Breckenridge, CO North-South T-Way BRT Sarasota, FL Las Colinas APT Irving, TX Connector Legend

Cost

6.84 9.92 31.60 54.62 13.76 37.36 N/A N/A

Yes Yes

APT = area personal transit BRT = bus rapid transit SS = Small Starts project that does not qualify as a Very Small Starts project VSS = Very Small Starts project Source: GAO analysis of FTA data. Note: The numbers included in this table are what was recommended by FTA in the New Starts annual report but the actual total capital cost and percent of New Starts share is subject to change at the time FTA executes the FFGA.

FTA evaluated and rated the 4 Small Starts and Very Small Starts projects that were eligible and had complete applications. All 4 of these projects received a ―medium‖ rating. FTA approved the 4 Small Starts and Very Small Starts projects for advancement into the project development phase on the basis of its review, evaluation, and rating of their applications. The total capital cost of these projects is estimated to be $118.4 million, and the total Small Starts, including Very Small Starts, share is expected to be $84.9 million. FTA has also recommended that $48.2 million be allocated for ―other‖ Small Starts projects that were not ready for advancement into project development at the time applications were due, but that may be ready for advancement later in fiscal year 2008.

THE ADMINISTRATION’S FISCAL YEAR 2008 BUDGET PROPOSAL REQUESTS $1.40 BILLION FOR THE NEW STARTS PROGRAM The administration‘s fiscal year 2008 budget proposal requests that $1.40 billion be made available for the New Starts program. This amount is $166 million less than the program‘s

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fiscal year 2007 appropriation. Figure 4 illustrates the planned uses of the administration‘s proposed fiscal year 2008 budget for New Starts, including the following:    

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

$863.74 million would be shared among the 11 New Starts projects with existing FFGAs, $120 million would be shared between the 2 New Starts projects with pending FFGAs, $210 million would be shared between the 2 New Starts projects proposed for new FFGAs, $72.08 million would be shared by as many as 6 ―other‖ New Starts projects to continue their development, and $100 million would be used for new

Source: GAO analysis of FTA data. Notes: FTA is authorized to use up to 1 percent of amounts made available for the New Starts program for project management oversight activities. Federal statute requires that specified amounts of New Starts funds be set aside annually for projects in Alaska and Hawaii; new fixed-guideway systems; and extensions to existing systems that are ferryboats, ferryboat terminals, or approaches to ferryboat terminals.

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FTA is authorized to provide $5 million for each fiscal year from 2006 through 2009 for the Denali Commission, which provides critical utilities, infrastructure, and economic support throughout Alaska, particularly in remote communities. Figure 4. Planned Uses of the Administration‘s Proposed Fiscal Year 2008 Funding for the Capital Investment Grants Program.

Although SAFETEA-LU authorized $200 million for the Small Starts program each year from fiscal years 2006 through 2009, no funding for the program has been allocated to date. For fiscal year 2007, the administration‘s budget proposal requested $100 million for the Small Starts program. Of the $1.57 billion allocated to the New Starts program for fiscal year 2007, no funding was appropriated for Small Starts projects. The administration‘s budget proposal for fiscal year 2008 also requests $100 million for the Small Starts program. FTA officials told us that they requested less than the authorized amounts for the Small Starts program for both fiscal years 2007 and 2008 because it has taken time for them to establish the program, and because they did not receive as many Small Starts applications as expected.

FTA IS IMPLEMENTING SEVERAL CHANGES TO THE NEW STARTS EVALUATION AND RATING PROCESS

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SAFETEA-LU requires FTA to make several changes to the New Starts evaluation and rating process, including adding economic development as an evaluation criterion and changing the rating scale. FTA is in the process of implementing these changes. For example, table 3 describes the act‘s changes to the evaluation and rating process and the status of their implementation, as of July 2007. Table 3. Implementation of SAFETEA-LU Changes to the New Starts Evaluation and Rating Process, as of July 2007 SAFETEA-LU provision Revise New Starts overall project-rating scale

Description The overall project rating is based on a 5point scale of ―high,‖ ―medium-high,‖ ―medium,‖ ―mediumlow,‖and ―low.‖ Projects are required to receive an overall rating of ―medium‖ or higher to be recommended for funding.

Status of implementation FTA used a 3-point projectrating scale for the fiscal years 2007 and 2008 evaluation and rating cycles, but changed ratings to ―high,‖ ―medium,‖ and ―low.‖ FTA‘s February 2007 policy guidance proposed implementing the 5-point scale starting in May 2007.

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Table 3. – Continued SAFETEA-LU provision Identify reliability of cost estimate and ridership forecast as considerations in evaluation process

Add economic development criterion to evaluation process

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Identify land use as a specific evaluation criterion

Description The Secretary of Transportation is required to analyze, evaluate, and consider the reliability of the forecasting methods used by New Starts project sponsors and their contractors to estimate costs and ridership. Projects will be evaluated on the basis of a review of their effects on local economic development.

Projects will be evaluated on the basis of a review of their public transportation supportive land-use policies and future patterns.

Status of implementation FTA‘s January 2006 policy guidance for New Starts and advanced notice of proposed rulemaking for Small Starts proposed an approach for incorporating reliability into project evaluations.

FTA considers economic development as an unweighted ―other factor‖ criterion in the evaluation process. FTA has sought comments from various parties on the appropriate measures for economic development. FTA considers land use as a weighted criterion in the evaluation process.

Remaining action(s) Rulemaking needed to establish requirement.

Rulemaking needed to solicitcomments on and finalize measures for economic development.

None.

Source: GAO analysis of FTA data.

Although FTA has taken steps to implement changes required by SAFETEA-LU, the project sponsors we interviewed frequently expressed concern that FTA has not yet fully incorporated economic development into its evaluation. Specifically, FTA currently assigns a weight of 50 percent each to cost-effectiveness and land use to calculate a project‘s overall rating. The other four statutorily defined criteria, including economic development, mobility improvements, operating efficiencies, and environmental benefits, are not weighted. As described in table 3, to reflect SAFETEA-LU‘s increased emphasis on economic development, FTA has encouraged project sponsors to submit information that they believe demonstrates the impact of their proposed transit investments on economic development. According to FTA, this information is considered as an ―other factor‖ in the evaluation process, but is not weighted. However, FTA officials told us that few project sponsors submit information on their projects‘ economic development benefits for consideration as an ―other factor.‖ We previously reported that FTA‘s reliance on two evaluation criteria to calculate a project‘s overall rating is drifting away from the multiple-measure evaluation and rating

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process outlined in statute and current New Starts regulations.[19] Thus, we recommended that FTA (1) improve the measures used to evaluate New Starts projects so that all of the statutorily defined criteria can be used in determining a project‘s overall rating or (2) provide a crosswalk in the regulations showing clear linkages between the criteria outlined in the statute and the criteria and measures used in the evaluation and rating process in the upcoming rulemaking process. Many of the project sponsors and all of the industry groups we interviewed also stated that they believe certain types of projects are penalized in the evaluation and rating process because of the weights assigned to the different evaluation criteria. Specifically, the project sponsors and industry groups said that by not weighting economic development, the evaluation and rating process does not consider an important benefit of some transit projects. They also expressed concern that the measure FTA uses to determine cost-effectiveness does not adequately capture the benefits of certain types of fixed-guideway projects—such as streetcars—that have shorter systems and provide enhanced access to a dense urban core, rather than transport commuters from longer distances (e.g., light or heavy rail). Project sponsors and an industry group we interviewed further noted that FTA‘s cost-effectiveness measure has influenced some project sponsors to change their project designs from more traditional fixed-guideway systems (e.g., light rail or streetcars) to bus rapid transit, expressly to receive a more favorable cost- effectiveness rating from FTA. According to FTA officials, they understand the importance of economic development to the transit community and the concerns raised by project sponsors, and said they are currently working to develop an appropriate economic development measure. FTA is currently soliciting input from industry groups on how to measure economic development, studying possible options, and planning to describe how it will incorporate economic development into the project justification criteria in its upcoming rulemaking. FTA officials also stated that incorporating economic development into the evaluation process before issuing a regulation could potentially create significant uncertainty about the evaluation and rating process for project sponsors. Furthermore, they agreed with our previous recommendation that this issue should be addressed as part of their upcoming rulemaking, which they expect to be completed in April 2008. As part of its upcoming rulemaking, FTA will also conduct several outreach efforts with project sponsors and industry groups. FTA officials noted that they have had difficulty developing an economic development measure that both accurately measures benefits and distinguishes competing projects. For example, FTA officials said that separating economic development benefits from land-use benefits— another New Starts evaluation criterion—is difficult. In addition, these officials noted that many economic development benefits result from direct benefits (e.g., travel time savings). Therefore, including economic development benefits in the evaluation could lead to double-counting the benefits FTA already measures and uses to evaluate projects. Furthermore, FTA officials noted that some economic development impacts may represent transfers between regions, rather than a net benefit for the nation, thereby raising questions about the usefulness of these benefits for a national comparison of projects.[20] We have also reported on many of the same challenges of measuring and forecasting indirect benefits, such as economic development and land-use impacts.[21] For example, we noted that certain benefits are often double-counted when transportation projects are evaluated. We also noted that indirect benefits, such as economic development, may be more correctly considered transfers of direct user benefits or of economic activity from one area to another.

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Therefore, estimating and adding such indirect benefits to direct benefits could constitute double-counting and lead to overestimating a project‘s benefits. Despite these challenges, we have previously reported that it is important to consider economic development and land-use impacts, since they often drive local transportation investment choices.[22]

CHANGES IN THE SIZE AND COMPOSITION OF THE NEW STARTS PIPELINE ARE LIKELY DUE TO DIFFERENT FACTORS The number of projects in the New Starts pipeline has decreased since the fiscal year 2001 evaluation and rating cycle, and the types of projects in the pipeline have changed. FTA and project sponsors attributed these changes to different factors, with FTA officials citing their increased scrutiny of applications and projects, and the project sponsors pointing to the complex, time-consuming, and costly nature of the New Starts process. FTA is considering different ideas on how to improve the New Starts process, some of which may address the concerns identified by project sponsors.

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THE NUMBER OF PROJECTS IN THE NEW STARTS PIPELINE HAS DECREASED, AND THE TYPES OF AND FUNDING FOR PROJECTS HAVE CHANGED Since the fiscal year 2001 evaluation cycle, the number of projects in the New Starts pipeline—which includes projects that are in the preliminary engineering or final design phases—has decreased by more than one-half, from 48 projects in the fiscal year 2001 evaluation cycle to 19 projects in the fiscal year 2008 evaluation cycle. Similarly, the number of projects FTA has evaluated, rated, and recommended for New Starts FFGAs has decreased since the fiscal year 2001 evaluation and rating cycle. Specifically, as shown in table 4, the number of projects that FTA evaluated and rated decreased by about two-thirds, from 41 projects to 14 projects. Table 4. Number of Projects in the Pipeline, and Evaluated and Rated, by Fiscal Year Fiscal year 2001 2002 2003 2004 2005 2006 2007 2008

Number of projects in the pipelinea 48 40 43 52 37 30 22 19

Number of projectsevaluated and ratedb 41 26 25 27 23 18 18 14

Source: GAO analysis of FTA data.

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aData include projects that were evaluated and rated for the fiscal year evaluation cycle as well as ―exempt‖ projects. bData include projects in final design and preliminary engineering, both recommended and not recommended, but do not include ―exempt‖ projects and those categorized by FTA as ―not rated.‖

Although the number of projects in the New Starts pipeline has decreased, the amount of funding FTA has requested for the program remained relatively the same, while the average dollar amount per FFGA has increased since fiscal year 2001. Adjusted to current dollars, FTA has requested nearly the same funding amounts for the program during this time frame, having requested $1.22 billion in fiscal year 2001 and $1.37 billion in fiscal year 2008. Twelve projects were recommended for FFGAs in fiscal year 2001, while only 2 were recommended for fiscal year 2008. However, in the fiscal years between 2001 and 2008, the number of projects recommended for FFGAs varied from as many as 5 to as few as 2 for any given fiscal year. Furthermore, we found that the average dollar amount requested for proposed FFGAs has increased since fiscal year 2001. When adjusted to current dollars, the average dollar amount of an FFGA proposed in fiscal year 2001 was about $20 million, but for fiscal year 2008 it was $103 million (see table 5).[23] Table 5. Total Dollar Amounts and Numbers of New Starts FFGAs, by Fiscal Year Amounts in 2007 dollars

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Fiscal year 2001 2002 2003 2004 2005 2006 2007 2008

Total number of proposed FFGAs 12 5 2 4 5 4 5 2

Average dollar amount requested per proposed FFGAa $20,338,288 19,052,155 30,568,123 63,658,035 62,039,958 150,450,331 60,520,000 103,042,198

Source: GAO analysis of FTA data. aThese dollar values are only for the year in which the project was proposed for an FFGA. Dollar values were adjusted for inflation, using the gross domestic product (chained) price index, with fiscal year 2007 as the reference year. Dollar values through fiscal year 2006 were calculated using averages of quarterly indexes from the U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Business, and National Income and Product Accounts, table 1.1.4 as of January 31, 2007. Dollar values for fiscal years 2007 and 2008 are from Congressional Budget Office projections, The Budget and Economic Outlook (Washington, D.C.: January 2007), 136137.

The composition of the pipeline—that is, the types of projects in the pipeline—has also changed since the fiscal year 2001 evaluation cycle. During fiscal years 2001 through 2007, light rail and commuter rail were the more prevalent modes for projects in the pipeline. In fiscal year 2008, bus rapid transit became the most common transit mode for projects in the New Starts pipeline (see figure 5). The increase in bus rapid transit projects is likely due to a

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number of factors, including foreign countries‘ positive experiences with this type of transit system. To be eligible, a corridor-based bus project must (1) operate in a separate right-ofway dedicated for public transit use for a substantial portion of the project or (2) represent a substantial investment in a defined corridor. Furthermore, medium and smaller project sponsors may be expressing more interest in the New Starts program, including Small Starts, because bus rapid transit may serve as a more affordable and cost-effective alternative to other fixed-guideway options.

Source: GAO. Figure 5. Types of Projects in the New Starts Pipeline, by Fiscal Year.

Although bus rapid transit projects are now more common than commuter or light rail projects, they represent a small amount of the total cost for all projects in the pipeline. We found that bus rapid transit accounts for about 12 percent of the total cost of all projects in the New Starts pipeline, while commuter rail (36 percent), heavy rail (30 percent), and light rail (22 percent) account for greater shares—which is not surprising, given that bus rapid transit projects are often less expensive than rail projects. However, although bus rapid transit projects account for a smaller share of the total costs, we found that project sponsors seek higher funding shares for these projects. In fiscal year 2008, project sponsors sought, on average, New Starts funding to cover about 58 percent of the total cost of bus rapid transit projects, whereas they sought about 49 percent for commuter rail projects, about 50 percent for light rail projects, and about 38 percent for heavy rail projects.

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FTA AND PROJECT SPONSORS ATTRIBUTED THE DECREASE IN THE NEW STARTS PIPELINE TO DIFFERENT FACTORS FTA and project sponsors identified different factors for the decrease in the New Starts pipeline. FTA officials cited their increased scrutiny of applications to help ensure that only the strongest projects enter the pipeline, and said they had taken steps to remove projects from the pipeline that were inactive, not advancing, or did not adequately address identified problems. According to FTA officials, these projects consume FTA oversight resources and congressional funding without demonstrating evidence of progress. FTA officials said they believed projects had been progressing slowly through the pipeline in recent years and, therefore, needed encouragement to move forward or be removed from the pipeline. Along these lines, since fiscal year 2004, FTA has issued warnings to project sponsors that alert them to specific project deficiencies that must be corrected by a specified date for the project to advance through the pipeline. If the deficiency is not corrected, FTA removes the project from the pipeline. To date, FTA has issued warnings for 13 projects. Three projects have only recently received a warning and their status is to be determined; 3 projects have adequately addressed the deficiency identified by FTA; 1 project was removed by FTA for failing to address the identified deficiency; and 6 projects were withdrawn from the pipeline by the project sponsors. FTA officials told us that project sponsors are generally aware of FTA‘s efforts to better manage projects in the pipeline. Although FTA has taken steps to remove inactive or stalled projects from the pipeline, FTA officials noted that most projects have been withdrawn by their project sponsors, not FTA. According to FTA data, 23 projects were withdrawn from the New Starts pipeline between calendar years 2001 and 2007. Of these, 16 projects were withdrawn from the pipeline at the request of project sponsors; 6 were removed from the pipeline in response to efforts initiated by FTA; and 1 was removed from the pipeline at congressional direction.[24] Of the 16 projects that were withdrawn by project sponsors, the most common reasons were that the project was either reconfigured (the project scope or design was significantly changed) or reconsidered, or that the local financial commitment was not demonstrated. Similarly, FTA initiated the removal of 4 of 6 projects for lack of local financial commitments, often demonstrated by a failed referendum at the local level. Of the 23 projects withdrawn from the New Starts pipeline, 3 were expected to reenter the pipeline at a later date. The project sponsors we interviewed provided other reasons for the decrease in the number of projects in the New Starts pipeline. The most common reasons cited by project sponsors were that the New Starts process is too complex, costly, and time-consuming: 

Complexity and cost of the New Starts process: The majority of project sponsors we interviewed told us that the complexity of the requirements— including those for financial commitment projections and travel forecasts, which require extensive analysis and economic modeling—creates disincentives to entering the New Starts pipeline. Sponsors also told us that the expense involved in fulfilling the application requirements, including the costs of hiring additional staff and private grant consultants, discourages some project sponsors with fewer resources from applying for New Starts funding. Furthermore, concerns about the cost of applying to the New

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Starts program come at a time when project sponsors expect to receive less funding for their projects from the program. Specifically, for recently completed transit projects that received an FFGA, the project sponsors we surveyed reported that, on average, the federal government funded approximately 60 percent of the total project costs via the New Starts program. For ongoing projects, sponsors reported that they expect to receive an average of about 50 percent of the total project costs from the New Starts program. Time required to complete the New Starts process: More than one-half of the project sponsors we interviewed said that the application process is time-consuming or leads to project delays, although sponsors could not provide specifics on how long various components of the process contributed to a specific delay. One project sponsor told us that constructing a project with New Starts funding (as opposed to without such funding) delays the timeline for the project by as much as several years, which in turn leads to increased project costs since inflation and expenses from labor and materials increase with the delay. The lengthy nature of the New Starts process is due, at least in part, to the rigorous and systematic evaluation and rating process established by law—which, as we have previously noted, could serve as a model for other transportation programs. In addition, FTA officials noted that most project delays are caused by the project sponsor, not FTA. These delays are attributable to the sponsor‘s inability to obtain local funding commitments, local decisions to significantly modify the project‘s scope or alignment, or unanticipated environmental impacts. Other reasons for the decrease in the pipeline that were cited by the project sponsors we interviewed include that the project sponsors are finding alternative sources of funding, such as other federal funds or state, local, or private funding. One project sponsor remarked that sponsors try to avoid the New Starts process by obtaining a congressional designation, so that they can skip the New Starts application process and construct their project more quickly. In addition, three other project sponsors said that since the New Starts process is wellestablished and outcomes are predictable, potential project sponsors do not even apply to enter the pipeline because they realize their projects will not fare well against the New Starts criteria and, thus, are unlikely to receive New Starts funding. Our survey found similar reasons that project sponsors provided for the decline in the New Starts pipeline. Among the project sponsors we surveyed with completed transit projects, the most common reasons given for not applying to the New Starts program were that the process is lengthy or that the sponsor wanted to move the project along faster than could be done in the New Starts process. About two-thirds of these project sponsors reported that their most recent project was eligible for New Starts funding, yet more than one-fourth of them did not apply to the program.[25] Instead, these project sponsors reported using other federal funding and state, local, and private funding—with other federal and local funding the most commonly used and private funding the least commonly used—to fund their most recently completed project. In addition, we found that almost two-thirds of the large project sponsors we surveyed applied to the New Starts program for their most recently completed project, while only about one-third of medium and smaller project sponsors applied.[26] Other reasons these project sponsors cited for not applying to the program include sufficient funding from other sources to complete the project, concern about jeopardizing other projects in the pipeline, time and resources needed to complete application each year are too great, and

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difficulty in understanding and completing the process and in understanding the program‘s eligibility requirements. FTA is considering and implementing different means of improving the New Starts process—many of which would address the concerns identified by project sponsors. For example, FTA has recognized that the process can be lengthy, and in 2006 FTA commissioned a study to examine, among other issues, opportunities for accelerating and simplifying its implementation of the New Starts program. According to FTA officials, one of the study‘s recommendations was to use project development agreements to solidify New Starts project schedules and improve FTA‘s timeline for reviews. FTA officials told us that they are pursuing this recommendation, and have already implemented project schedules for three New Starts projects in the pipeline. Other key recommendations for FTA contained in the study include developing a simple ―road map‖ that concisely identifies requirements for navigating through preliminary engineering and final design, more clearly defining entry criteria for each phase of the process, simplifying the travel forecasting modeling, and clarifying and consistently implementing the New Starts technical guidance and policies. The FTA Administrator has publicly stated that FTA will continue to look for ways to further improve the program. In June 2007, FTA issued in the Federal Register a number of changes to the New Starts and Small Starts processes, including streamlining through the elimination of a number of reporting requirements. For example, FTA will no longer require project sponsors to submit information on operating efficiencies and environmental benefits, nor will they be required to submit information for evaluation for FTA‘s annual report if their project is not likely to be ready for a funding recommendation. In addition, the resubmission of information on land-use patterns for the annual report will now be optional for project sponsors. Other changes to the processes include expanding the evaluation criteria to a five-tiered rating scale, and considering a project‘s innovative contractual agreements in the evaluation and rating of the operating finance plan for projects. The guidance also states that under the evaluation of ―other factors,‖ if a project is a principal element of a congestion management strategy, this could increase a project‘s overall rating. Projects could also increase their overall rating by reporting economic development; therefore, FTA encourages project sponsors to submit such information.

