Mass Transit
FTA Needs to Provide Clear Information and Additional Guidance on the New Starts Ratings Process Gao ID: GAO-03-701 June 23, 2003Under the Transportation Equity Act for the 21 st Century (TEA-21), Congress authorized federal funding for New Starts fixed guideway transit projects--including rail and bus rapid transit projects that met certain criteria. In response to an annual mandate under TEA-21, GAO assessed the New Starts evaluation and ratings process for the fiscal year 2004 cycle, including (1) changes to the process and any related issues and (2) any challenges related to New Starts initiatives contained in the administration's fiscal year 2004 budget proposal.
FTA made two changes to the New Starts evaluation and ratings process for the fiscal year 2004 cycle. First, in response to language contained in a conference report prepared by the House Appropriations Committee, FTA adopted a 60 percent preference policy, which in effect, generally reduced the level of New Starts federal funding share for projects from 80 percent to 60 percent. Because FTA has not revised its program regulations to reflect this change, transit agencies, project sponsors, and the public did not have an opportunity to formally comment on the change. Explicitly stating its criteria and procedures in regulation would allow those involved in considering potential projects to make their investment decisions on the basis of a transparent process. Second, FTA revised some of the criteria used in the ratings process to include a new Transportation System User Benefits measure. Project sponsors GAO interviewed said that the measure was an improvement over the previous benefits measure because it considers benefits to both new and existing transit system riders. However, many project sponsors experienced difficulties in generating a value for the measure for a number of reasons, such as problems with their local forecasting models. FTA officials are working closely with project sponsors to correct these problems, but more guidance may be necessary to avert similar difficulties in the future. The administration's fiscal year 2004 budget proposal requests that $1.5 billion be made available for New Starts for that year, a 25 percent increase over fiscal year 2003. The budget proposal contains three initiatives--reducing the federal share to 50 percent, allowing certain nonfixed guideway projects to be funded through New Starts, and establishing a streamlined ratings process for projects requesting less than $75 million in New Starts funding. These initiatives may allow FTA to fund more projects and give local communities flexibility in choosing among transit modes. However, they may also create challenges for some future transit projects, such as difficulties in generating an increased local funding share or a reduction in the number of smaller communities that will participate in New Starts.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-03-701, Mass Transit: FTA Needs to Provide Clear Information and Additional Guidance on the New Starts Ratings Process
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Report to Congressional Committees:
June 2003:
Mass Transit:
FTA Needs to Provide Clear Information and Additional Guidance on the
New Starts Ratings Process:
GAO-03-701:
GAO Highlights:
Highlights of GAO-03-701, a report to the Committee on Banking,
Housing, and Urban Affairs, U.S. Senate, and the Committee on
Transportation and Infrastructure, House of Representatives
Why GAO Did This Study:
Under the Transportation Equity Act for the 21st Century (TEA-21),
Congress authorized federal funding for New Starts fixed guideway
transit projects”including rail and bus rapid transit projects that
met certain criteria. In response to an annual mandate under TEA-21,
GAO assessed the New Starts evaluation and ratings process for the
fiscal year 2004 cycle, including (1) changes to the process and any
related issues and (2) any challenges related to New Starts
initiatives contained in the administration‘s fiscal year 2004 budget
proposal.
What GAO Found:
FTA made two changes to the New Starts evaluation and ratings process
for the fiscal year 2004 cycle. First, in response to language
contained in a conference report prepared by the House Appropriations
Committee, FTA adopted a 60 percent preference policy, which in effect,
generally reduced the level of New Starts federal funding share for
projects from 80 percent to 60 percent. Because FTA has not revised
its program regulations to reflect this change, transit agencies,
project sponsors, and the public did not have an opportunity to
formally comment on the change. Explicitly stating its criteria and
procedures in regulation would allow those involved in considering
potential projects to make their investment decisions on the basis of
a transparent process. Second, FTA revised some of the criteria used
in the ratings process to include a new Transportation System User
Benefits measure. Project sponsors GAO interviewed said that the
measure was an improvement over the previous benefits measure because
it considers benefits to both new and existing transit system riders.
However, many project sponsors experienced difficulties in generating
a value for the measure for a number of reasons, such as problems with
their local forecasting models. FTA officials are working closely with
project sponsors to correct these problems, but more guidance may be
necessary to avert similar difficulties in the future.
The administration‘s fiscal year 2004 budget proposal requests that
$1.5 billion be made available for New Starts for that year, a 25
percent increase over fiscal year 2003. The budget proposal contains
three initiatives”reducing the federal share to 50 percent, allowing
certain nonfixed guideway projects to be funded through New Starts,
and establishing a streamlined ratings process for projects requesting
less than $75 million in New Starts funding. These initiatives may
allow FTA to fund more projects and give local communities flexibility
in choosing among transit modes. However, they may also create
challenges for some future transit projects, such as difficulties in
generating an increased local funding share or a reduction in the
number of smaller communities that will participate in New Starts.