FUTURE DEMAND FOR NEW STARTS PROGRAM EXPECTED; PROJECT SPONSORS SEEK SMALL STARTS PROGRAM IMPROVEMENTS Our survey and interviews of project sponsors indicated that there will likely be a future demand for New Starts funding. Survey respondents told us that they plan to seek New Starts funding for 101 of 141 future planned New Starts, Small Starts, and Very Small Starts transit projects. While FTA has taken steps to streamline the Small Starts program as envisioned by SAFETEA-LU, project sponsors find the application process to be time- consuming and too costly to complete. In addition, project sponsors we interviewed, especially those that have never applied for New Starts funding, find the Small Starts interim guidance difficult to

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understand and would like more assistance from FTA on how to complete the application process.

PROJECT SPONSORS INDICATED THAT FUTURE DEMAND FOR NEW STARTS FUNDING IS LIKELY

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Our survey of project sponsors indicated that there is likely to be a future demand for New Starts funding. About 46 percent (77 of 168) of the project sponsors we surveyed reported that they had a total of 141 planned transit projects, which we defined as projects currently undergoing an alternatives analysis or other corridor-based planning study. According to the project sponsors, they will likely seek New Starts funding for almost threefourths (72 percent, or 101) of these 141 planned New Starts, Small Starts, and Very Small Starts projects. More specifically, they will likely seek New Starts funding for 57 of the planned New Starts projects, 30 of the planned Small Starts projects, and 14 of the planned Very Small Starts projects (see fig. 6).[27] Although the project sponsors we surveyed indicated that they were considering a range of alternative project types in their planning, the most commonly cited alternatives were bus rapid transit and light rail.

Source: GAO. Note: ―Other‖ refers to the project sponsors we surveyed that selected ―None of the above‖ in response to the type of federal funding, if any, they are likely to request for their planned project(s). Figure 6. Project Sponsors‘ Expected Use of New Starts Funding for Planned New Starts, Small Starts, and Very Small Starts Projects.

All of the Small Starts and Very Small Starts project sponsors we interviewed viewed the new Small Starts program favorably. These project sponsors told us that they appreciated the emphasis FTA has placed on smaller transit projects through its new programs and the steps FTA has taken to streamline the application process for the programs. The project sponsors

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also told us that the Small Starts program, including the Very Small Starts eligibility category, address a critical and unmet funding need, and that they believe their projects will be more competitive under these programs because they are vying for funding with projects and agencies of similar size. FTA officials told us that they have been responsive in providing assistance on the program when contacted. Our survey results also indicated that, through its Small Starts program, FTA is attracting more project sponsors than before, including those that have not previously applied for the New Starts program and also those that would not otherwise be applying for New Starts funds. For example, of the 30 project sponsors that intend to seek New Starts funding for their planned Small Starts and Very Small Starts proj ects,[28] 13 have not previously applied for New Starts funding.[29] Project sponsors also indicated that the Small Starts program, including the eligibility category for Very Small Starts projects, has influenced how they plan for their ongoing projects, which are projects that have completed the alternatives analysis phase and have moved forward into the later stages of development, such as preliminary engineering or final design. Of the ongoing Small Starts and Very Small Starts projects for which respondents indicated they would be requesting New Starts funding, project sponsors definitively reported that they would have sought New Starts funding for only about onequarter of those ongoing projects if the Small Starts program, including the eligibility category for Very Small Starts projects, had not been established.

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PROJECT SPONSORS WOULD LIKE FTA TO FURTHER STREAMLINE THE SMALL STARTS PROGRAM In implementing the Small Starts program, FTA has taken steps to streamline the application and evaluation and rating processes for smaller- scale transit projects, as envisioned by SAFETEA-LU. According to our analysis of the numbers and types of requirements for the New Starts and Small Starts application processes, the Small Starts process has fewer requirements. For example, in the categories of travel forecasting, project justification, and local financial commitment, the number of requirements was reduced. FTA also established a simplified financial evaluation process for Small Starts, which reduced the reporting burden for qualified projects. In addition, FTA allows simplified methods for travel forecasts that predict transportation benefits, and it reduced the number of requirements for the Small Starts application process. For example, the Small Starts application process is about one-quarter fewer requirements than those for the New Starts program. FTA also established the Very Small Starts process, which has even fewer application requirements than the Small Starts program. This process expedites the reporting, evaluation, and advancement of simple and inexpensive projects. FTA‘s steps have greatly reduced the amount of information to be submitted for each of the specific requirements (see table 6).

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Table 6. New Starts, Small Starts, and Very Small Starts Application Requirements

Category of reporting requirements Project background and maps Travel forecasts Costs (operations, maintenance, and capital) Project justification criteria Local financial commitment Certification of technical methods and planning assumptions Make-the-case document Total

Number of reporting requirements, by project type Very Small New Starts Small Starts Starts 3 7

3 7a

4 0

7

5

5

12 4

6a 3a

1a

1

1

0

1 35

1 26

1 14

3

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Source: GAO analysis of the New Starts, Small Starts, and Very Small Starts application requirements. aData indicate that in this category, whether the number of requirements has remained the same or decreased, FTA has greatly reduced the amount of information to be submitted for each specific requirement. For example, in the travel forecast category, both the New Starts and Small Starts programs have seven application requirements, but the Small Starts program requires substantially less information for each requirement.

Despite these efforts, many of the project sponsors we interviewed find the Small Starts application process time-consuming and too costly to complete, and would like to see FTA further streamline the process. Frequently, project sponsors said that the current Small Starts application process takes as long and costs as much to complete as the New Starts application process, even though the planned projects cost less. For example, a project sponsor that applied to the Small Starts program told us that FTA asks applicants to submit templates used in the New Starts application process that call for information not relevant for a Small Starts project, such as travel forecasts beyond the opening year, which are not required for the Small Starts program. The project sponsor suggested that FTA develop a separate set of templates for the Small Starts program that would ask only for Small Starts-related information. FTA officials told us that in these cases, they would not expect project sponsors to provide the additional information that is not required. Another project sponsor we interviewed told us that although FTA tried to streamline the process by requiring ridership projections only for the opening year of Small Starts projects, the environmental impact statement still mandates the development of multiyear ridership projections. Such extensive ridership projections take a considerable amount of work, staff time, and funding to produce. FTA officials explained to us that the level of ridership projections required is dependent on the nature of the project. Several other project sponsors that applied to the Small Starts program, including sponsors that used the Very Small Starts process, expressed additional concerns about having to provide duplicate information, such as project finance and capital cost data that can be found in other required worksheets. FTA officials do not believe that such duplicate information is

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burdensome for project sponsors to submit. Nonetheless, smaller-sized entities that lack New Starts experience, in-house expertise, and resources may find the process burdensome. In reviewing the Small Starts application process requirements, we also found that the application is not always tailored for Small Starts applicants and, in several instances, requests duplicate information. FTA officials acknowledged that the Small Starts application process could be further streamlined and said that they are working to decrease the burden by, for example, reducing land-use reporting requirements, simplifying the rating process, and developing specific Small Starts templates. However, FTA officials noted that some requirements are statutorily defined or reflect industry-established planning principles. For example, federal statute requires that projects, even Small Starts projects, emerge from an alternatives analysis that considers various options to address the transportation problem at hand. Therefore, only certain aspects of the process can be streamlined.

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PROJECT SPONSORS SEEK ADDITIONAL APPLICATION ASSISTANCE AND CONSISTENT INFORMATION FROM FTA ON SMALL STARTS The project sponsors we interviewed, especially those that have never applied for New Starts funding, would like more assistance from FTA in completing the application process because some find the interim guidance difficult to understand. Before the Small Starts and Very Small Starts application deadline, FTA provided initial outreach to applicants. Despite this outreach, 8 of the 12 applications were incomplete or sought funding for ineligible projects. In some cases, the project sponsors that submitted these applications had no past experience with the New Starts process, limiting their familiarity with the information required for the application. To help address this issue, FTA officials told us that, in one instance, they provided a Very Small Starts project sponsor with a copy of a submitted application from another project sponsor (with New Starts program experience) to use as a guide. The Very Small Starts project sponsor found the application to be helpful in preparing its own application. FTA officials told us that they plan to host an informal meeting of potential Small Starts project sponsors later this calendar year. In addition, some project sponsors did not understand what constitutes an eligible project. For example, one project sponsor we interviewed submitted an application for the construction of a new station. However, FTA officials told us that the construction of a station did not meet the definition of a corridor-based project, as required. Another project sponsor we interviewed told us that it believed FTA deemed its two Small Starts and Very Small Starts projects ineligible because service was already being provided on the proposed route (and, therefore, the proposed service would not be new). In response, FTA officials told us that these projects were in fact ineligible because they already had incremental developments, including some of the elements FTA requires for Small Starts and Very Small Starts projects, such as traffic signal priority or preemption and branding of the proposed service. Yet, these project sponsors were unaware that the incorporation of some of these elements into their existing service rendered their project ineligible.[30] We found that although FTA‘s Small Starts guidance outlines the elements required for a project to receive funding, it does not explicitly state that projects that have already begun to incrementally incorporate these elements are ineligible. When we discussed this concern with FTA officials, they told us that they might consider asking project

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sponsors to demonstrate the cost- effectiveness of the preexisting elements to allow for such projects to be eligible for Small Starts funding. The project sponsors we interviewed said they need more consistent, reliable information from FTA. We found that on several occasions, FTA headquarters and regional offices provided project sponsors with inconsistent information, which contributed to the sponsors‘ submitting applications for ineligible projects and submitting incomplete applications. For example, two project sponsors said they thought their projects were eligible after talking with FTA regional officials. However, after submitting their applications, these project sponsors learned from FTA headquarters officials that their projects were ineligible. Furthermore, one project sponsor stated that officials from a regional FTA office said there was no need to submit a separate application for the Small Starts program, since the sponsor had previously applied to the New Starts program. Rather, FTA regional officials said the project sponsor needed to submit only a few additional pieces of information. However, after the project sponsor sent this information, along with a letter to FTA requesting that the application be transferred from the New Starts program to the Small Starts program, FTA headquarters officials responded that the application was incomplete. The study of the New Starts process that FTA recently commissioned found similar inconsistencies in the information provided by officials in its regional offices and headquarters. Therefore, the study recommended that FTA develop internal standard operating procedures for New Starts staff that formalize the duties and responsibilities for each position. In addition, the study recommended implementing Web-based technology to standardize the communication and enforcement of policies across the program, and having FTA establish a formal policy for responding to every project sponsor‘s correspondence with a formal response or written notification. FTA officials told us that they understand the need to ensure consistent information, and that they are already working on developing standard operating procedures for New Starts staff, as recommended in the study.

CONCLUSION The recent decrease in the New Starts pipeline does not appear to be a reflection of diminishing interest in the program. In fact, our survey showed that there will likely be substantial demand for New Starts funding in the future if most potential project sponsors follow through on their plans for new transit projects. Rather, the decrease is likely due to a combination of factors, including FTA‘s increased scrutiny of projects, project sponsors‘ perceptions of the process as lengthy and too complex, and project sponsors‘ uncertainty given the recent changes made to the New Starts program. As FTA moves forward with the rulemaking process for New Starts and Small Starts, it will have to balance both the need to make the programs accessible to a range of project sponsors—both large and small agencies—and the need to maintain the rigor of the evaluation and rating process. Although project sponsors expressed substantial interest in both the New Starts and the Small Starts programs, they also identified a number of ways to improve the programs. In particular, project sponsors raised specific concerns about the Small Starts program. Because the Small Starts program is in its first few years of implementation, it is not surprising that it may experience growing pains. Some of the project sponsors may find their concerns about

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the program addressed as they become more familiar and comfortable with it and as a number of implementation details are finalized through the upcoming rulemaking process. However, we believe that the relatively low number of Small Starts applications received to date and the number of project sponsors submitting ineligible applications due to unclear guidance suggest that additional FTA action is warranted, including further streamlining the Small Starts program, providing additional information about the program through training and a working group, and clarifying eligibility guidance. Although FTA has taken some steps to further streamline the Small Starts program, continued refinement is needed to ensure a simplified and expedited evaluation process. FTA‘s upcoming rulemaking, including the associated outreach efforts, will provide an opportunity for FTA to continue to streamline the Small Starts program, provide additional training, and clarify guidance.

RECOMMENDATIONS FOR EXECUTIVE ACTION To improve the Small Starts program, we are recommending that the Secretary of Transportation direct the FTA Administrator to take the following three actions: 

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



To increase awareness and information sharing about the Small Starts, including Very Small Starts, application process, FTA should conduct training (in-person, Web-based, or both) for potential applicants and facilitate the development of a working group or community of practice. To ensure that project sponsors better understand the types of corridor bus projects that are eligible for Small Starts funding, FTA should clarify in its Small Starts program guidance that bus rapid transit projects cannot already include any of the required elements for eligibility, or if they do, must demonstrate the costeffectiveness of the preexisting elements. To ensure that the Small Starts program provides a streamlined application process as envisioned by SAFETEA-LU, FTA should continue to refine this process as outlined in the Small Starts program guidance. Examples of refinements include collapsing the project finance or cost worksheets to minimize the duplication of data to be submitted and providing specific guidance on how, when applicable, Small Starts applicants can conduct a simplified alternatives analysis.

APPENDIX I. SCOPE AND METHODOLOGY To address our objectives, we reviewed the Federal Transit Administration‘s (FTA) guidance on the New Starts and Small Starts programs; the Advanced Notice of Proposed Rule Making for Small Starts; and the provisions of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users and prior law that address the New Starts program. We reviewed this legislation to identify changes that have occurred in the New Starts program and to gather information on FTA‘s new Small Starts program, which we used, in part, to analyze the quantitative differences in application requirements between this program and the New Starts program. Furthermore, we reviewed the FTA‘s Annual Reports

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on New Starts for fiscal years 2001 through 2008 to determine trends in the New Starts pipeline (those projects in preliminary engineering and final design) for each year, including the number of projects evaluated, rated, and recommended for funding; the modes of projects in the pipeline; and the amount of New Starts funding requested for projects, and the total costs of proposed projects. We also interviewed FTA officials and industry associations to gain their insights on past, current, and future aspects of the programs. We interviewed FTA officials who work extensively with the New Starts and Small Starts programs to gain a better understanding of the programs. In addition, we interviewed three industry associations that represent project sponsors that participate closely in these programs: the American Public Transportation Association, the New Starts Working Group, and Reconnecting America. Furthermore, we attended an American Public Transportation Association legislative workshop to learn about the New Starts and Small Starts programs, including New Starts project planning and evaluation process, and Small Starts interim guidance and rulemaking. We also interviewed 15 project sponsors, including all 10 sponsors that applied for the Small Starts program (including Very Small Starts applicants) for the fiscal year 2008 evaluation cycle. We interviewed the project sponsors to gather information on their past experiences with the New Starts and Small Starts programs, and their potential future use of these programs. The 10 project sponsors we interviewed that applied for the fiscal year 2008 Small Starts program (including Very Small Starts applicants) included the City of Breckenridge Public Works Department (Breckenridge, Colorado); Dallas County Utility and Reclamation District (Irving, Texas); Fort Collins Transportation Department (Fort Collins, Colorado); Kansas City Area Transportation Authority (Kansas City, Missouri); King County Metro (King County, Washington); Lane Transit District (Springfield, Oregon); Los Angeles County Metropolitan Transit Authority (Los Angeles, California); Northern Arizona Intergovernmental Public Transportation Authority (Flagstaff, Arizona); Sarasota County Area Transit (Sarasota County, Florida); and Sound Transit (Seattle, Washington). In addition, we interviewed 5 other project sponsors that varied in their levels of experience with the New Starts program, size, and regional location. These 5 sponsors were the Metropolitan Transit Authority of Harris County (Houston, Texas); New Jersey Transit Corporation (Newark, New Jersey); Orange County Transit Authority (Orange County, California); St. Louis Regional Transit (St. Louis, Missouri); and TriMet (Portland, Oregon). To further address our objectives, we used a Web-based questionnaire to survey all of the project sponsors that are located in an urbanized area with a population of over 200,000 and have an annual ridership of over 1 million. These project sponsors may or may not have previously applied to the New Starts or Small Starts programs, but because of their size and ridership, they would be more likely to plan the types of transit projects that would potentially qualify for New Starts funding. Project sponsors were defined typically as transit agencies, but they may also have included city transportation offices and metropolitan planning organizations, among other entities. The questionnaire to project sponsors asked questions that allowed for a combination of open-ended and closed-ended responses. The questionnaire included questions about project sponsors‘ (1) current transit situation, (2) most recently completed transit projects, (3) current ongoing transit projects, and (4) future planned transit projects. For each question, we asked the project sponsors about the types of transit project they sponsored, how they funded or

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intended to fund transit projects in the future, and their experiences with and perceptions of the various programs. The questionnaire was designed by a GAO survey specialist in conjunction with other GAO staff knowledgeable about the grant program. We pretested the questionnaire with 5 project sponsors that had varying levels of experience in working with the New Starts program. Three project sponsors had previously applied to either the New Starts program or the Small Starts program, while 1 project sponsor had not applied to either program. In addition, the 5 project sponsors represented both larger and smaller project sponsors included in our list of the 215 largest transit agencies. The 5 project sponsors were the Fort Collins Transportation Department (Fort Collins, Colorado); Maryland Transit Administration (Baltimore, Maryland); Rockford Mass Transit District (Rockford, Illinois); TriMet (Portland, Oregon); and Washington Metropolitan Area Transit Authority (Washington, D.C.). Furthermore, we asked two industry groups (the American Public Transportation Association and the New Starts Working Group) and FTA to review the project sponsor questionnaire and provide comments. During the pretests and reviews of the questionnaire, we asked the project sponsors and industry groups whether the questions were understandable and if the information was feasible to collect. We refined each of the questions as appropriate in response to the feedback we received. To conduct the questionnaire, we posted self-administered electronic questionnaires to the World Wide Web and sent e-mail notifications to project sponsor contacts provided to us by FTA in early February 2007. We found after our first e-mail that some addresses were no longer valid, so we contacted each agency by telephone to find the appropriate contact to send the e-mail notification. We also responded to inquiries from project sponsors. Many project sponsor contacts believed they were not the right person to answer the questions. In these instances, we resent the e-mail notification to the correct contact at the project sponsor. Our goal was to find the staff member at each project sponsor who was the most knowledgeable about the New Starts program and the Small Starts program. After determining the correct contact, we e-mailed each potential respondent a unique username and password to ensure that the project sponsor would have access to the questionnaire. We asked the project sponsor contact to complete the questionnaire within 2 weeks. To encourage respondents to complete the questionnaire, we sent an e-mail message to prompt each nonrespondent every 2 weeks after the initial e-mail message for approximately 6 weeks. After 6 weeks, we called all nonrespondents at least once to encourage their participation in the questionnaire and to increase our response rate. We closed the questionnaire on May 11, 2007. In total, we surveyed 215 project sponsors and received responses from 168 of them, for a response rate of 78 percent. To view our questionnaire and the aggregated project sponsor responses, go to www.gao.gov/cgi-bin/getrpt?GAO-07-927SP. Because the questionnaire was not a sample survey, it has no sampling errors. However, the practical difficulties of conducting any survey may introduce errors, commonly referred to as ―nonsampling‖ errors. For example, difficulties in how a particular question is interpreted, in the sources of information available to the respondents, or in how the data are entered into a database or were analyzed can introduce unwanted variability into the questionnaire results. We took steps in developing the questionnaire, collecting the data, and analyzing the data to minimize these nonsampling errors. For example, as we have previously noted, our survey specialists designed the questionnaire in collaboration with GAO subject matter experts, and we pretested the draft questionnaire with the appropriate officials to ensure that the questions

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were relevant, clearly stated, and easy to comprehend. After the data were analyzed, a second, independent analyst checked all computer programs. Since this was a Web-based questionnaire, the respondents entered their answers directly into the electronic questionnaire, eliminating the need to have the data keyed into a database, thereby removing an additional potential source of error. We performed our work from November 2006 through July 2007 in accordance with generally accepted government auditing standards.

REFERENCES [1]

[2]

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[3]

[4] [5]

[6]

Fixed-guideway systems use and occupy a separate right-of-way for the exclusive use of public transportation services. These fixed-guideway systems include fixed rail, exclusive lanes for buses and other high-occupancy vehicles, and other systems. Although SAFETEA-LU did not create a separate Small Starts program, it established various requirements to be applied to projects receiving capital investment grants of less than $75 million and where the total estimated net capital cost of the project is less than $250 million. FTA consistently refers to this authority as the Small Starts program in its regulations, annual report, and guidance. Thus, for the purposes of this report, we refer to Small Starts as a program. Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, Pub. L. No. 109-59, title III, § 3011, 119 Stat. 1573 (2005), codified as positive law at 49 U.S.C. § 3509. See, in particular, 49 U.S.C. § 3509(e). Transit projects that qualify for the Small Starts program are referred to as ―Small Starts projects‖ in this report as well as in FTA‘s guidance and reports. Transit projects that do not qualify for the Small Starts program because they request more federal funding, or are larger in scope, than is permitted by 49 U.S.C. § 5309(e) are referred to as ―New Starts projects.‖ Thus, in this report, we use the term ―New Starts‖ in two contexts: (1) to identify projects that are larger in scope than is permitted by 49 U.S.C. § 5309(e) and (2) as a reference to the entire capital investment grants program that is subject to 49 U.S.C. § 5309(d) or (e). As used in this report, ―New Starts projects‖ refer to projects that do not qualify as Small Starts, while ―New Starts program,‖ ―New Starts funding,‖ and ―New Starts pipeline‖ refer generally to the capital investment grants program. 49 U.S.C. § 5309(k)(2). Project sponsors that we surveyed may or may not have previously applied to the New Starts program, but because of their size and ridership, these sponsors would be more likely to plan the types of transit projects that would potentially qualify for New Starts funding. Project sponsors are typically transit agencies, but they may also include city transportation offices and metropolitan planning organizations, among other entities. In this report, project sponsors are current sponsors of transit projects as well as past or potential sponsors of such projects. GAO, Preliminary Analysis of Changes to and Trends in FTA‘s New Starts and Small Starts Programs, GAO-07-812T (Washington, D.C.: May 10, 2007).

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[8]

[9]

[10]

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[11]

[12]

[13]

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[15] [16] [17]

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7Projects with pending FFGAs were previously recommended for FFGAs by FTA; however, FFGAs have not been executed. FTA expects to execute both pending FFGAs by the end of fiscal year 2007. Of the 54 project sponsors with a completed transit project, 35 reported that their most recently completed project was eligible for New Starts funding. Of those 35 sponsors, 10 did not apply to the program. An alternatives analysis (also known as a major investment study or a multimodal corridor analysis) is conducted to evaluate a range of transportation alternatives (including the appropriate modal and alignment options) developed to address transportation problems and mobility needs in a given corridor. The alternatives analysis is intended to provide information to local officials on the benefits, costs, and impacts of alternative transportation investments developed to address the purpose and need for an improvement in the corridor. Thirty project sponsors that responded to our survey intend to seek New Starts funding for their planned Small Starts or Very Small Starts projects. However, 2 of those sponsors did not answer whether they had previously applied for any New Starts funding. During the preliminary engineering phase, project sponsors refine the design of the proposal, taking into consideration all reasonable design alternatives and estimating their costs, benefits, and impacts (e.g., financial or environmental). According to FTA officials, to gain approval for entry into preliminary engineering, a project must (1) be identified through the alternatives analysis process, (2) be included in the region‘s longterm transportation plan, (3) meet the statutorily defined project justification and financial criteria, and (4) demonstrate that the sponsors have the technical capability to manage the project during the preliminary engineering phase. Some federal New Starts funding is available to projects for preliminary engineering activities, if so appropriated by Congress. Final design is the last phase of project development before construction and may include right-of-way acquisition, utility relocation, and the preparation of final construction plans and cost estimates. The exceptions to the evaluation process are statutorily ―exempt‖ projects, which are those projects with requests for less than $25 million in New Starts funding. Sponsors of these projects are not required to submit project justification information (although FTA encourages the sponsors to do so). FTA does not rate these projects. As a result, the number of projects in the preliminary engineering or final design phases may be greater than the number of projects evaluated and rated by FTA. The administration‘s funding recommendations are made in the President‘s budget and are included in FTA‘s annual New Starts report to Congress, which is released each February in conjunction with the President‘s budget. The fixed-guideway portion need not be contiguous, but it should be located to result in faster and more reliable running times. In comparison, 20 projects were evaluated and rated in the fiscal year 2007 evaluation cycle, with 1 rated as ―high,‖ 17 as ―medium,‖ and 2 as ―low.‖ In its annual report, FTA stated that 3 of these ―other‖ projects are expected to be in final design by spring 2007, assuming satisfactory resolution of any outstanding issues. FTA also stated that the remaining 3 ―other‖ projects are in final design, but because of

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[18]

[19]

[20]

[21]

[22] [23]

[24]

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[25]

[26]

[27]

[28]

[29] [30]

Katherine Siggerud uncertainties related to their scopes, schedules, and/or budgets, FTA lacked confidence—at the time the administration was preparing its fiscal year 2008 budget proposal—that the projects would maintain their ―medium‖ rating and/or achieve the necessary cost-effectiveness rating to be recommended for an FFGA. Portland, Oregon, submitted an application for a Small Starts project in early 2007. The application was for a $151 million streetcar project. However, the application was submitted after FTA‘s deadline for inclusion in its fiscal year 2008 New Starts annual report. Therefore, we did not include this project in our review. GAO, Public Transportation: Opportunities Exist to Improve the Communication and Transparency of Changes Made to the New Starts Program, GAO-05-674 (Washington, D.C.: June 28, 2005). Indirect benefits, such as economic development, may represent transfers of economic activity from one area to another. While such a transfer may represent real benefits for the jurisdiction making the transportation investment, it is not a real economic benefit from a national perspective because the economic activity is simply occurring in a different location. GAO, Highway and Transit Investments: Options for Improving Information on Projects‘ Benefits and Costs and Increasing Accountability for Results, GAO-05-172 (Washington, D.C.: Jan. 24, 2005). GAO-05-172. FTA officials told us that although the dollars per project have increased over time, the share or percentage of New Starts funding per project has decreased. We did not verify this information. The 16 projects withdrawn by their sponsors and the 6 projects withdrawn by FTA include the 7 projects that received a warning and were subsequently withdrawn from the pipeline by the project sponsors or FTA. Of the 54 project sponsors with a completed transit project, 35 reported that their most recently completed project was eligible for New Starts funding. Of those 35 sponsors, 10 did not apply to the program. For the purposes of our survey, we defined ―small project sponsors‖ as those with an annual ridership of less than 10 million trips; ―medium project sponsors‖ as those with an annual ridership of between 10 and 50 million trips, inclusive; and ―large project sponsors‖ as those with an annual ridership of more than 50 million trips. For the remaining 40 planned transit projects, respondents said either that they were not planning to apply for New Starts funding, or that they did not know whether they planned to apply. Planned projects are in the earliest stages of development (i.e., alternatives analysis or a similar corridor-based planning study). The 30 project sponsors that responded to our survey intend to seek New Starts funding for their planned Small Starts or Very Small Starts projects. However, 2 of those sponsors did not answer whether they had previously applied for New Starts funding. These projects may or may not currently be in FTA‘s pipeline of New Starts or Small Starts projects. According to FTA‘s guidance, Small Starts projects must (1) meet the definition of a fixed guideway for at least 50 percent of the project length in the peak period, (2) be a fixed- guideway project, or (3) be a corridor-based bus project with the following

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minimum elements: substantial transit stations; traffic signal priority or preemption, to the extent, if any, that there are traffic signals on the corridor; low-floor vehicles or level boarding; branding of the proposed service; and 10-minute peak and 15-minute off-peak running times (i.e., headways) or better while operating at least 14 hours per weekday.

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Chapter 4

HEARING ON THE FEDERAL TRANSIT ADMINISTRATION'S IMPLEMENTATION OF THE NEW STARTS AND SMALL STARTS PROGRAMS *

PURPOSE OF HEARING

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The Subcommittee on Highways and Transit is scheduled to meet on Thursday, May 10, 2007 at 10:00 a.m., to receive testimony on the Federal Transit Administration's (FTA) implementation of the New Starts and Small Starts provisions of the Capital Investment Grants program. The Subcommittee will hear from officials of FTA, U.S. Government Accountability Office (GAO), Los Angeles County Metropolitan Transportation Authority (LA Metro), Dallas Area Rapid Transit (DART), Interurban Transit Partnership of Grand Rapids (The Rapid), Portland Streetcar, Inc., and the Senior Vice President of HDR Decision Economics, Inc.

BACKGROUND The Capital Investment Grants program, codified at 49 U.S.C. 5309, is the Federal government's primary mechanism for supporting locally planned, implemented, and operated transit capital investments. From commuter rail to light rail transit, from streetcars to bus rapid transit (BRT), transit investments improve the mobility of millions of Americans, help to reduce congestion and improve air quality in the areas they serve, and foster the development of more economically viable, safe, and livable communities. Congress created this discretionary transit grant program in the Urban Mass Transportation Act of 1964 (UMTA) "to provide additional assistance for the development of comprehensive and coordinated mass transportation systems." Several program categories exist within the Capital Investment Grants program: the fixed guideway modernization program, the discretionary bus and bus facilities program, and both the New Starts and Small Starts programs.

*

This is an edited, excerpted and augmented edition of an United States House of Representatives Committee on Transportation and Infrastructure publication, dated May 10, 2007.

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The New Starts program (initially known as the UMTA Section 3 Program), is one of the oldest categories of capital transit grants. Designed to fund major investments in the transit infrastructure of urbanized areas, the New Starts program has helped to make possible dozens of new rail transit fixed guideway systems across the country. A new fixed guideway project is a minimum operable segment of a new fixed guideway or an extension to an existing fixed guideway system. Transit project sponsors seeking more than $75,000,000 in Federal New Starts funds must apply to FTA under the New Starts program criteria at 49 U.S.C. 5309(d). In general, the New Starts program contains more justification criteria, grant requirements, and detailed FTA review than any other category of capital investment grants. The Small Starts program, the newest category of capital transit grants, was created in 2005 by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Transit project sponsors seeking less than $75,000,000 in Federal Small Starts funds for a project with a total estimated net capital cost of less than $250,000,000 may apply to FTA under the Small Starts program criteria at 49 U.S.C. 5309(e). The Small Starts program is designed to include fewer project justification criteria and grant requirements, allowing for a more simplified FTA review.

Basic Statutory Requirements of the New Starts and Small Starts Programs Both New Starts and Small Starts projects may be approved for Federal funding only if they meet three basic requirements. For a New Starts project, the selection criteria are as follows: 1

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2

3

The project must be based on the results of an alternative analysis and preliminary engineering. The project must be justified based on a comprehensive review of its mobility improvements, environmental benefits, cost effectiveness, operating efficiencies, economic development effects, and public transportation supportive land use policies and future patterns. The project must be supported by an acceptable degree of local financial commitment.

For a Small Starts project, the selection criteria are as follows: 1 2 3

The project must be based on the results of planning and alternative analysis. The project must be justified based on a review of its public transportation supportive land use policies, cost effectiveness, and effect on local economic development. The project must be supported by an acceptable degree of local financial commitment.

Of the three basic requirements of both the News Starts and Small Starts programs, the project justification criteria receive by far the most attention in the statute. Congress has included these specific justification criteria for FTA to analyze, evaluate and consider in each application for a New Starts or Small Starts grant. FTA, however, is not currently incorporating all of the congressionally mandated project justification criteria into either the

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New Starts or Small Starts evaluation process, especially the economic development criterion. A more detailed review of the evolution of the New Starts and Small Starts program criteria and FTA's implementation of those programs follows.

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Evolution of New Starts and Small Starts Project Justification Criteria Statutory criteria for evaluating New Starts projects first appeared in the Surface Transportation Uniform and Relocation Assistance Act of 1987 (STURAA). This Act established a set of statutory criteria that New Starts projects had to meet to be eligible for Federal grants. Congress established that a wide range of public transportation alternatives must be considered in the planning, or alternatives analysis, process. Congress also directed that projects be cost-effective and supported by an adequate degree of local financial commitment. The Intermodal Surface Transportation Efficiency Act of 1991 (IS1 EA) made important changes to the New Starts program by requiring the consideration of additional project justification criteria. Specifically, Congress directed that mobility improvements, operating efficiencies and environmental benefits be taken into account — along with cost-effectiveness — when determining a New Starts project's justification. The Transportation Equity Act for the 21" Century (TEA-21) reauthorized these four project justification criteria, keeping the multiple-measure method of project evaluation intact. Congress made the most recent changes to the evaluation process in SAFEJEA-LU. For the New Starts program, two new factors were added to the list of required project justification criteria: economic development effects and public transportation supportive land use policies and future patterns. Thus, FTA is directed to conduct a comprehensive review of all six New Starts project justification criteria. Following is Figure I-1 from FTA's FY 2008 Annual Report on New Starts which demonstrates FTA's current New Starts evaluation and rating framework: The FTA New Starts Evaluation and Rating Framework

In creating the Small Starts program, Congress created three justification criteria — public transportation supportive land use policies, cost effectiveness, and effect on local economic development — all of which FTA was directed to review.

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ETA's Implementation of the Economic Development Criterion for New Starts and Small Starts Projects SAFETEA-LU required FTA to issue policy guidance regarding changes to the New Starts program, and also required FTA to issue an Impact Report on the methodology to be used in evaluating the land use and economic development impacts of non-fixed guideway or partial fixed guideway Small Starts projects. These guidance and reporting requirements included deadlines which FTA did not meet. In addition, FTA failed to submit an Impact Report and instead issued a letter which stated, "Predicting economic development impacts of transit improvements — particularly the types of improvements anticipated to be funded through the Small Starts program — is a particular challenge." Eventually, FTA did issue policy guidance for New Starts and Small Starts, though that guidance failed to incorporate economic development factors into the overall project justification rating. In its January 2006 guidance on New Starts, FTA stated, "In response to SAFETEA-LU, FTA might add an economic development criterion..." but in its May 2006 Final Guidance on New Starts, FIA stated that it "will not change the current framework and methodology for evaluating and rating New Starts projects," and encouraged project sponsors to "submit information on anticipated economic development of their proposed investments as an 'other factor'." Some in the transit community submitted comments to the FTA docket on this issue, reiterating their strong opinion that economic development factors should be evaluated as a separate and equal project justification criterion as contemplated by the statutory language in SAFETEA-LU. In its Interim Guidance on Small Starts, FTA stated that until the issuance of a final rule, the Small Starts Evaluation framework and measures will be consistent with the framework established for evaluating New Starts. Because FTA has not issued a Notice of Proposed Rulemaking "NPRM" to date for either New Starts or Small Starts, the policy guidance issued by the FIA stands as its current position on those programs. As such, neither transit grant program is being fully implemented as Congress directed in SAFETEA-LU.

ETA's Implementation of the Cost-Effectiveness Justification Criterion for New Starts and Small Starts Projects SAFE1EA-LU directed that each New Starts and Small Starts project justification factor be rated on a five-point scale including high, medium-high, medium, medium-low, and low designations. Although the statute does not direct FTA to weigh one project justification factor more heavily than any other, FTA has historically weighted the cost-effectiveness factor more heavily than the other project justification criterion when evaluating overall project justifications, and has continued this practice even after passage of SAFETEA-LU. In its Annual Report on Funding Recommendations for FY 2008, FTA states that costeffectiveness comprises 50 percent of the project justification rating. The practice of weighting cost-effectiveness more heavily compared to the other statutory justification criteria was first formally announced in a March 9, 2005 Dear Colleague letter from then-Administrator Jennifer L. Dorn who wrote, "as a general practice, the Administration will target its funding recommendations in FY 2006 and beyond to those

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proposed New Starts projects able to achieve a medium or higher rating for costeffectiveness." Although a significant number of respondents to the letter suggested that implementation of any policy changes be delayed until after the then-pending surface reauthorization has been passed and/or a formal rulemaking is concluded, FTA stated in the April 29, 2005 follow-up Dear Colleague on the issue, "we do not believe that such a delay is either necessary or advisable." Thus, FTA's general practice is not to advance any project unless it receives at least a medium rating on the single cost-effectiveness rating, regardless of the ratings it receives on any of the other project justification criteria. Although the Dear Colleague on cost-effectiveness was written before SAFE'I'EA-LU created the Small Starts program, FTA has indicated that it will apply the Administration's policy of favoring cost-effectiveness in the Small Starts program as well. In an April 2007 letter to a project sponsor seeking a Small Starts grant, FTA stated, "The Administration recommends Section 5309 New Starts and Small Starts funding only for projects that earn a rating of Medium or better for cost- effectiveness."

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FTA's Proposal to Eliminate the Operating Efficiencies and Environmental Benefits Justification Criteria for New Starts Projects In its most recently published proposed guidance on New Starts policies (February 2007), FTA proposes to no longer require the submission of information on operating efficiencies and environmental benefits. FTA claims that locally-generated and reported information in support of these two criteria does not distinguish, in any meaningful way, the differences between competing transit capital investments. In addition, PTA admits that it "has not factored the ratings assigned to these two criteria into a project's "project justification" rating for several years." In light of the fact that SAFETEA-LU continued to direct FTA to evaluate and rate both operating efficiencies and environmental benefits as part of the overall project justification rating of all New Starts projects, this recent proposal by FTA has raised both Congressional and transit industry concern.

FTA's Implementation of the Local Financial Commitment Criteria Similar to projects seeking Federal funds from various highway programs, projects seeking Federal transit grants are limited by the maximum government share allowed under the statue. 49 U.S.C. 5309(h) requires that the government's share of a grant for transit capital investments "shall be for 80 percent of the net capital project cost, unless the grant recipient requests a lower grant percentage." Nevertheless, Congress was concerned that project sponsors felt pressure to seek far less than the allowable federal share. In order to address these concerns, SAFETEA-•U included language to ensure that nothing in the Act shall be construed as authorizing FTA to require a non- Federal financial commitment for a project that is more than 20 percent of the net capital project cost. FTA, however, has long pursued a policy of encouraging New Starts project sponsors to dramatically increase the local share of the net project cost. In the February 2007 guidance on New. Starts and Small Starts policies, FTA proposes to extend this policy to the Small Starts program by adding a rule that projects requesting no more than a 50 percent Small Starts

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share be given a "high" rating, and those requesting between 50 percent to 80 percent share receive no less than a "medium" rating. As justification for this policy, FTA cites the demand for funding under the New Starts program which has been far in excess of the authorized funding. FTA states that it expects this same trend of increasing demands to play out in the Small Starts program as well.

ADDITIONAL CHARACTERISTICS OF THE SMALL STARTS PROGRAM PROJECT ELIGIBILITY When creating the eligibility criteria for the new Small Starts program, Congress sought to strike a balance between proponents of streetcars and BRT in defining the term "fixed guideway capital project". While streetcars fit under the general definition of fixed guideway in section 5302(a)(4), some BRT projects that are not wholly within a dedicated right-of-way arguably do not. As such, the Small Starts program includes a broader definition of fixed guideway capital projects to ensure eligibility for all modes. To be eligible for the Small Starts program, a project sponsor must demonstrate either that a substantial portion of the project operate in a separate right-of-way dedicated for public transit use during peak hour operations, or, that the project represent a "Substantial investment" in a defined corridor.

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The Very Small Starts Program Until the passage of SAFETEA-LU, transit project sponsors seeking less than $25,000,000 in Federal New Starts funds were exempt from the Capital Investment Grants program evaluation process. Under SAFETEA-LU, this exemption continues only until FTA issues regulations establishing an evaluation and rating process for the Small Starts program. FTA is currently in the process of undertaking this rulemaking, but the agency does not contemplate its completion until early 2008. In the meantime, FTA has issued guidance on the Small Starts program in which it proposes to create another category of Capital Investment Grants which it has named the "Very Small Starts" program. In its August 2006 Final Interim Guidance for Small Starts, the FTA stated that to be eligible for the Very Small Starts category, the project should meeting the following criteria: (1) have substantial transit stations; (2) use traffic signal priority/pre-emption, to the extent, if any, that traffic signals exist in the corridor; (3) have low-floor vehicles or level boarding; (4) use a clear brand identity for the proposed service; (5) operate 10 minute peak/15 minute off peak headways or better and operate at least 14 hours per weekday (not required for commuter rail or ferries); (6) be in corridors with at least 3,000 average weekday existing riders who will benefit from the proposed project; and (7) have a total capital cost less than $50 million (including all project elements) and less than $3 million per mile, exclusive of rolling stock. Additional program criteria and procedure will be established by FTA upon the issuance of its anticipated Notice of Proposed Rulemaking.

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FTA's Inclusionof Outsourcing and Congestion Pricing Factors into the New Starts and Small Starts Programs Another new proposal announced by FTA in its February 2007 guidance is its intention to include both outsourcing and congestion pricing factors into the New and Small Starts programs. Specifically, FTA is proposing to provide a ratings bonus to a project sponsor who "can demonstrate it has provided the opportunity for the operation and maintenance of the project to be contracted out." Further, FTA proposes to increase the project justification rating of a New or Small Start project that is a "principal element of a congestion management strategy, in general, and a pricing strategy, in particular." Neither of these changes in the recent _VIA proposed guidance is based on the statutory language of 49 U.S.C. 5309, but rather, FTA notes that their proposal "supports the congestion initiative of the Secretary of Transportation, which is to promote strategies that reduce highway congestion."

PREVIOUS SUBCOMMITTEE ACTION

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The Subcommittee on Highways and Transit last held a hearing on the New Starts program on June 20, 2002, and the subcommittee has never held a hearing on the Small Starts program. The focus of the 2002 hearing was on the benefits and the changes needed to the Federal Transit Capital Grants Program.

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Chapter 5

SUBCOMMITTEE ON HIGHWAYS AND TRANSIT HEARING ON IMPLEMENTATION OF NEW STARTS AND SMALL STARTS PROGRAMS, MAY 10, 2007

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*

Good Morning, Mr. Chairman and members of the Subcommittee. My name is Roger Snoble. It is a pleasure to be with you today, and I appreciate the opportunity to provide testimony on the important topic of the implementation of the New Starts and Small Starts programs of the Federal Transit Administration (FTA). I have worked in the transportation industry for almost forty years and have been involved in the construction and implementation of several major new fixed guideway projects, in different cities in the U.S. At the helm of Los Angeles County Metro, and prior to that as the Executive Director of Dallas Area Rapid Transit (DART) and as General Manager of San Diego Transit Corporation, I have been responsible for the planning, financing, design and construction, and regulatory compliance for many large capital projects -- rail, bus, and highway. LA Metro is the third largest public transit agency in the United States and is responsible for transportation planning, coordination, design, construction and operation of bus, subway, light rail, Bus Rapid Transit (BRT) services, and, in partnership with Caltrans, carpool lanes. Metro also works in partnership with Caltrans on carpool lanes and with MetroLink on its expansive commuter rail system. Metro has a $3 billion annual budget, 9,000 employees, and serves a 1,433 square mile service area in one of the Nation‘s largest and most populous counties of 10 million people. Metro has approximately 200 bus routes, 73 miles of rail lines, and over 400 miles of carpool lanes that crisscross Los Angeles County. We fund a vast array of surface transportation improvement projects, including street widening, bikeways, synchronized traffic lights, and busways. Metro‘s transportation network is extensive, and we are a leading innovator in improving the mobility of the community we serve.

*

This is an edited, excerpted and augmented edition of an United States House of Representatives Committee on Transportation and Infrastructure publication, dated May 10, 2007

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HISTORY AND EXPERIENCE WITH NEW STARTS PROJECTS Over the past of 20-2 5 years, Los Angeles has probably had the most ambitious and aggressive program of new fixed guideway construction in the United States. During that time period, we have spent over $8.6 billion building nine new fixed guideway projects in Los Angeles County. Over 60% of that funding has come from State and local sources. See Metro‘s Major Construction Program Summary in Exhibit 1. Metro has extensive experience with the FTA New Starts project development process. Four of our projects -- MOS-1 & MOS-2 of the Red Line, the MOS-3 North Hollywood Red Line, and the Eastside Gold Line - were developed and implemented under the New Starts process, and all four of these projects were the subject of a Full Funding Grant Agreement (FFGA) with the FTA. Since each of these Federal projects went through the New Starts process at a different point in time, we have directly experienced the changes and evolution in that process. In addition, five Los Angeles transit projects -- the Long Beach Blue Line, the Green Line, the Pasadena Gold Line, the San Fernando Orange Line, and Phase 1 of the Exposition Line -- have been designed and constructed without any Federal New Starts funding. In addition, the entire Metrolink commuter rail system, consisting of 512 route miles of commuter rail service, has been developed without any Federal New Starts funding. As a result, we have also directly experienced the differences -- and they are significant -- between developing a project under the Federal New Starts process and developing a project without the encumbrances associated with that process.

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Growth in Demand for Projects In the initial years of the FTA grant program, there were a fairly limited number of New Starts projects around the country, and the Federal process for funding and implementing those projects was relatively straight forward. New projects were built by MARTA in Atlanta, BART in the Bay Area, and Washington Metro in D.C., and projects were being planned in cities like Miami, Portland, San Diego, and Los Angeles. Overall, however, public transit in the United States in the early days of the FTA program consisted primarily of extensive capital infrastructure in what are referred to as the ―old rail cities‖ (Boston, New York, Philadelphia, and Chicago), and bus systems, often with little infrastructure or capital investment, in the rest of the country. By the early 1980‘s, however, that picture began to change, and since that time, the interest in New Starts projects nationwide has dramatically expanded. This may be due in part to increases in the size of the Federal program; it may also reflect an enhanced public and political awareness (particularly in western and southern States) of ever-increasing mobility problems and the key economic role that transit capital investments can play in ensuring the vitality of our cities. Whatever the combination of reasons, few would dispute that the landscape has shifted dramatically. The State of California -- a State famous for its love of the automobile -- may be the most striking example of this phenomenal growth in transit capital investment. New Starts projects

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Subcommittee on Highways and Transit Hearing on Implementation of New Starts … 121 have been constructed from one end of the State to another in the past 20-25 years—San Diego, North County, Los Angeles Metro, Santa Clara, Sacramento, BART extensions, and Muni in San Francisco. In terms of nationwide interest, the growth has also been dramatic -by 2004 there were almost 80 proposed projects in the New Starts ―pipeline‖. SAFETEA-LU provides an even more astounding picture of the level of demand -- in that law, over 250 New Starts projects were authorized for alternatives analysis and preliminary engineering. Given this magnitude of demand, it should come as no surprise that there is not nearly enough Federal assistance available to help build all -- or even most -- of the potential New Starts projects being developed across the U.S. For several years, there have been simply too many projects nationwide chasing too few Federal dollars. To illustrate this point, if only 100 of the 250 SAFETEA-LU authorized New Starts projects were constructed, at an average cost of $500 million, the total demand would be $50 billion in public funding. To address this demand, the current New Starts funding program, even if it grew by 5% per year over the next 10 years, would provide only about $18 billion.

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Development of the New Starts Evaluation and Rating System This imbalance between supply and demand has led, inevitably, to intense competition for the relatively limited amount of Federal New Starts funds. It has also led, at the Federal level, to a fundamental policy question -- what should be the basis for determining which projects receive Federal funding? For the past two decades, successive Administrations and the Congress have wrestled with this question, with the goal (ideally) of selecting the ―best‖ projects on the basis of merit, and also of identifying which projects do not warrant Federal investment. Since FTA‘s initial Policy Statement on Major Capital Investments in 1984, both the New Starts evaluation system and the Federal project development process have become increasingly complex and detailed – with greater and greater Federal involvement in the local project development process. The burdens placed on local project sponsors have increased, the Federal oversight has become significantly greater -- to the point of micro-management -- and the time required to complete the Federal process has grown significantly. The goals of the Federal New Starts process, and the objectives of the congressional and Department of Transportation efforts to develop evaluation criteria and a rating system for New Starts projects, are well intentioned as a matter of public policy. The New Starts program represents a unique effort to award Federal dollars on the basis of merit and to direct public investment to the best projects. The system has also fostered several management tools that are valuable to local agencies in designing and building new transit projects. The fundamental problem is that the New Starts process is unreasonably onerous for New Starts grantees. In its effort to exercise due diligence over Federal funds and the New Starts program, FTA has developed a system so complex, so replete with reports and analyses, and so fraught with delays and schedule uncertainty, that it now obstructs one of the agency‘s fundamental goals -- to assist urban areas in building critically needed transit systems in a cost effective manner. The result is delay and frustration for New Starts project sponsors, and even in some cases decisions by grantees to design and build new fixed guideway projects without Federal discretionary funding.

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To put this in some perspective, the FTA New Starts Program consists today of the following key elements: First, project sponsors (the local agency grantee) must make detailed New Starts submittals to the FTA on an annual basis providing extensive information on their proposed project. Based on these submittals, FTA evaluates and rates the projects under two statutory/regulatory criteria: 

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

Project Justification, which evaluates cost effectiveness, land use, environmental benefits, mobility improvements, economic development, and operating efficiencies. Local Financial Commitment, which evaluates the grantee‘s local financial commitment (State and local funds) in terms of stability, reliability, and availability, and also the extent of the local ―overmatch‖ (i.e., the grantee‘s contribution in excess of the statutorily required 20% local share).

The most complicated and controversial element of this evaluation is FTA‘s effort to measure a project‘s cost effectiveness through use of the Transportation System User Benefit or ―TSUB‖, which is intended to show the incremental transit ―user benefits‖ per dollar of transit investment. Local grantees are responsible for developing this TSUB ―number‖ using complicated and often confusing modeling systems. The value of the TSUB number generated, as an indicator of project merit (both independently and in comparison to other projects), remains a subject of considerable debate. Because of this TSUB element, potential subway alternatives are all but eliminated from consideration, even if it is the most pragmatic solution in a densely populated urban corridor. As one of the more densely populated regions in the country, this places Los Angeles at a disadvantage. Second, New Starts projects must be developed and proceed in discrete stages (alternatives analysis, preliminary engineering, final design, etc). FTA acts as a ―gatekeeper‖ in the project development process. A project cannot advance from one stage to the next -- such as from alternative analysis to preliminary engineering -- without receiving the ―green light‖ from FTA. Project sponsors must submit detailed documentation to FTA that their project is ―ready o enter the next stage. Projects are essentially on hold while they wait for the necessary FTA gateway approval, which often takes several months.‖ Third, almost all projects must obtain full clearance under the National Environmental Policy Act (NEPA). This means preparation of a Draft and Final Environmental Impact Statement (EIS) and issuance of a Record of Decision (ROD) by FTA. While clearly justified as a matter of public policy, the EIS process as administered by FTA is extremely time consuming, with frequent delays and the resulting schedule uncertainty. Finally, in order to be eligible for construction funding and receipt of a Full Funding Grant Agreement (FFGA), a project sponsor must make its way through a time consuming FTA ―due diligence‖ and project review process. The project sponsor must develop a lengthy series of project reports and documents, and provide detailed project cost, revenue, scope, and schedule information to FTA. These materials are subject to exhaustive review and analysis by FTA and its consultants. Again, the grantee spends weeks and months waiting for FTA to complete its reviews. FTA‘s two outside consultants (the PMO and

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Subcommittee on Highways and Transit Hearing on Implementation of New Starts … 123 FMO) must also produce detailed ―independent‖ reports on the project. Finally, the grantee must then negotiate and execute a Full Funding Grant Agreement (FFGA) with FTA. There are over 20 steps in the current checklist to obtaining a FFGA, and the required documents take months to generate, review, refine, and finalize. Once a FFGA is in place, a similarly onerous process is undertaken each year to ensure that the necessary funds are appropriated by the Congress.

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Comparison of Federal and Non-Federal Projects Given this extensive Federal process, there are obviously significant differences between advancing a project under the Federal new starts process and developing a new fixed guideway project outside that process, using only State and local funds. The most significant differences we have experienced are in schedule and cost. First, we estimate that the Federal New Starts process can add one to two years to the project schedule. We have experienced this impact in a comparison between the actual timelines in Los Angeles for Federal and non-Federal projects. For example, on the federally funded Eastside Project, Metro received a ROD in June 2002 and executed a FFGA two years later in June 2004, which allowed us to start construction. By contrast, on the nonfederally funded Exposition Project, we received a ROD in February 2006 and started design and construction that March. Second, we estimate that the Federal process adds 10-15% to the overall project costs. This added cost has two elements. There are significant ―soft‖ costs – primarily the staff and consultant time required to prepare and revise the extensive documents and reports required by FTA, consult and meet regularly with FTA and its consultants, submit New Start reports on the project, etc. In addition, there are escalation costs incurred simply because the engineering, design, and construction process takes longer under the Federal process. Even if escalation is relatively modest -- 5% per year, for example -- the cost of a one year delay on a $1 billion project would be $50 million in taxpayer dollars. In particular, over a two-year period like that noted above in the comparison of the Eastside and Exposition projects, the costs of construction materials (such as steel) can increase significantly. Given that providing sufficient revenue sources to build a major project is always a challenge, these extra costs can have a substantial negative impact on a local agency‘s ability to meet a project budget. One critical aspect of this comparison bears emphasis. No one can really take issue with the idea that projects should be carefully managed and reviewed, or that FTA should be a conscientious steward of the Federal funds it provides. However, we have not found in Los Angeles that the current micro-management level of Federal oversight has any actual, demonstrable yield in terms of project success or performance. Our Federal New Starts projects do not have a better record, for example, of being completed on time and within budget than our non-Federal projects. In fact, due to the delays and added costs of the Federal process, actually the opposite seems to be true. One of the primary reasons for this, I believe, is that agencies like Metro have developed sound project management systems and tools that have greatly enhanced our ability to build projects on time and within budget. Certainly the FTA should be credited with assisting us in achieving that goal, through its technical assistance and its emphasis on project management. We

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believe that is an appropriate role for the Federal Government. However, I am not aware of any empirical evidence, on a nationwide basis, that the ever increasing levels and layers of Federal review and micro-management have actually resulted in better performing projects, in terms of adherence to schedule and budget.

SPECIFIC RECOMMENDATIONS FOR CHANGE In a nutshell, FTA‘s elaborate project development and ―due diligence‖ structure creates enormous problems in terms of time and resources for grantees trying to build New Starts projects. New Starts projects are multi-million dollar public works projects, and as such require development and adherence to a strict critical path schedule. The unfortunate fact is that in the implementation of a New Starts project, one of the biggest risk factors has become the Federal Government‘s well intentioned but inefficient rules governing the New Starts process. If the New Starts program continues in its present form, the future will be increased frustration for project sponsors, delay in project development and completion, and deferred benefits to those dependent on transit. Cities with the resources to build projects outside the FTA New Starts system will do so; cities without those resources will either struggle through the Federal process or in some cases perhaps forego needed projects. However, there are steps that can be taken collectively to address the current problems and improve the program. Here are five suggestions for how the New Starts program can be improved.

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1. Recognize True Allocation of Risk The New Starts program could be improved by reducing the Federal due diligence role and making the local project sponsor responsible for its own risk assessment and related tasks. While the New Starts process has a legitimate public policy goal of assuring that Federal transit funds are directed toward the best transit investments and that project cost estimates, revenue projections, and transit user benefit estimates are realistic and achievable, there is a serious question of whether the actual value of this oversight has become outweighed by the extensive and time consuming burden it places on local agency project sponsors, and also whether this oversight is consistent with the actual allocation of project risk. One of the most time consuming aspects of the New Starts process is the preparation of extensive reports and documents by the project sponsor, reviews and analysis of those reports by FTA‘s consultants (the PMO and FMO), and the preparation of detailed analysis by those two FTA consultants. The preparation of these various plans and documents by the grantee, following by extensive review by FTA and its consultants, adds months of time to the process. A significant deficiency in this current risk assessment approach is that it does not seem to provide any basis for evaluating the type or degree of risk based on the scope and

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Subcommittee on Highways and Transit Hearing on Implementation of New Starts … 125 complexity of the project involved (i.e., a BRT project as compared to a subway tunnel). More importantly, the current FTA approach fails to take into account the actual level of risk to the Federal Government, and the extent to which that risk has been transferred to the local project sponsor/grantee. Specifically, for a number of years FTA has utilized the FFGA to limit its financial exposure in New Starts projects, by placing an absolute limit or ―cap‖ on the amount of Section 5309 New Starts funds that will be provided for the Project. This shifts all of the risk for cost increases, overruns, scope changes, and schedule delays to the grantee. Moreover, in the FFGA the grantee expressly commits to paying all project cost increases, and thereby by contract assumes all of the financial risk. The current New Starts model is fundamentally counterintuitive, in that it requires that the Federal Government perform an extensive and time- consuming due diligence and risk assessment role, but it places essentially no financial risk on the Federal Government. In light of the actual allocation of risk, a far more justifiable approach would be to place the primary burden for risk assessment and due diligence on the party actually bearing the financial risk, and for the FTA to limit the amount and scope of the Federal Government‘s review. In exchange, FTA could require the grantee to be responsible for conducting its own risk assessment and preparing and validating its own financial plan for the project, and providing FTA with guarantees or self-certifications in those areas.

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2. Streamline and Simplify the New Starts Rating Process The New Starts program could be improved by simplifying and streamlining the evaluation and rating process. One of the areas in significant need of reform is FTA‘s New Starts evaluation and rating process. Both the amount of information submitted and the FTA review process itself need to be streamlined. In its heavy emphasis on the TSUB ―number‖, FTA is seeking a quantitative evaluation that will permit highly refined differentiations in the comparison of projects. As the Los Angeles County Metro stated in prior written comments to FTA, ―analytical perfection should not be the goal‖. A more reasonable approach would seem to be to develop a more streamlined, easier to use rating system that would simply identify the best and worst projects. It would also be beneficial for FTA to develop a simple rating method for each of the statutory criteria established by the Congress. Currently, the extensive information on environmental benefits, operating efficiencies, and mobility benefits submitted by a project sponsor in the annual New Starts submittal is not actually scored by FTA in the overall Project Justification rating. (The only factors scored are cost effectiveness and land use.) Adoption of a simple scoring methodology for all criteria would be much more consistent with the Congressional intent, particularly given that in SAFETEA-LU the Congress mandated that New Starts projects be evaluated based on a ―comprehensive review‖ of all of these factors. See 49 U.S.C. 5309(d)(2)(B). Finally, in the local financial contribution evaluation and rating, it would be far more equitable for FTA to take into account all of the project sponsor‘s new fixed guideway investments in its transit system, and not just its share of the individual project being rated. In Los Angeles, for example, Metro‘s capital investment in non-Federal new fixed

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guideway projects in its transit system is over $5 billion, but this contribution goes totally unrecognized in the current FTA rating system. A change in this element of the evaluation would not only recognize the true level of local financial commitment, but would also provide a tangible incentive for increased levels of State and local funding.

3. Establish a Bilateral Commitment to Timeframes

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The New Starts program could be improved by FTA committing to a schedule and milestones for its actions and approvals. The combined effect of the due diligence reviews, the NEPA process, the requirement for FTA approval to advance from one stage to the next, and the FFGA process creates havoc for the grantee‘s project schedule, both in uncertainty and in the amount of time taken to make it though the process to FFGA execution. One fact is quite startling -- the Federal Government is the only participant in the New Starts Project development process that does not have to make any commitments regarding the schedule for its actions. The project sponsor, local funding partners, and the engineering, design, and construction firms involved must all agree to and comply with specific timetables for their actions. The New Starts process would benefit greatly if FTA were simply to adopt a more disciplined and time sensitive approach for its actions in each of the steps in the process, and were to make the type of milestone and schedule commitments that other participants in the process are already obligated to make. For example, FTA and the New Starts grantee could agree to a bilateral schedule for the processing of the NEPA documents and the multiple other plans and reports required in the New Starts process, as well as for the preliminary engineering and final design approval processes.

4. Reduce Time Frame from ROD to Construction The New Starts program could be improved by reducing the time between the issuance of the Record of Decision and the start of design and construction. FTA needs to take some specific actions to reduce the amount of ―dead time‖ between issuance of the ROD and the start of final design and construction. As a general rule, when a ROD is issued by a Federal agency, the underlying Federal action may proceed. However, under the FTA New Starts process, there are additional and time consuming post-ROD steps and approvals that must occur before a grantee may actually commence design and construction of its project -- specifically, the often lengthy process of obtaining FTA‘s approval to enter final design, and the detailed and time consuming development of the FFGA package and accompanying reports. The net result is that the time from issuance of the ROD until the execution of the FFGA is typically well over a year, and frequently is two years or more—which means that actual construction of the project is delayed for that period of time. FTA could greatly improve the New Starts process, and save time and public funds, if following the issuance of the ROD the grantee were permitted to proceed with design and at least limited construction activities.

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Subcommittee on Highways and Transit Hearing on Implementation of New Starts … 127

5. Provide Increased New Starts Funding to Address the Nationwide Demand The New Starts program could be improved by increasing the amount of Federal New Starts funding. A bigger, more robust New Starts program is needed in order to meet the growing demand for transit investments nationwide. It is true that to address this demand would require several billion dollars in Federal funding. However, this would be an investment in infrastructure in this country that would yield a huge return -- in job growth, in the economic vitality of our cities, in congestion relief, and in air quality. Without venturing into an area beyond this Committee‘s jurisdiction, if the Federal Government can contribute billions of dollars toward rebuilding and improving the infrastructure in foreign countries, it seems reasonable to pursue a higher level of funding for the substantial transportation infrastructure needs we have in the United States. Many State and local governments -- California is a notable example -- have dramatically increased their funding for transit capital investments in recent years, but the Federal program has not kept pace with this growth. To meet the substantial and growing capital needs throughout the United States, it is critical for the Federal Government to increase its role as a funding partner. In addition, a more robust funding program, allowing more projects to receive Federal assistance, would also help to reduce the pressure on FTA to select ―perfect‖ projects and subject those projects to unnecessary and redundant levels of review and analysis.

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CONCLUSION That concludes my testimony. I will be happy to answer any questions that you might have. Again, I appreciate the opportunity to provide the views of Los Angeles County Metro on these important transit issues.

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Chapter 6

TESTIMONY FOR THE HOUSE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE’S SUBCOMMITTEE ON HIGHWAYS AND TRANSIT

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Gary C. Thomas Chairman DeFazio, thank you for the opportunity to appear before your committee today to testify on transit-oriented development issues related to the Federal Transit Administration‘s implementation of the New Starts and Small Starts programs. I am Gary C. Thomas, President/Executive Director of Dallas Area Rapid Transit (DART). On behalf of the DART Board of Directors and staff, I would like to take this opportunity to express our appreciation to you and your colleagues for your leadership and hard work in addressing the critical transportation needs of our country. As you are well aware, public transportation plays a vital role in helping our nation overcome many challenges we currently face as we strive to provide all Americans with an enhanced quality of life for the 21st century and beyond. I would also like to take this opportunity to thank the members of the North Texas Congressional delegation for their exemplary leadership, vision, and unwaivering support in our drive to fulfill North Texas‘ mass transit needs. DART is a 24 year old regional transportation authority providing a multi-modal transit system for a 700 square mile area of North Texas. DART is comprised of 13 member cities and serves approximately 330,000 total passenger trips per day. Currently, DART serves Dallas and 12 surrounding cities with approximately 130 bus routes, 45 miles of light rail transit (DART Rail), 31 freeway miles of high occupancy vehicle (HOV) lanes, and paratransit service for persons with mobility impairments. DART and the Fort Worth Transportation Authority (the T) jointly operate 35 miles of commuter rail transit (the Trinity Railway Express or TRE), linking downtown Dallas and Fort Worth with stops in the mid-cities and DFW International Airport. Through 2013, the DART Rail System is slated to more than double in size to 93 miles. Total ridership on all modes for FY 2006 was 102.9 million passenger trips. Our ridership, broken down by modes, is: 

Bus: 44.7 million passenger trips

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    

DART Rail (light rail): 18.6 million passenger trips Trinity Rail Express: 2.4 million passenger trips HOV: 36.1 million commuter trips Paratransit: 660,312 Vanpool: 440,472

DART‘s mission is to build, establish and operate a safe, efficient and effective transportation system that, within the DART Service Area, provides mobility, improves the quality of life, and stimulates economic development. As we have witnessed in the Dallas-Ft. Worth area, economic development and land use changes provide immense benefits to projects. It is our strong belief that FTA, in evaluating projects, must recognize the elevated status of land use and economic development as specifically required by SAFETEA-LU. We have encouraged FTA to work with experts to quantify land use and economic development benefits with a focus on under valued property and the prospects of increasing the value as a surrogate for development potential. Actual commitments and adoptions of land use actions to increase densities around stations by local agencies should be recognized as real measures of change that will benefit transit. Any measure of land use and economic development should also consider the benefit of stabilizing existing land uses and economic activities in mature cities. As the rest of testimony demonstrates, the North Texas region has witnessed signficant economic growth and benefited greatly from transit-oriented development. In order to accomplish the economic aspect of our mission, DART encourages and facilitates transit-oriented development by actively participating with member cities in rail line and station location and land use planning. Stations are sited in areas that are planned or have potential to accommodate transit-oriented development. Station site design also is coordinated with member cities and developers to maximize the achievement of transitoriented goals. DART works with the community, landowners, and developers to promote transit-oriented development and create livable, walkable communities. From suburban areas to the city center, DART Rail has proven to be a powerful engine for economic development in the North Texas region. A study conducted in September 2005 by Drs. Bernard Weinstein and Terry Clower, economists at The University of North Texas (UNT), demonstrated that DART is driving more than $3.3 billion in development throughout its 45-mile light rail system serving Dallas, Garland, Richardson and Plano.[1] Weinstein and Clower‘s research also determined that rail stations are enhancing nearby residential and office property valuations. From 1997 to 2001, residential properties near DART Rail stations on average increased in value 39% more than comparable properties not served by rail. Office buildings near DART Rail increased in value 53% more than comparable properties not located near rail.[2] Transit-oriented development is playing a key role in the transformation of downtown Dallas into a mixed-use area enjoying improved livability, increased property values and attractiveness to newcomers. The Central Business District (CBD) is witnessing a revitalization that began soon after DART opened its first rail operations in 1996. Since that time, a steady stream of renovations began in empty buildings downtown and in a conversion of parking lots into transit-oriented development projects. The trend continues today, notably including residential developments. By the end of 2006, residency in downtown Dallas

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approached the 4,000 mark, and city planners predict the number will reach 10,000 by 2010. According to the City of Dallas Office of Economic Development, more than $640 million in private funds has been invested in the downtown area since 1996. The downtown renaissance and convenient DART rail access has drawn employers as well, with companies relocating and renewing leases in the city center. On the southern edge of downtown Dallas, the new Dallas Police Headquarters has opened adjacent to Cedars Station and the hugely successful South Side on Lamar residential community. South Lamar Street is quickly transforming into an entertainment district featuring restaurants, clubs and coffeehouses. Victory Park, near the American Airlines Center and home to the NBA‘s Dallas Mavericks and NHL‘s Dallas Stars, is a former brownfield site that has been turned into a tremendously successful example of mixed-use development. The location boasts two highprofile luxury hotels, residences, offices, and retail space. Several established ―transit villages‖ at DART stations are drawing substantial infill development. Mockingbird Station, Dallas‘ first true transit village, is a complex of loft apartments and retail and entertainment establishments which opened in 2001. Mockingbird Station now contains 178,000 square feet of retail space, 211 loft-style apartments and 150,000 square feet of office space, and construction has recently begun on an additional 23,000 square feet of retail space with a target completion date in early 2008. Across the street from Mockingbird Station, developers recently completed a $90- million mixed-use refurbishment to the Hotel Palomar. This redevelopment also will contain about 25,000 square feet of lower-level retail with loft-style condominiums. Just up the line at Park Lane Station, construction is under way on a $500-million development with more than two million square feet of retail, apartments, condominiums, hotel rooms and office space. Downtown Plano has also witnessed a highly successful revitalization. Eastside Village, a two-part transit village near DART's Downtown Plano Station was planned and built before the rail station had even opened. The first phase of Eastside Village is a $16- million retail and residential complex occupying two square blocks and also includes a 2,000-square-foot city conference center. The Eastside Village project was so successful that the $18-million second phase - 225 loft apartments and 25,000 square feet of ground- floor retail space - was initiated before the first phase was completed. Forward-thinking North Texas communities that are awaiting future rail extensions are now planning ahead for transit-oriented development. The Cities of Carrollton and Farmers Branch are making plans for town center-style projects, while Irving officials recently announced $3.5 billion in transit-oriented development that will transforming the soon-to-bevacated Texas Stadium site and greatly expand the Las Colinas Urban Center as the gateway to DFW International Airport. Transit-oriented development not only creates a tremendous impact on the economy in the North Texas region but also on the whole state of Texas. According to research conducted by the UNT Center for Economic Development and Research, the development of the 93-mile DART Light Rail System through 2013 is generating more than $8 billion in statewide economic activity, $3 billion in labor income, and more than 64,000 person years of employment.[3] Also, the $3.3 billion in new transit-oriented development that DART Rail stations have attracted through 2005 has produced $78 million in annual property tax revenues (city,

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county, school) and $40.6 million in sales tax income for the state and $6.5 million for local municipalities.[4] As these studies clearly demonstrate, transit-oriented development creates a vitality in communities that promotes greater economic development, increased mobility, improved air quality, and an enhanced quality of life. As such, I would encourage FTA to consider land use and economic development as key factors when evaluating projects. Mr. Chairman, this concludes my presentation to the Committee. I will be happy to answer any questions you have. Again, thank you for the opportunity to testify before you today.

REFERENCES [1]

[2]

[3]

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[4]

Weinstein, Bernard. L, and Clower, Terry L., The Estimated Value of New Investment Adjacent to DART LRT Stations, University of North Texas Center for Economic Development and Research, Dallas, TX, September 2005. 2 Weinstein, Bernard L. and Clower, Terry L. An Assessment of the DART LRT on Taxable Property Valuations and Transit Oriented Development, University of North Texas Center for Economic Development and Research, Dallas, TX, September 2002. Weinstein, Bernard L. and Clower, Terry L, Economic and Fiscal Impacts of DART Operations and Capitol Expenditures, University of North Texas Center for Economic Development and Research, Dallas, TX, April 2007. Weinstein, Bernard L. and Clower, Terry L., The Fiscal Impacts of DART‘s Transit Oriented Development, University of North Texas Center for Economic Development and Research, Dallas, TX, April 2007.

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Chapter 7

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STATEMENT OF DAVID LEWIS, PH.D., SENIOR VICE PRESIDENT, HDR/DECISION ECONOMICS HDR ENGINEERING INC. BEFORE THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE SUB-COMMITTEE ON HIGHWAYS AND TRANSIT IMPLEMENTATION OF NEW STARTS AND SMALL STARTS PROGRAM Good morning. My name is David Lewis. I am Senior Vice President and Chief Economist of HDR Decision Economics, a division of HDR Engineering Inc. I served previously as a Principal Economist of the U.S. Congressional Budget Office. I was trained as an economist at the London School of Economics and I am the recipient of several professional awards, including the Elmer Staats Comptroller General‘s Award of the International Journal of Government Auditing. I am an elected a Fellow of the Institute of Logistics and Transport and an elected Emeritus Member of the Transportation Research Board (Committee on Specialized Transportation). I specialize in the application of CostBenefit Analysis and risk analysis to transportation investment problems. I am a long-serving consultant to the U.S. and Canadian federal governments as well as to local transportation agencies in both countries. For the Canadian federal government I developed the Cost-Benefit Analysis process that helps guide transit investment decision making. My 1999 book, ―Policy and Planning as Public Choice: Mass Transit in the United States‖ (co-authored by Dr. Fred Williams) is a quantitative accounting of the benefits of mass transit. I would like to thank Sub-committee Chairman DeFazio for inviting me to appear here today. It is my purpose to try and place questions about the New Starts process in the broader context of economic value for money. The principal message I wish to leave with you is that in not recognizing the full economic value of transit projects, the federal New Starts process creates a risk of underinvestment in transit and, hence, the marginalization of public transportation investment in American urban development.

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THE ECONOMIC BENEFITS OF NEW STARTS Whereas the New Starts process quantifies ridership as the principal benefit of New Starts, the economic benefits of transit actually fall into three categories, congestion management; mobility for transit users; and community economic development. While all three are measureable, albeit with uncertainty, the FTA New Starts program focuses on ridership alone, which is actually a sub-set of the mobility category. Regarding Congestion management. Increased use of transit in lieu of automobiles can lead to improved traffic flow, shorter highway travel times and reduced unpredictability in travel time. Such benefits accrue to both the passenger and freight sectors. Improved traffic flows and travel times lead, in turn, to reduced vehicle operating costs; improved air quality, reductions in greenhouse gases; improved public health; and fewer traffic deaths, personal injuries and property losses. Whereas the benefits of highway capacity expansion in congested corridors can erode as new demand is induced to use the facility, my studies for FTA demonstrate that rail systems in congested highway corridors serve to stabilize roadway congestion in the face of population growth and land development. Regarding Mobility for Transit Users. Increased use of transit creates mobility benefits for riders. For low-income individuals transit is often used in lieu of taxis and other highercost modes and thereby releases scarce household resources for more highly valued uses, including shelter, nutrition and childcare. Increased mobility might also lead to cross-sector resource savings through a reduction in the demand for home-based nutrition, dialysis and other social services. Regarding Economic development. Transit creates statistically measurable economic value for communities, with benefits extending to both transit users and non-users. This value is manifest in increased land values and rents created by the demand for residential and commercial space in transit-oriented urban environments. Scientific statistical studies of how transit stations affect urban development values reflect both the capitalization of transportation benefits (i.e., the manifestation of delay savings) and nonuse benefits of transit due to improved neighborhood structure and livability. Studies my firm performed for the Federal Transit Administration indicate that rail transit stations yield in the range of $16.00 greater residential equity value for each foot closer a property is to the station. Findings in San Francisco, for example, indicate that the average home carries $15,000.00 more value for each 1000 feet closer to a BART station. My studies for FTA also show that proximity to Metrorail here in Washington D.C. station has a positive impact on commercial property values. We find that a 1,000 foot decrease in walking distance to a Metrorail station increases commercial property values by $2.30 per square foot. For the average sized commercial property of about 30,500 square feet, each 1,000 foot reduction in walking distance to a Metrorail station increases the value of a commercial property by more than $70,000.00. For proposed new starts and extensions, such as rail investment proposals I recently evaluated in Minneapolis-St. Paul, Austin and Toronto, the cumulative projected effect of these projects on downtown and suburban economic development value is in the hundreds of millions of dollars. Although a portion of this increased value reflects the capitalization of transit time savings in the value of land (and is thus reflected in the measurement of congestion benefits) transit can give rise to urbanization and amenity affects that are valued

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by people who do not use transit. As well, whereas increased land values associated with transit represent, in part, the transfer of development from other parts of the region, the character of development, namely urban as distinct from suburban development, is unique and thus additive to the diversity value of the region.

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THE NEED FOR BEST-VALUE INVESTMENT DECISIONS The New Starts framework does not seek to determine whether projects are economically worthwhile, but rather to rank them against one another as a basis for distributing a predetermined allocation of congressionally appropriated funds. Yet, without economic yardsticks, decision makers cannot ask how much transit investment is actually worthwhile, nor how transit projects stack up in relation to highway alternatives. In other sectors, capital investment choices follow from rigorous economic analysis and head-tohead comparisons of alternative solutions. In the urban transportation sector, however, transit and highway projects are treated separately, as if they serve wholly different purposes (which, of course, they don‘t). Failure to examine transit and highway projects against a common economic yardstick works to transit‘s disadvantage in the competition for budgetary resources. Methods exist for examining proposed new highway investments in terms of conventional tests of investment value, (metrics such as net life-cycle benefits and rate of return). This can place highways within the powerful accountability framework of capital budgeting. By benchmarking highway rates of return to alternative uses of funds (such as bond market returns), highway investment decisions can occasion a great deal of financial and economic legitimacy. The reality that transit cannot as a rule make it financially seems to have created a belief in some quarters that it cannot make it economically either. Evidence indicates the reverse, however. Evidence from the application of mainstream business case methods indicates that the benefits of a single New Start project can exceed its costs by almost $1 billion dollars and produce net benefits greater than those associated with alternative highway capacity expansion projects (Table 1). Table 1. Cincinnati I-71: Estimated Costs, Benefits, Net Benefits and Ranking of Alternative Strategies, (for the period 2003 – 2032, in dollars of present-day value) OPTION

TOTAL ECONOMIC COST In millions of 2003 dollars

Alternative 1 - Four$616.7 Lane Continuity Alternative 2 - Four- $605.6 Lane Continuity plus HOV

TOTAL ECONOMIC BENEFITS In millions of 2003 dollars $699.9 $439.2

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NET ECONOMIC BENEFITS Benefits minus costs, in millions $83.2 of 2003 dollars ($167.3)

RANK Rank order of contribution to regional economic welfare 4 5

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Table 1. (Continued) OPTION

TOTAL ECONOMIC COST In millions of 2003 dollars

Alternative 3 - Light Rail Transit (LRT) $1,087.9 Alternative 4 - Peak $65.0 Period Truck Restriction Alternative 5 $1,704.6 Combined FourLane Continuity and Light Rail Transit (LRT)

TOTAL ECONOMIC BENEFITS In millions of 2003 dollars

NET ECONOMIC BENEFITS Benefits minus costs, in millions $911.4 of 2003 dollars

RANK Rank order of contribution to regional economic welfare

$385.5

$320.5

3

$2,428.3

$723.6

2

$1,999.4

1

Source: HLB Decision Economics Inc. for the Metropolitan Mobility Alliance, Moving Forward: The Economic and Community Benefits and Investment Value of Transportation Options for Greater Cincinnati, April 2, 2001.

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RECOMMENDATIONS Broadening the New Starts process to recognize the full economic value of transit proposals would help create a level playing field for urban transportation investment and elevate transit‘s status in resource allocation decisions accordingly. But this should not, in my view, be executed in such a way as to complicate the already long and involved New Starts procedure. I make the following recommendations:

1. In addition to the benefits directly associated with ridership, FTA should encourage localities to examine the congestion, mobility and economic development value of transit; FTA should recognize such values in federal decision making; 2. The Federal Highway Administration should require Metropolitan Planning Organizations to compare prospective major highway investments to transit alternatives in terms of conventional business case yardsticks, namely Cost- Benefit Analysis; and 3. The Federal Transit Administration and the Federal Highway Administration should provide coordinated technical guidelines for the application of common business case analysis tools.

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Chapter 8

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STATEMENT OF JAMES S. SIMPSON ADMINISTRATOR FEDERAL TRANSIT ADMINISTRATION U.S. DEPARTMENT OF TRANSPORTATION BEFORE THE SUBCOMMITTEE ON HIGHWAYS AND TRANSIT COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE U.S. HOUSE OF REPRESENTATIVES FTA IMPLEMENTATION OF THE NEW STARTS AND SMALL STARTS PROGRAMS Good morning, Chairman DeFazio, Ranking Member Duncan, and Members of this Subcommittee. Thank you for the opportunity to testify today on the Federal Transit Administration's (FTA) New Starts and Small Starts programs, which are among the Federal government's largest discretionary programs. When the New Starts program was last evaluated by the Office of Management and Budget (OMB), the program received the highest rating among 62 competitive Federal grant programs. The Government Accountability Office (GAO) and the Department of Transportation Office of the Inspector General have lauded our management of the program as one of the government's most rigorous. At this time, FTA also would like to thank GAO for its annual review of the New Starts program. Over the years, we have cultivated a good working relationship with GAO representatives and have taken into account many of the findings and recommendations in past reports as we manage the program. ETA's management of the New Starts program fosters highly successful Federal-local partnerships that positively impact millions of Americans across the country on a daily basis — both transit riders and users of our Nation's highway system who benefit from additional transportation capacity. Communities across the country count on public transportation systems to provide a reliable alternative to congested highways and highway users who fund large percentages of the costs of public transportation expect these systems to be integrated with highway policies. For example, the Texas Transportation Institute estimates that without public transportation, the cost of lost time and wasted fuel on our Nation's highways would be nearly $20 billion more every year. New Starts and Small Starts investments can be

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particularly effective when utilized in connection with a highway congestion reduction strategy. In addition, millions of Americans who lack access to an automobile need public transportation for their basic mobility needs. And, public transportation contributes to economic development, air quality, and other local goals and objectives.

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STRONG PROJECT MANAGEMENT OVERSIGHT PROGRAM Since the passage of the Intermodal Surface Transportation Efficiency Act of 1991, FTA has provided nearly $17 billion in New Starts funds to help build 27 light rail, 19 commuter and heavy rail, and a number of streetcar, bus, and other transit projects with total project costs of approximately $37 billion. Since June 2006, FTA has executed 5 Full Funding Grant Agreements (FFGAs) having a Federal share of $3.42 billion, with total project costs of approximately $10 billion. On April 12 of this year, FTA sent Congress a 60-day notification of our intent to execute an FFGA with the Tri County Metropolitan Transit District for the Portland, Oregon, I-205/Downtown Mall Light Rail Transit project. Even as we execute more FFGA's, FTA has increased its commitment to the sound management of these limited Federal resources. We understand the pressures and anticipation that local communities face as they plan, develop, and construct major transit capital investments. We also know that schedule delays may result in increased costs. However, the costs to taxpayers that result when proper oversight is not provided can be much greater. It is imperative that FTA continue to provide strong and on-going oversight in order to mitigate this risk. FTA believes it is making good investment choices and our oversight program supports our decision-making process. FTA's current portfolio of projects under construction totals $21.5 billion in project costs, and FTA is managing costs to within 0.5 percent of the FFGA baseline and cost estimates. We have achieved this success through a close working relationship with New Starts project sponsors, and by providing oversight, technical assistance and risk management. FTA helps local sponsors identify risks in cost estimates and schedule assumptions early on, and develop strategies to minimize and manage these risks as projects proceed through design and construction. FTA has made significant investments in oversight resources to carry out these activities. Likewise, we have invested heavily in tools, techniques, and training to help local agencies better estimate the ridership and travel time savings anticipated by their proposed New Starts projects, and to better understand the travel markets that benefit from the proposed investment. FTA oversight is paying off for the transit program. Travel forecasting methods are much improved. Improving the reliability of project cost and benefit estimates helps ensure that Federal investment in transit is directed to the most worthwhile projects and also improves the information available to support local decision-making. The result is successful projects that ultimately foster Federal and local commitment to additional investment in transit.

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NEW STARTS PROGRAM ASSESSMENT AND RESULTANT IMPROVEMENTS FTA strives for continuous process improvement, quality, and increased customer satisfaction. As a result, we undertook the further step last summer of engaging an international business and management consulting firm to review our New Starts process. That firm, Deloitte Consulting, LLP, reviewed and assessed every aspect of the New Starts competitive process from organizational structure and operations to improved project delivery. The Deloitte report is organized around four general themes, i.e., streamlining project development and evaluations processes; New Starts process management; FTA's organizational structure; and, improved communications. The Deloitte report first discusses streamlining project development and evaluation processes, i.e., how FTA can move projects faster, reduce reporting requirements, and shorten, or at least standardize, review times. On this front, we are happy to report on some short-term measures that we are prepared to implement in the coming weeks, and some longer-term opportunities we intend to flesh out in the near future. As first outlined in our February 2007 Proposed Policy Guidance on New Starts and Small Starts, FTA proposed eliminating a number of New Starts reporting requirements, including, for many projects, the need to re-report any criteria on an annual basis. New Starts stakeholders voiced support for this idea through the public comment process, and we will address their comments in the final New Starts Policy Guidance, which we will issue in the very near future. In terms of improving FTA response times, the Deloitte group endorsed the Project Development Agreement — or PDA — a concept that we have encouraged the industry to consider for some time. Under a PDA, the New Starts project sponsor and FTA would agree to a delivery schedule, a review of key project development deliverables, and clarify FTA and local expectations for demonstrating project development progress. Both parties to the agreement would be held accountable for the advancement of candidate New Starts projects. FTA looks forward to working with project sponsors on such agreements. In addition, FTA is looking at ways to more efficiently address project development risk, such as the potential for cost overruns and schedule delays. One way is to incorporate risk management into the project development process, and we are happy to report to you that in the next several weeks FTA will be unveiling a robust program of guidance and training in project risk management. A second way is to encourage alternative project delivery methods, including various public private partnership delivery methods commonly utilized in the highway sector around the world such as design build, design build operate and maintain agreements, and long term concessions. FTA's Public-Private-Partnership Pilot Program — or Penta-P — acknowledges this transfer of risk from the public to the private sector with the advantage of streamlined FTA oversight requirements. Under Penta-P, FTA will remove the private sector investment in a proposed New Starts project from its cost effectiveness calculation to the extent the terms of such investment provide powerful incentives for more efficient operations and management of a project. The investment of private capital in major transit capital projects is likely to improve the accuracy of cost and ridership projections used to justify public investment in such projects. We believe Penta-P will be a successful extension of the Federal-local partnership, resulting in more efficient Federal investments in new major capital projects.

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A second theme found in the Deloitte report is New Starts process management. In this regard, Deloitte recommended that PTA develop and better integrate meaningful program performance measures into its strategic business plan, which we are actively considering. Deloitte also recommended that FTA improve upon its industry guidance. The development of major transit capital investment projects is a complex endeavor, often among the largest and most technically challenging public infrastructure efforts undertaken in many urban areas. FTA possesses considerable technical expertise in this area and has developed a number of guidance documents available on its website, as well as training opportunities in such topics as alternatives analysis, travel forecasting, and construction management. In addition to the risk management initiative, FTA is developing technical guidance on capturing previously unmeasurable benefits in local travel forecasting procedures. Both efforts will result in better New Starts project cost and benefit estimates. Deloitte further recommended that FTA develop guidance that clarifies and simplifies its procedural requirements for advancing projects through the New Starts project development process. FTA agrees, and is responding to this recommendation. In addition to the New Starts Policy Guidance and updated New Starts Criteria Reporting Instructions, FTA plans to publish Preliminary Engineering and Final Design "checklists," clarifying, in one source document, the distinct requirements for advancing projects into each project development stage. Also, in the coming weeks, FTA will clarify guidance on the New Starts baseline alternative, including substantial streamlining in the baseline development and approval process; issue final guidance on the Before and After study and the first set in a series of New Starts "fact sheets" — one page synopses geared to local policymakers and agency staff alike - of the guiding principles supporting the myriad of New Starts activities, including project development, evaluation, technical competencies, and FTA requirements. The industry can expect even more guidance in the months ahead. To further improve the New Starts management process, FTA is implementing more efficient and transparent management systems to facilitate project development delivery reviews. Technology will play a large role in this endeavor. FTA is engaged in its own "alternatives analysis" of several internet-based case management systems designed to respond to the need for project tracking, tracking of project deliverables, FTA review periods, FTA comments and direction, and accountability for that direction — in essence, the writing of a project development history, at least in terms of FTA involvement and its significant milestone approvals. Importantly, this system will be open and available to project sponsors, so that they can be assured that FTA is delivering timely reviews and technical assistance. The third theme in the Deloitte report focuses on FTA's own organizational structure. FTA has dedicated staff serving both a national program in Washington, DC and its implementation arm(s) in 10 regional and 5 metropolitan offices across the country. As part of our stewardship responsibilities, we work hard to ensure that all New Starts project sponsors are provided the same level of agency support, and that their projects compete on a level playing field. We endeavor to optimize employee skill sets in program administration. We also strive to improve upon the stakeholder service that we take such pride in. To that end, FTA is implementing the "New Starts Team" concept, designed to bring together technical and programmatic resources to deliver responsive technical assistance and to bring a "problem- solving" attitude to the implementation of our program. Essentially, New Starts project sponsors are paired with a "New Starts Team," whose primary point of contact resides in the FTA Regional Office. Both the project sponsor and the FTA Regional Office can rely

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on transit planners, environmental specialists, engineers, and other resources in headquarters to provide timely technical support, reviews and responses to questions. FTA is developing internal standard operating procedures for the New Starts Teams and then will issue guidance on the range of New Starts Teams' services and the process for working with the Teams. The fourth theme evident in the Deloitte report is the need for improved communications with program stakeholders. At this juncture, I would like to note our close working relationship with Congress on the New Starts process and the status of individual projects. We have a monthly New Starts conference call with House and Senate Committee staffs during which we provide individual project updates and discuss notable problems or policy changes. We have found this to be an invaluable tool in keeping Congress apprised of project status and policy updates. In addition, we communicate with Congress in writing before each New Starts project proceeds to the next stage of development. Before a project proceeds into Preliminary Engineering, Final Design, or Project Development, we provide Congress with a 10 day notice and a short description of the project. Prior to signing an FFGA, we provide Congress with a 60 day notice, an in-depth briefing and a copy of the agreement and supporting documentation. It is certainly our desire to make the New Starts process as transparent as possible and having a close working relationship with Congress is a key component of that goal. Aside from our discussions with Congress, many of FTA's initiatives mentioned in my testimony, such as enhanced guidance, training on FTA procedural and technical requirements and expectations, a transparent New Starts case management system, and clearer lines of FTA responsibility for key aspects of the program, certainly contribute to improved communications. We also will perform more stakeholder outreach, which will include the popular "New Starts Roundtable" discussions with transit agency staff.

SMALL STARTS The Small Starts program is a significant departure from the traditional New Starts program, which has long required as a defining feature of eligibility a "fixed guideway," that is, either an exclusive or semi-exclusive transit right-of-way or in-street rail operations. Communities with low population densities are often unable to successfully compete in the New Starts process because travel markets inherent to such areas generally do not justify investment in complex fixed guideway systems. And yet, certain transit investments in these communities often require more funding than can be generated locally or provided under FTA's discretionary bus program. In addition, we have found that project sponsors often avoided less-costly public transportation projects because New Starts funds were limited to fixed guideway investments. For these reasons, SAFE-1.EA-LU established the Small Starts program to advance lower-cost fixed guideway and non-fixed guideway projects such as bus rapid transit, streetcars, and commuter rail projects through an expedited and streamlined evaluation and rating process. Subsequent to the passage of SAFE1EA-LU, FTA introduced a project concept called "Very Small Starts." These projects are simple, low-risk projects that qualify for a highly simplified project evaluation and rating process by FTA. A project must be a bus, rail or ferry

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project, contain certain features and have a total project cost of less than $50 million. Such projects, by their nature, have sufficient benefits to rate well without further analysis. Interest in the Small Starts program is growing, but until recently there were not enough eligible projects to justify the authorized funding levels. That looks to be changing, however. In addition to the four projects that the Administration recommended for funding in the President's FY 2008 budget request, FTA is working with several potential Small Starts project sponsors on preparing a request for entry into project development. FTA may recommend any one of these projects for FY 2008 funding. With your support, Mr. Chairman, and the support of the Subcommittee members, I am confident that we can administer a robust Small Starts program during this reauthorization period.

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GUIDANCE AND REGULATIONS In early 2006, FTA issued an Advance Notice of Proposed Rulemaking (ANPRM) on the Small Starts program and draft policy guidance on the New Starts program to seek public input for later development of a notice of proposed rulemaking (NPRM). Over the next several months, FTA held a number of outreach sessions to discuss these two documents. Given the complexity of the issues involved and the level of interest in both the New Starts and Small Starts programs, the comments we received were extensive. FTA has worked diligently to review and reconcile the comments, and we hope to soon issue an NPRM for both the New Starts and Small Starts programs. In the meantime, FTA issued final New Starts Policy Guidance in May 2006 and an Interim Guidance on the Small Starts program, including Very Small Starts, in July 2006. Both documents are intended to guide the development and advancement of New Starts and Small Starts until issuance of a final regulation or subsequent policy guidance in the next few months, followed by a final rule sometime in 2008.

CONCLUSION Chairman DeFazio, Ranking Member Duncan, and Members of this Subcommittee, FTA is committed to the New Starts and Small Starts programs. The Deloitte report provides FTA with an independent process review and assessment of the programs and we are implementing many of the firm's recommendations. We are committed to streamlining project delivery while providing strong project management oversight. We strive to bring good projects in ontime and within budget. We are enhancing customer service through improved communications and are eager to provide program guidance and establish regulatory requirements for both these programs. We look forward to working with Congress on these and other issues facing our Nation's public transportation system. I will be happy to respond to your questions.

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Chapter 9

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TESTIMONY FROM PETER VARGA, EXECUTIVE DIRECTOR, CHIEF EXECUTIVE OFFICER INTERURBAN TRANSIT PARTNERSHIP GRAND RAPIDS, MICHIGAN: HOUSE TRANSPORTATION AND INFRASTRUCTURE COMMITTEE SUBCOMMITTEE ON HIGHWAYS AND TRANSIT, MAY 10, 2007 Chairman DeFazio, Congressman Ehlers, and distinguished members of the Subcommittee, I am Peter Varga, Executive Director and Chief Executive Officer of the Interurban Transit Partnership ("The Rapid" as it is referred to locally). The Rapid operates 19 fixed bus routes and carries nearly 7.4 million riders per year. Ridership has grown by 43% since 2000. The Grand Rapids region began a study of transit options in early 2003 as part of a Major Investment Study ("MIS") to consider the most appropriate technology and project corridors for an expansion of transit service through the New Starts program for the region. As the MIS was being conducted, which we refer to locally as "Great Transit, Grand Tomorrows" (GT2), Congress adopted the Small Starts program as part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ("SAFETEA-LU"). We quickly shifted our focus to the new Small Starts program since it provided an opportunity to develop a transit project that was consistent with the scale of project most appropriate for Grand Rapids. Two separate projects emerged from the MIS - (1) a 10 mile Bus Rapid Transit ("BRT") project from downtown Grand Rapids south along Division Street that will include service to the cities of Grand Rapids, Wyoming and Kentwood, as well as the townships of Gaines and Byron, and (2) a downtown streetcar circulator of approximately 2.2 miles in length that will connect major destinations and trip generators in the downtown. However, only the BRT will be submitted under the Very Small Starts program while local and private sector funds will be sought for the downtown streetcar circulator. My testimony will focus on how that decision was made and the impact of the Federal Transit Administration ("FTA") FY 2008 Small Starts Guidance and the impact of the establishment of a Very Small Starts program on that decision.

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As you know, the Very Small Starts program provided a reduced project review and evaluation process for those projects with the following characteristics:   

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   

a total capital cost of less than $50 million per mile cost less than $3 million (excluding vehicles) operate at least fourteen hours per day, with ten minutes peak.15 minute off peak headways in corridors that currently carry at least 3,000 rider per day, substantial transit stations, signal priority/preemption, and, low-floor vehicles or level boarding.

Projects containing these characteristics, after preparing basic information about the project, would receive a "medium" rating on each of the principal criteria - cost effectiveness, land use, and effect on local economic development. In contrast, a streetcar project would be required to prepare information pursuant to a reduce New Starts process and would be subject to the current measure for cost effectiveness. Moreover, the effect of the project on economic development would be relegated to being considered an "other factor" and not given the same weight as the other criteria. The Grand Rapids region quickly concluded that under the FTA criteria for the Small Starts and Very Small Starts program that the greatest prospect for securing federal funding would be realized by pursuing funding for the BRT project through the Very Small Starts program, Therefore, we have worked closely with FTA over the past several months as we have developed the supporting documentation to seek FTA approval to advance the BRT project into the next phase - project development. FTA has given us invaluable technical assistance through this process. The Board of The Rapid approved the BRT project as its Locally Preferred Alternative on January 24, 2007 and two weeks ago the Grand Valley Metropolitan Council, the metropolitan planning organization for our region, approved the inclusion of the BRT project on the regional Transportation Improvement Program. We will be submitting our project information to FTA this Summer and seeking approval to enter PD later this year. There continues to be considerable interest in the downtown circulator streetcar project. However, a decision was made not to seek Small Starts funding because the project would not meet the eligibility criteria for the Very Small Starts program, based on the $60 million cost of the project, and the fact that the Small Starts program, as implemented to date by FTA, does not establish a project approval framework that is favorable to streetcar projects. Thus, we will seek to build the project without Federal funding. You might ask why we believe that the project would not fare well under the current Small Starts program criteria. First, we understood the Small Start program to offer a simplified process, but the process established by FTA is essentially the existing New Starts project approval process which is very data and time intensive. Second, we understood that it was the intent of Congress to place a greater emphasis on land use and the effect of a project on economic development, but FTA has opted to relegate economic development to an "other factor" and maintain the project approval process used for the New Starts program. It is our understanding that FTA has taken the position that the Congress was not clear that cost

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effectiveness, land use and the effect of the project on economic development are to receive equal weight in the project review and evaluation process. Any legislative language or other directive to FTA to clarify your intent would be very helpful in reinforcing the change in the law made by Congress. Third, FTA continues to rely on a cost effectiveness measure that places an emphasis on long distance trips and comparing options based on travel times which is not the transportation role for a streetcar project. Fourth, a review of the FY 2008 and proposed FY 2009 Guidance would indicate that FTA does not embrace streetcars based on the fact that project sponsors can't count pedestrian trips generated as a result of the availability of the streetcar, the reluctance to develop and implement a measure for the effect of a project on economic development even as the statute requires the agency to do so, and the lack of recognition of ability of a streetcar operating in a denser urban environment to eliminate auto trips due to its accessibility and availability. Thus, while we will proceed with the BRT project through the Very Small Starts program, we remain interested in a streetcar project and would seek federal funding if the project review criteria were revised by FA. Thank you for the opportunity to testify before the Subcommittee today and to present our perspectives on the Small Starts program.

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Chapter 10

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SUBCOMMITTEE ON HIGHWAYS AND TRANSIT RICK GUSTAFSON EXECUTIVE DIRECTOR, PORTLAND STREETCAR, INC. PORTLAND, OREGON Chair DeFazio, distinguished members of the Committee, my name is Rick Gustafson, Executive Director of Portland Streetcar, Inc. PSI is a nonprofit corporation that contracts with the City of Portland to design, build, operate and maintain the Portland Streetcar system. Portland Streetcar inaugurated modern low floor streetcar service in 2001. We have extended the line three times to reach a 4.0 mile line serving the Central City of Portland. We carry over 3 million riders per year and have been a part of extraordinary urban redevelopment that has occurred in Portland. Since we announced the streetcar, there has been $2.8 billion of new investment along the corridor with over 7,000 new residential units built. The streetcar operates in mixed traffic and serves a shorter trip than light rail and provides the connections between centers in denser populated areas. I want to congratulate the Committee on making great progress in the last authorization bill SAFE-TEA LU. The establishment of Small Starts is an important break through for supporting lower cost fixed guideway projects that serve denser areas of our cities and provides quality service for shorter trips. Prototype Manufacturer Important Action by the Committee: Before we discuss the implementation of Small Starts, I want to express my appreciation for including a grant for a US- owned manufacturing company to manufacture a modern low-floor streetcar in the US. I believe streetcars are in a similar place that light rail was in the early 1980‘s where there were no new systems in the country and Portland, San Diego and Buffalo committed to build theirs. Since then over 2,500 vehicles have been delivered to US cities with an average of 135 vehicles per year over the last 11 years. To date, not one light rail car has been manufactured by a US-owned company. Your help with the prototype grant is a part of making sure we do not repeat the light rail story with streetcars. Portland Approved for Project Development: The Portland region has been an active participant in the development of the Small Starts program when the concept was first introduced to this Committee. The initial year of rule making with FTA was frustrating and discouraging as no progress was made in streamlining or in accommodating the

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Subcommittee on Highways and Transit Rick Gustafson…

benefits of streetcar. Since September of last year, there has been a significant change in attitude at FTA. In November, FTA contacted TriMet, our regional transit agency, to encourage our application. The Portland region submitted the application for Small Starts funding for the Portland Streetcar Loop Project which extends the existing line 3.3 miles and creates a Central City Loop connecting both sides of our river. The application for the Portland Streetcar Loop Project with an estimated total cost of $152 million project was submitted on February 9, 2007. FTA notified of us of approval on March 20. Congress was notified by FTA on April 16. We received excellent response and support from FTA through this process. April 26, 2007, FTA issued the letter of approval for Project Development for the Portland Streetcar Project. They gave our project an overall rating of Medium. But in the next paragraph, they destroyed the project by reverting to their previous position that no project with a low cost effectiveness rating can be recommended for funding. Cost Effectiveness: The most discouraging aspect of FTA review is the application of the same Cost Effectiveness measure used for New Starts to the Small Starts program. The FTA measurement tool, known as TSUB, does not account for the benefits that are derived from the streetcar investment. Our Streetcar proposal projects 10,000 average weekday trips, equal to some of the best bus lines in the region. However, streetcar trips are shorter in length and do not result in significant travel time savings compared to similar bus lines. But a streetcar, which links inner-city housing to close by employment and shopping opportunities, facilitates a travel pattern with reduced reliance on autos, and more reliance on walking, and short transit trips. This reduces vehicle miles of travel and vehicle trips – with accompanying environmental, energy and transportation system benefits. FTA‘s cost-effectiveness measure is short-sighted and does not include these benefits. Because the travel time on streetcars is generally the same as a bus, the current FTA cost effectiveness measurement tool guarantees a “low” rating for streetcars. I would urge that the Committee include language in the next authorization that either changes the current cost effectiveness measure to reflect the system benefits from these shorter and foregone trips, or automatically provide streetcars with a pass on cost effectiveness when packaged to serve, create, and enhance high density urban neighborhoods. In this regard, we were recently very surprised that FTA‘s letter approving the Portland Streetcar Loop project requires that the project achieve a ‗medium‘ FTA cost-effectiveness measure before being granted funds. This was contrary to earlier communication with FTA, which indicated that a ‗ high ‗ land use score would balance with a ‗low‘ in this particular costeffectiveness score to achieve an overall ‗medium‘ rating – the statutory requirement for funding. I question whether Congress intended this one ‗low‘ rating to trump all the other criteria in SAFE-TEA LU, land use, economic development, etc., as FTA‘s recent letter to us implies. The Portland Streetcar Loop Project has a $35 TSUB rating and $22.49 is the maximum cost per benefit for a medium rating. We made our application with FTA‘s encouragement, and full knowledge of our TSUB score. But, because of these changing signals from FTA, we now believe our project is ‗high centered.‘ The refusal of FTA to allow other benefits to balance the narrowly defined cost effectiveness criteria is the primary reason that Portland is currently the only applicant for streetcars in the Small Starts process. With clear legislative intent and broad base of interest in streetcar

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149

development in our cities, it is inexcusable for FTA now two years later to refuse to follow congressional intent of facilitating smaller fixed guideway projects. Economic Development: The Committee was successful in adding economic development to the criteria for approval of projects. Portland has conducted economic studies of the Central City before and after streetcar was built. Before streetcar offered the higher quality access, developers built at much lower densities preferring townhouses and rowhouses for the in-town living. When the streetcar came to the RiverPlace (downtown development), a new condo tower is built in response to the higher quality access. Prior to the streetcar, developers averaged 30% of the zoned density for parcels along the streetcar. After announcing the streetcar, the average has been 90% of allowed density has been built along the streetcar line. More important, 53% of all the new development in the Central City since 1997 has been within one-block of the streetcar line. Streetcars can attract higher density and attract development. Trip Not Taken: Streetcars support a much higher density of development. One of the most important benefits to an area is not currently taken into account by the FTA criteria, namely the reduction in vehicle miles traveled. Creating livable mixed use environments that are attractive to residents result in very different travel behavior. A family living in a mixed use environment will satisfy their trip needs by walking 25% of the time they need to travel. The average family in a mixed use environment will travel 9 vehicle miles per day while the same family will travel 21 in a suburban environment with limited transit. The 7,248 new households built in Portland along the streetcar line, if located in the suburbs, would have added 59 million vehicle miles per year to the system. It is possible to calculate trip reduction and congestion relief in this form. And believe me, it is a benefit. It is time we started counting the obvious benefits in managing travel in our cities. Exempt Projects: In SAFE-TEA LU, Congress eliminated the exemption for projects requesting less that $25 million federal funding. Whiles FTA has developed a Very Small Starts Program, it is written in a way to make it impossible for streetcars to qualify. I would urge that the exemption for Small Starts projects seeking less than $25 million be restored in the next authorization. Two very successful streetcar projects partially funded by FTA have relied upon the exemption to be implemented: Little Rock which is operating very successfully and Seattle that will open in December of this year. Neither project could have been accomplished without the exemption provision of the law. I know that many cities in the US are evaluating streetcars with numerous ones needing less than $25 million federal funds. Kenosha, Wisconsin is one example. Streetcar Potential is Real: There are over 80 cities in the country that are conducting streetcar studies. The Small Starts program is a good start for a federal partnership with cities and transit districts that are committed to high quality, mixed use and higher density environments. The Streetcar supports and incents the higher density development that supports livable, sustainable environments. It does it with domestically produced power, and, with your help, we can domestically manufacture the vehicles. To summarize the recommendations:

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3. Establish a balance in the criteria with cost effectiveness, land use and economic

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development. 4. Restore the exemption for fixed guideway projects requiring less than $25 million.

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INDEX

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A academic, 67 access, xi, 8, 19, 21, 23, 24, 40, 91, 105, 131, 138, 149 accessibility, 37, 40, 145 accountability, 57, 135, 140 accounting, 13, 40, 51, 69, 133 accuracy, 30, 67, 139 achievement, 130 administration, 31, 77, 82, 85, 108, 140 advertising, 3, 14 advocacy, 65 aggressiveness, 13 aid, 11, 14 air, xi, 10, 12, 35, 36, 44, 48, 52, 53, 70, 71, 111, 127, 132, 134, 138 air quality, xi, 35, 36, 44, 52, 53, 71, 111, 127, 132, 134, 138 Alaska, 63, 64, 88, 89 alternative, x, xi, 2, 7, 8, 17, 31, 37, 38, 42, 45, 68, 69, 70, 71, 72, 76, 79, 80, 94, 96, 98, 107, 112, 122, 135, 137, 139, 140 alternatives, 31, 37, 54, 58, 61, 68, 69, 70, 71, 79, 80, 84, 98, 99, 101, 103, 107, 108, 113, 121, 122, 135, 136, 140 ambient air, 36, 44 American Airlines, 131 American Public Transportation Association, 19, 20, 21, 65, 104, 105 annual rate, 19 annual review, 137 appendix, 28, 38, 71, 72 application, 31, 44, 76, 79, 80, 81, 95, 96, 97, 98, 99, 100, 101, 102, 103, 108, 112, 133, 135, 136, 148 appropriate technology, xi, 143 appropriations, 62, 85

argument, 8, 12 Arizona, 66, 104 ART, xi, 129, 130 ash, 60, 66 assessment, 6, 10, 41, 44, 54, 65, 124, 125, 142 assets, 14, 48, 71 assumptions, 6, 9, 40, 41, 51, 52, 72, 100, 138 attractiveness, 37, 130 auditing, 28, 68, 78, 106 authority, xi, 106, 129 automobiles, 134 availability, 122, 145 averaging, 33, 36, 47 awareness, 103, 120

B barriers, 16 BART, 120, 121, 134 behavior, 29, 42, 68, 69, 149 benchmarking, 135 benefits, xi, 7, 8, 11, 12, 13, 15, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 57, 58, 59, 65, 68, 69, 70, 71, 72, 77, 80, 82, 90, 91, 97, 99, 107, 108, 112, 113, 115, 117, 122, 124, 125, 130, 133, 134, 135, 136, 140, 142, 148, 149 bias, 12 blame, 13 blocks, 131 boats, 64 bond market, 135 bonds, 13, 14 bonus, 117 Boston, 61, 65, 120 Britain, 86 budget deficit, 9 budgetary resources, 135

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Index

152 buildings, 130 Bureau of Economic Analysis, 21, 93 buses, 5, 8, 15, 17, 37, 69, 106

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C calibration, 68 capacity, xi, 7, 8, 17, 29, 32, 39, 42, 54, 82, 134, 135, 137 capital cost, 6, 14, 60, 61, 62, 63, 65, 70, 71, 77, 83, 85, 86, 87, 100, 106, 112, 116, 144 capital expenditure, 4, 8, 10, 18 category a, 46 Census, 19, 20 Census Bureau, 19, 20 central city, 8 certifications, 125 childcare, 134 Cincinnati, 135, 136 clustering, 72 collaboration, 105 Colorado, 104, 105 combined effect, 126 communication, 7, 32, 102, 148 communities, 64, 89, 111, 130, 131, 132, 134, 138, 141 community, xi, 15, 20, 30, 31, 53, 59, 91, 103, 114, 119, 130, 131, 134 commuter rail system, xi, 119, 120 competition, 16, 121, 135 competitive process, 139 complexity, 5, 26, 29, 30, 41, 44, 46, 53, 76, 95, 125, 142 compliance, 71, 119 components, 96 composition, 76, 78, 93 concentration, 10, 17 confidence, 58, 108 Congestion, 5, 16, 18, 20, 21, 23, 117, 134 congress, 22 Congress, v, ix, x, xi, 1, 2, 5, 6, 15, 16, 17, 18, 21, 22, 23, 24, 27, 32, 33, 57, 62, 70, 71, 74, 76, 78, 81, 82, 85, 107, 111, 112, 113, 114, 115, 116, 121, 123, 125, 138, 141, 142, 143, 144, 148, 149 Congressional Budget Office, 9, 18, 21, 93, 133 consensus, 58 conservation, 11 Consolidated Appropriations Act, 28, 33, 73 constraints, 55, 57 construction, x, 8, 9, 10, 12, 13, 31, 55, 61, 70, 75, 77, 81, 83, 101, 107, 119, 120, 122, 123, 126, 131, 138, 140 construction materials, 9, 123

consultants, 28, 41, 44, 66, 67, 95, 122, 123, 124 consulting, 139 consumer surplus, 68 consumers, 74 consumption, 70 contractors, 90 contracts, 12, 16, 147 control, 7, 12, 17 conversion, 130 corporations, 14 corridors, xi, 8, 11, 15, 61, 71, 83, 116, 134, 143, 144 cost effectiveness, 26, 112, 113, 122, 125, 139, 144, 145, 148, 149, 150 cost saving, 35, 47, 48, 72 cost-effective, 26, 27, 28, 32, 34, 35, 36, 37, 38, 39, 41, 44, 46, 47, 49, 50, 51, 69, 70, 71, 74, 77, 83, 85, 90, 91, 94, 103, 108, 113, 114, 115, 148 costs, xi, 10, 11, 12, 14, 15, 16, 17, 23, 27, 28, 30, 31, 32, 35, 37, 40, 44, 47, 51, 54, 55, 57, 58, 60, 61, 64, 70, 80, 82, 85, 86, 90, 94, 95, 96, 100, 104, 107, 123, 134, 135, 136, 137, 138 credit, 39, 69 CRS, 1, 18, 20, 21, 23, 24 CT, 86 current ratio, 6, 10 cycles, 73, 89

D Dallas, x, xi, 104, 111, 119, 129, 130, 131, 132 DART, x, xi, 111, 119, 129, 130, 131, 132 database, 105 deaths, 134 debt, 13 debts, 3 decision makers, 37, 54, 135 decision making, 133, 136 decision-making process, 138 decisions, 9, 18, 31, 62, 82, 85, 96, 121, 135, 136 deficiency, 95, 124 deficit, ix, 1, 2, 9, 14 deficits, 14, 15 definition, 71, 83, 101, 108, 116 deflator, 20, 23 delivery, 12, 139, 140, 142 demand, 5, 6, 9, 11, 16, 26, 29, 41, 42, 68, 71, 72, 76, 79, 97, 98, 102, 116, 121, 127, 134 density, 8, 15, 29, 34, 37, 40, 42, 55, 148, 149 Department of Commerce, 21, 93 Department of Transportation, vi, ix, x, 1, 3, 4, 14, 18, 19, 20, 21, 22, 23, 24, 25, 26, 28, 67, 80, 121, 137 dependent populations, 8, 16

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Index desire, 141 development policy, 13 dialysis, 134 diesel, 4, 18 discretionary, 8, 57, 111, 121, 137, 141 discretionary programs, 137 distribution, 12, 17, 18, 54, 55, 57 diversity, 65, 135 division, 133 Division K, 70 donor, 10 DOT, ix, x, 5, 6, 7, 10, 13, 16, 19, 24, 25, 26, 28, 31, 39, 43, 54 double counting, 37 draft, 31, 80, 105, 142 duplication, 103 duties, 31, 54, 59, 102

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E economic activity, 50, 91, 108, 131 economic development, xi, 8, 16, 27, 28, 29, 32, 33, 34, 36, 37, 38, 39, 40, 41, 43, 44, 45, 46, 48, 49, 50, 51, 52, 53, 55, 56, 65, 67, 70, 73, 77, 78, 83, 89, 90, 91, 97, 108, 112, 113, 114, 122, 130, 132, 134, 138, 144, 145, 148, 149, 150 economic growth, 130 economies of scale, 72 elderly, 5 eligibility criteria, 116, 144 employees, xi, 119 employers, 131 employment, 48, 131, 148 encouragement, 95, 148 energy, 11, 16, 70, 148 energy consumption, 70 entertainment, 131 environment, 11, 13, 16, 22, 53, 67, 84, 145, 149 environmental factors, 48 environmental impact, 48, 84, 96, 100 Environmental Protection Agency, 25, 35, 71 EPA, 25, 44, 71 equity, 55, 134 estimating, 29, 34, 40, 41, 68, 70, 92, 107 ETA, xi, 114, 137 evening, 16 evolution, 113, 120 exclusion, 55 execution, 126 Executive Order, 5, 19, 54 exercise, 121 expansions, 15 expenditures, 4, 9, 10, 18

expert, v, 42, 51, 54, 55, 56, 57, 65, 66 expertise, 45, 66, 101, 140 exposure, 125

F FA, 145 family, 149 February, 5, 18, 19, 21, 61, 70, 72, 89, 105, 107, 115, 117, 123, 139, 148 federal funds, 4, 8, 14, 31, 69, 77, 82, 96, 149 federal government, 2, 3, 4, 5, 6, 7, 10, 15, 16, 18, 27, 30, 56, 57, 77, 96, 133 Federal Highway Administration, 3, 4, 14, 18, 19, 20, 23, 25, 29, 136 federal law, 11, 19 Federal Register, 19, 97 Federal Transit Administration, vi, ix, x, 3, 4, 14, 18, 19, 20, 22, 23, 25, 27, 59, 70, 75, 77, 103, 111, 119, 129, 134, 136, 137, 143 feedback, 53, 105 fees, 10 feet, 131, 134 finance, 2, 13, 32, 82, 97, 100, 103 financial support, 8 financing, ix, 1, 2, 5, 13, 14, 119 firms, 126 FL, 23, 87 flexibility, 59 forecasting, 43, 53, 90, 91, 97, 99, 138, 140 Fort Worth, xi, 129 freight, 54, 134 frustration, 39, 121, 124 fuel, xi, 9, 10, 137 funding, ix, x, 1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 25, 27, 28, 29, 31, 32, 35, 42, 43, 44, 47, 55, 56, 57, 58, 59, 61, 62, 64, 65, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 89, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 106, 107, 108, 112, 114, 115, 116, 120, 121, 122, 126, 127, 141, 142, 144, 145, 148, 149 funds, ix, 1, 2, 3, 4, 5, 7, 8, 9, 10, 13, 14, 17, 18, 31, 33, 44, 50, 57, 64, 69, 70, 72, 77, 80, 82, 85, 88, 96, 99, 112, 115, 116, 121, 122, 123, 124, 125, 126, 131, 135, 138, 141, 143, 148, 149

G gases, 134 gasoline, 4, 18 GDP, 20, 23 General Accounting Office, 5, 19, 22, 24

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Index

154

general fund, ix, 1, 2, 9, 18 generators, 143 goals, xi, 11, 15, 16, 26, 29, 30, 41, 55, 56, 64, 121, 130, 138 government, x, 2, 3, 4, 5, 6, 7, 10, 11, 14, 15, 16, 17, 18, 19, 26, 27, 28, 30, 40, 43, 56, 57, 58, 67, 68, 77, 78, 96, 106, 111, 115, 127, 133, 137 Government Accountability Office, x, 5, 19, 20, 21, 22, 24, 111, 137 Government Accountability Office (GAO), x, 111, 137 grants, 3, 5, 17, 27, 62, 77, 84, 106, 112, 113, 115 greenhouse, 52, 53, 55, 134 greenhouse gas, 52, 53, 55, 134 greenhouse gases, 134 gross domestic product, 11, 93 Gross Domestic Product, 21 groups, x, 6, 43, 55, 65, 76, 91, 105 growth, ix, 1, 2, 3, 6, 7, 9, 15, 18, 19, 34, 48, 120, 127, 130, 134 guidance, ix, x, 26, 28, 29, 30, 32, 33, 36, 39, 41, 44, 45, 46, 49, 50, 54, 55, 64, 71, 77, 78, 80, 83, 86, 89, 90, 97, 101, 103, 104, 106, 108, 114, 115, 116, 117, 139, 140, 141, 142 guidelines, 57, 136 guiding principles, 140

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H Harvard, 66 Hawaii, 63, 64, 88 health, 71, 134 hearing, 117 higher quality, 149 highway system, xi, 10, 137 highways, ix, xi, 1, 2, 5, 10, 11, 12, 13, 19, 42, 135, 137 hiring, 44, 95 host, 6, 101 hotels, 13, 131 House, vi, vii, 12, 20, 21, 111, 119, 129, 137, 141, 143 House Appropriations Committee, 12 household, 42, 134 households, 149 housing, 148 human, 44 human capital, 44

identity, 116 Illinois, 105 impairments, xi, 129 implementation, x, 28, 37, 40, 69, 70, 77, 89, 90, 97, 102, 111, 113, 115, 119, 124, 129, 140, 147 inactive, 95 incentive, 16, 126 incentives, 139 inclusion, 32, 58, 82, 108, 144 income, 14, 131, 132, 134 increased access, 40 Independent Agencies, 21 indexing, 9 indicators, 57 indirect effect, 40 industry, x, 2, 14, 17, 28, 33, 39, 51, 58, 65, 76, 78, 91, 101, 104, 105, 115, 119, 139, 140 inequity, 11 inflation, ix, 1, 9, 35, 47, 71, 93, 96 information sharing, 80, 103 infrastructure, 6, 10, 11, 13, 38, 54, 64, 68, 72, 89, 112, 120, 127, 140 infusions, 15 injuries, 134 injury, v innovation, 10, 11 Innovation, 67 Inspector General, 137 interaction, 53 internet, 140 Internet, 67 interpretation, 29 interstate, 10 interview, 66 interviews, 40, 65, 66, 67, 97 investment, xii, 6, 8, 12, 13, 26, 27, 29, 32, 37, 38, 40, 43, 54, 57, 68, 71, 77, 83, 92, 94, 106, 107, 108, 112, 116, 120, 121, 122, 125, 127, 133, 134, 135, 136, 138, 139, 140, 141, 147, 148

J January, 20, 21, 22, 23, 90, 93, 114, 144 job creation, 13 Jordan, 61 jurisdiction, 50, 108, 127 justification, ix, x, 26, 27, 28, 31, 32, 33, 34, 36, 37, 38, 39, 46, 47, 48, 49, 50, 64, 65, 70, 71, 77, 82, 83, 91, 99, 100, 107, 112, 113, 114, 115, 116, 117

I identification, 2 Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

155

Index K King, 63, 87, 104

Copyright © 2009. Nova Science Publishers, Incorporated. All rights reserved.

L LA Metro, x, 111, 119 labor, 11, 15, 16, 96, 131 lack of confidence, 58 land, 12, 13, 26, 27, 28, 29, 34, 35, 36, 38, 40, 41, 42, 45, 46, 48, 50, 51, 52, 53, 65, 70, 71, 72, 77, 83, 90, 91, 97, 101, 112, 113, 114, 122, 125, 130, 132, 134, 144, 148, 150 land use, 26, 27, 28, 29, 34, 35, 36, 38, 40, 41, 42, 45, 46, 48, 50, 51, 52, 53, 65, 70, 71, 72, 77, 83, 90, 112, 113, 114, 122, 125, 130, 132, 144, 148, 150 land-use, 90, 91, 97, 101 language, 50, 114, 115, 117, 145, 148 large-scale, 10, 57 law, ix, x, 11, 18, 19, 25, 26, 41, 50, 57, 64, 76, 79, 96, 103, 106, 121, 145, 149 laws, 13, 14, 16 lead, 39, 40, 51, 58, 91, 92, 134 leadership, 129 legislation, 7, 10, 11, 27, 29, 31, 41, 59, 64, 70, 77, 103 legislative, 13, 16, 26, 31, 59, 64, 70, 104, 145, 148 lending, 14 life-cycle, 135 light rail, xi, xii, 7, 8, 61, 65, 69, 76, 79, 86, 91, 93, 94, 98, 111, 119, 129, 130, 138, 147 limitation, 42, 72 limitations, 17, 26, 27, 29, 30, 34, 41, 43, 45, 46, 51, 52, 53, 54, 58 links, 57, 148 local government, x, 2, 3, 11, 14, 17, 19, 40, 127 local mobility, 11 location, 15, 78, 104, 108, 130, 131 London, 133 long distance, 145 long-term, 30, 43, 53, 54, 59, 107 Los Angeles, x, xi, 63, 73, 87, 104, 111, 119, 120, 121, 122, 123, 125, 127 losses, 134 love, 120 low-density, 8, 15 low-income, 134

M

mainstream, 135 maintenance, 7, 12, 100, 117 major cities, 11 management, xi, 8, 15, 16, 31, 34, 35, 36, 49, 61, 64, 81, 88, 97, 117, 121, 123, 134, 137, 138, 139, 140, 141, 142 mandates, 100 manufacturer, 149 manufacturing, 147 marginalization, 133 market, 15, 135 market share, 15 markets, 48, 138, 141 Maryland, 105 Massachusetts, 65, 67 Massachusetts Institute of Technology, 67 matching funds, 7 measurement, 134, 148 measures, 5, 26, 27, 28, 29, 30, 31, 32, 33, 34, 36, 39, 43, 44, 45, 46, 48, 49, 50, 51, 52, 53, 54, 55, 56, 58, 59, 65, 71, 72, 90, 91, 114, 130, 139, 140 metropolitan area, 8, 11, 16, 71 Miami, 16, 60, 66, 120 missions, 6, 52, 53, 55 Missouri, 104 mobility, xi, 8, 10, 11, 16, 26, 27, 28, 29, 30, 31, 34, 36, 37, 38, 39, 40, 41, 42, 43, 44, 46, 48, 49, 50, 51, 52, 53, 54, 55, 56, 59, 67, 70, 71, 72, 73, 77, 90, 107, 111, 112, 113, 119, 120, 122, 125, 129, 130, 132, 134, 136, 138 modeling, 26, 29, 41, 42, 43, 44, 46, 51, 52, 53, 72, 95, 97, 122 models, 26, 29, 30, 31, 34, 37, 39, 40, 41, 42, 43, 45, 52, 53, 54, 58, 59, 68, 69, 70, 71, 72 modernization, 111 money, ix, 1, 2, 5, 10, 11, 12, 15, 18, 28, 57, 133 monopoly, 16 monopoly power, 16 morning, 16, 133, 137 motor vehicle emissions, 42 movement, 43

N nation, 7, 11, 15, 54, 91, 129 national, 5, 6, 11, 13, 15, 20, 30, 36, 50, 56, 57, 91, 108, 140 National Income and Product Accounts, 93 national policy, 6 network, xi, 37, 38, 68, 72, 119 Nevada, 14 New Jersey, 12, 61, 66, 104

magnetic, v Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,

Index

156

New Starts program, ix, x, xi, 7, 8, 11, 17, 25, 26, 27, 28, 29, 32, 41, 43, 44, 46, 50, 55, 56, 57, 58, 63, 64, 66, 69, 70, 75, 77, 78, 79, 80, 82, 87, 88, 89, 94, 96, 97, 99, 101, 102, 103, 104, 105, 106, 112, 113, 114, 116, 117, 121, 124, 125, 126, 127, 134, 137, 141, 142, 143, 144 New York, iii, v, 8, 16, 23, 85, 120 noise, 70 Norfolk, 86 North Carolina, 65 Northeast, 61 Northeast Corridor, 61 nutrition, 134

O

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obligate, 14 obligation, 72 obligations, 43 Office of Management and Budget, 54, 137 OMB, 137 omission, 39 online, 21 OR, 86, 87 Oregon, vii, 104, 105, 108, 138, 147 organization, 25, 144 organizations, 65, 71, 104, 106 outsourcing, 117 oversight, 63, 64, 88, 95, 121, 123, 124, 138, 139, 142

P Pacific, 63, 73, 87 partnership, xi, 119, 139, 149 partnerships, ix, xi, 2, 5, 12, 137 passenger, xi, 3, 5, 7, 14, 19, 36, 48, 129, 130, 134 password, 105 pay-as-you-go, 14 pedestrian, 145 perceptions, 102, 105 performance, ix, 1, 5, 6, 7, 8, 10, 16, 28, 34, 35, 57, 68, 71, 123, 140 periodic, 15 permit, 125 personal, 15, 87, 134 Philadelphia, 11, 120 pipelines, x, 76, 78 planning, x, 5, 7, 17, 19, 22, 25, 29, 31, 43, 58, 71, 72, 76, 79, 80, 91, 98, 100, 101, 104, 106, 108, 112, 113, 119, 130, 131, 144 play, 116, 120, 140

pleasure, 119 policymakers, 28, 58, 140 pollutant, 36, 71 pollutants, 35 pollution, 10, 36, 48, 70 poor, 7 population, x, 2, 11, 15, 17, 19, 48, 55, 72, 78, 104, 134, 141 population growth, 134 portfolio, 61, 138 Portland Streetcar, vii, x, xii, 111, 147, 148 power, 7, 9, 57, 149 powers, 16 PPPs, 12, 13 pragmatic, 122 prediction, 69 pressure, 15, 115, 127 price deflator, 23 price index, 93 priorities, ix, 1, 2, 17, 30, 46, 56, 57, 71 private, ix, 1, 2, 3, 5, 12, 13, 16, 95, 96, 131, 139, 143 private sector, 2, 13, 139, 143 private sector investment, 139 private-sector, ix, 1, 5, 13 privatization, 16 productivity, x, 2, 5, 15 profit, 12, 14 program, ix, x, xi, 1, 2, 5, 7, 8, 9, 11, 12, 16, 17, 18, 24, 25, 26, 27, 28, 29, 30, 32, 33, 41, 43, 44, 46, 50, 54, 55, 56, 57, 58, 63, 64, 66, 69, 70, 75, 76, 77, 78, 79, 80, 82, 83, 85, 86, 87, 88, 89, 93, 94, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 111, 112, 113, 114, 115, 116, 117, 120, 121, 124, 125, 126, 127, 134, 137, 138, 139, 140, 141, 142, 143, 144, 145, 147, 148, 149 program administration, 140 promote, 18, 29, 34, 117, 130 property, v, 37, 40, 48, 130, 131, 134 protection, 11 prototype, 147 proxy, 26, 29, 40, 43, 51, 52, 53, 55 PSI, 147 PTA, 21, 69, 115, 140 public, ix, x, xi, 1, 2, 3, 5, 6, 7, 10, 12, 15, 16, 17, 18, 33, 65, 67, 69, 70, 90, 94, 106, 112, 113, 116, 119, 120, 121, 122, 124, 126, 129, 133, 134, 137, 139, 140, 141, 142 public funding, 3, 15, 121 public funds, 3, 126 public health, 134 public investment, 121, 139 public policy, 121, 122, 124

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157

Index public sector, 12 public transit, ix, x, 1, 2, 6, 7, 10, 15, 16, 17, 18, 67, 94, 116, 119, 120 public works projects, 124 public-private partnerships, ix, 2, 12 purchasing power, 9

Q quality of life, 129, 130, 132 questionnaire, 104, 105 questionnaires, 105

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R rail, xi, xii, 4, 7, 8, 15, 17, 18, 31, 32, 40, 44, 61, 65, 69, 76, 77, 79, 80, 83, 86, 91, 93, 94, 98, 106, 111, 112, 116, 119, 120, 129, 130, 131, 134, 138, 141, 147 rain, 7 range, 6, 9, 10, 12, 27, 32, 35, 37, 59, 65, 69, 76, 79, 82, 98, 102, 107, 113, 134, 141 rate of return, 10, 135 rating scale, 73, 78, 89, 97 ratings, 29, 31, 33, 34, 35, 36, 38, 39, 46, 47, 49, 71, 72, 82, 89, 115, 117 real estate, 48, 53 real terms, 7, 9, 15, 18 real time, 62, 85 reality, 8, 135 Reclamation, 104 recognition, 45, 145 reconcile, 142 recreational, 10 redevelopment, xii, 131, 147 reduction, xi, 8, 9, 17, 68, 134, 138, 149 reflection, 102 regional, xi, 16, 31, 35, 43, 50, 57, 58, 80, 102, 104, 129, 135, 136, 140, 144, 148 regular, 8 regulation, 10, 57, 70, 91, 142 regulations, ix, x, 11, 16, 26, 28, 31, 34, 35, 39, 54, 59, 74, 91, 106, 116 regulatory requirements, 142 rehabilitation, x, 2, 6, 17 relationship, 137, 138, 141 relevance, 65 reliability, 31, 35, 37, 47, 48, 59, 68, 90, 122, 138 rent, 12 rescission, 73 research, 17, 20, 21, 28, 40, 53, 66, 67, 72, 130, 131 researchers, 55

residential, xii, 130, 131, 134, 147 resolution, 107 resource allocation, 136 resources, x, 2, 12, 14, 17, 26, 27, 29, 31, 40, 41, 42, 43, 44, 58, 59, 95, 96, 101, 124, 134, 135, 138, 140 response time, 139 responsibilities, 5, 46, 102, 140 restaurants, 131 restructuring, x, 2, 5, 17 retail, 12, 131 returns, 135 revenue, ix, 1, 2, 3, 5, 7, 9, 10, 14, 15, 16, 18, 23, 122, 123, 124 rewards, 16 risk, x, 75, 124, 125, 133, 138, 139, 140, 141 risk assessment, 124, 125 risk factors, 124 risk management, 138, 139, 140 risks, 12, 51, 138 road map, 97 rolling, 71, 83, 116

S SAFETEA-LU, ix, x, xi, 25, 26, 27, 28, 29, 30, 32, 33, 39, 43, 44, 46, 50, 53, 64, 65, 69, 70, 71, 72, 73, 75, 76, 77, 78, 80, 82, 83, 84, 85, 89, 90, 97, 99, 103, 106, 112, 114, 115, 116, 121, 125, 130, 143 sales, 18, 132 sample, 28, 65, 105 sample survey, 105 sampling, 105 sampling error, 105 satisfaction, 139 savings, 29, 35, 37, 39, 40, 47, 48, 68, 69, 72, 91, 134, 138, 148, 149 school, 132 scores, 51 search, 8 searches, 67 Seattle, 16, 60, 61, 62, 66, 85, 87, 104, 149 Secretary of Transportation, 12, 24, 26, 31, 40, 59, 80, 90, 103, 117 selecting, 121 senate, 21, 23, 24 Senate, 21, 23, 24, 141 series, 122, 140 services, v, x, xi, 2, 5, 8, 13, 15, 16, 17, 69, 106, 119, 134, 141 severity, 48, 71 shares, 2, 6, 11, 94

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158

Index

sharing, 5, 11, 80, 103 shelter, 134 short-term, 54, 139 signals, 71, 83, 109, 116, 148 Small Starts program, x, xi, 32, 33, 44, 70, 75, 76, 77, 78, 79, 80, 83, 85, 89, 97, 98, 99, 100, 102, 103, 104, 105, 106, 111, 112, 113, 114, 115, 116, 117, 119, 129, 137, 141, 142, 143, 144, 145, 147, 148, 149 social services, 134 software, 39, 70 solutions, 135 sorting, 65 South Carolina, 11 specific knowledge, 67 speed, 43, 69 sponsor, 31, 32, 53, 61, 65, 66, 81, 82, 96, 100, 101, 102, 105, 115, 116, 117, 122, 124, 125, 126, 139, 140 St. Louis, 104 stability, 122 stabilize, 134 staffing, 43 stages, 7, 65, 99, 108, 122 stakeholder, 140, 141 stakeholders, 27, 28, 51, 52, 139, 141 standard operating procedures, 102, 141 standards, 28, 36, 68, 73, 78, 106 state laws, 13, 16 statistics, 20, 21 statutes, ix, x, 26 statutory, 31, 55, 78, 113, 114, 117, 122, 125, 148 statutory provisions, 78 steel, 123 stock, 71, 83, 116 strategic, 140 strategies, 5, 34, 49, 117, 138 streams, 14 strength, 48, 49 subjective, 56 subsidy, 17 suburban, 8, 130, 134, 149 suburbs, 15, 149 suffering, 6 summer, 16, 74, 139 supply, 15, 121 surplus, 69, 74 surprise, 121 sustainability, 15 switching, 68 systems, ix, xi, 1, 5, 6, 7, 8, 11, 16, 17, 31, 64, 69, 80, 88, 91, 106, 111, 112, 120, 121, 122, 123, 134, 137, 140, 141, 147

T tangible, 126 tax base, 13 tax increase, 4, 9, 18 tax rates, 10 taxes, 2, 4, 8, 10, 11, 18 tax-exempt, 13, 14 taxis, 134 taxpayers, 138 team members, 65, 67 technical assistance, 123, 138, 140, 144 technology, xi, 16, 102, 143 Technology Administration, 20, 21, 67 telephone, 105 terminals, 64, 88 testimony, x, 111, 119, 127, 130, 141, 143 Texas, xi, 66, 67, 104, 129, 130, 131, 132, 137 thinking, 131 time, x, xi, 10, 12, 15, 16, 29, 30, 32, 35, 37, 39, 40, 43, 45, 47, 48, 52, 55, 58, 62, 68, 75, 77, 79, 83, 85, 87, 89, 91, 92, 93, 95, 96, 97, 100, 108, 120, 121, 122, 123, 124, 125, 126, 130, 134, 137, 138, 139, 142, 144, 148, 149 time consuming, 122, 124, 126 time factors, 68 time frame, 58, 93 title, 70, 106 toll revenue, 16 tolls, 16 total costs, 64, 94, 104 tracking, 140 traction, 7 traffic, xi, xii, 16, 42, 71, 80, 83, 101, 109, 116, 119, 134, 147 traffic flow, 134 training, 80, 103, 138, 139, 140, 141 trans, ix, 1 transfer, 12, 108, 135, 139 transformation, 130 transit ridership, x, 2, 6, 11, 15, 17, 40, 78 transparent, 27, 45, 140, 141 transport, 91 transportation, x, xi, 2, 5, 6, 7, 8, 10, 11, 14, 15, 16, 18, 19, 20, 21, 25, 26, 27, 28, 29, 31, 35, 36, 37, 38, 40, 41, 43, 44, 45, 49, 50, 54, 57, 58, 66, 68, 69, 70, 71, 72, 73, 77, 78, 79, 80, 90, 91, 96, 99, 101, 104, 106, 107, 108, 111, 112, 113, 119, 127, 129, 130, 133, 134, 135, 136, 137, 141, 142, 145, 148 transportation infrastructure, 6, 127 travel, 6, 9, 10, 11, 15, 26, 28, 29, 30, 31, 34, 35, 37, 39, 40, 41, 42, 43, 44, 45, 47, 48, 49, 52, 53, 54,

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159

Index 58, 59, 68, 69, 71, 72, 91, 95, 97, 99, 100, 134, 138, 140, 141, 145, 148, 149 travel time, 28, 29, 34, 35, 37, 39, 40, 42, 47, 48, 55, 68, 69, 91, 134, 138, 145, 148, 149 Treasury, 2, 4, 21 trend, 15, 116, 130 trucks, 18 trust, 2, 4, 10 trust fund, 2, 4, 10

U U.S. Treasury, 2, 4 uncertainty, xi, 9, 91, 102, 121, 122, 126, 134 Underground Storage Tank Trust Fund, 9 unions, 16 United States, x, 3, 6, 20, 22, 25, 70, 75, 111, 119, 120, 127, 133 unpredictability, 134 upload, 21 urban areas, 121, 140 urbanization, 134 urbanized, 19, 78, 104, 112 Utah, 61

variation, 52, 69 vehicles, 6, 14, 69, 71, 83, 106, 109, 116, 144, 147, 149 Vice President, vi, x, 111, 133 village, 131 vision, 129

W walking, 37, 42, 134, 148, 149 Wall Street Journal, 20 weakness, 56 welfare, 135, 136 Wisconsin, 149 withdrawal, 11 workers, 16 World Wide Web, 105 writing, 140, 141 Wyoming, 143

Y yield, 123, 127, 134

Z

V zoning, 34, 35, 40

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values, 37, 59, 68, 93, 130, 134, 135, 136 variability, 105 variable, 16

Public Transit Issues and Developments, Nova Science Publishers, Incorporated, 2009. ProQuest Ebook Central,