What GAO Recommends:
To ensure that transit agencies have clear information on the New
Starts program, Federal Transit Administration (FTA) should (1) amend
its regulations governing the level of federal funding share for
projects to reflect its current policy and (2) issue additional
guidance to transit agencies on the use of local travel forecasting
models in calculating the Transportation System User Benefits
measure.
Department of Transportation officials generally agreed with the
information provided in this report. They concurred with the
recommendation about providing guidance on the user benefits measure
and they will consider the recommendation about amending the
regulations related to federal funding share.
www.gao.gov/cgi-bin/getrpt?GAO-03-701.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Rita Grieco at (202)
512-9047 or griecor@gao.gov.
[End of section]
Letter:
Results in Brief:
Background:
Changes to the New Starts Process for Fiscal Year 2004 Have Caused
Difficulties for Some Project Sponsors:
FTA Evaluated 52 Projects for the Fiscal Year 2004 Cycle, Rated 32, and
Proposed 4 for New Grant Agreements:
Proposed Initiatives in FTA's Fiscal Year 2004 Budget Proposal Have
Some Advantages, but May Create Challenges for Future New Starts
Projects:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Scope and Methodology:
Appendixes:
Appendix I: Additional Information on Four Projects Proposed for New
Full Funding Grant Agreements in Fiscal Year 2004:
Appendix II: Transit Sponsors and Metropolitan Planning Organizations
Contacted by GAO:
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Acknowledgments:
Figures:
Figure 1: New Starts Planning and Project Development Process:
Figure 2: Changes to the New Starts Evaluation and Ratings Process for
Fiscal Year 2004:
Figure 3: Distribution of New Starts Project Ratings for Fiscal
Years 2003 and 2004:
Figure 4: Ratings of Projects Proposed for New Starts Funding in
Fiscal Year 2004:
Figure 5: New Starts Funding Proposals for Fiscal Year 2004:
Figure 6: Advantages and Disadvantages of Proposed New Starts
Initiatives:
Abbreviations:
BRT: Bus Rapid Transit:
CTA: Chicago Transit Authority:
DOT: Department of Transportation:
FFGA: Full Funding Grant Agreement:
FTA: Federal Transit Administration:
FY: fiscal year:
LIRR: Long Island Rail Road:
LPA: Locally Preferred Alternative:
MPO: Metropolitan Planning Organization:
MTA: Metropolitan Transit Authority:
NEPA: National Environmental Policy Act:
PE: Preliminary Engineering:
RTC: Regional Transportation Commission:
TEA-21: Transportation Equity Act for the 21ST Century:
TSUB: Transportation System User Benefits:
Letter June 23, 2003:
The Honorable Richard C. Shelby
Chairman
The Honorable Paul S. Sarbanes
Ranking Minority Member
Committee on Banking, Housing, and Urban Affairs
United States Senate:
The Honorable Don Young
Chairman
The Honorable James L. Oberstar
Ranking Minority Member
Committee on Transportation and Infrastructure
House of Representatives:
Since the early 1970s, the federal government has provided a large
share of the nation's capital investment in mass transportation. Much
of this investment has come through the Federal Transit
Administration's (FTA) New Starts program, which awards full funding
grant agreements for fixed guideway[Footnote 1] rail, bus rapid
transit, trolley, and ferry projects. A full funding grant agreement
establishes the terms and conditions for federal participation in a
project.[Footnote 2] By statute, the federal funding share of a New
Starts project cannot exceed 80 percent of its net cost. To obtain a
grant agreement, a project must progress through a regional review of
alternatives and meet a number of federal requirements, including
providing data for the New Starts evaluation and ratings process.
Ongoing and proposed New Starts projects are located in cities in every
area of the country, and collectively will transport an estimated 190
million riders annually when completed, according to FTA. Because the
demand for New Starts funding is high, FTA was directed to prioritize
projects for funding on the basis of specific financial and project
justification criteria. FTA
evaluates and rates projects on multiple criteria and determines an
overall rating for each project.[Footnote 3]
Under the Transportation Equity Act for the 21st Century (TEA-
21)[Footnote 4] and subsequent amendments, Congress authorized
approximately $10 billion for New Starts projects from fiscal years
1998 through 2003. Because TEA-21 expires at the end of fiscal year
2003, Congress is currently considering reauthorization legislation
that will determine the amount of future funding for the New Starts
program and any changes to the program's structure. TEA-21 requires GAO
to report each year on FTA's processes and procedures for evaluating,
rating, and recommending New Starts projects for federal
funding.[Footnote 5] This report discusses (1) changes made to the New
Starts evaluation and ratings process for fiscal year 2004 and issues
related to these changes, (2) the number of New Starts projects that
were evaluated and rated and which projects FTA proposed for new grant
agreements in fiscal year 2004, and (3) the proposed funding
commitments and initiatives related to New Starts in the
administration's fiscal year 2004 budget proposal and any challenges
they might present for future projects.
Results in Brief:
FTA made two changes to the New Starts evaluation and ratings process
for the fiscal year 2004 cycle. First, in response to language
contained in a conference report prepared by the House Appropriations
Committee,[Footnote 6] FTA instituted a preference policy in its
ratings process favoring projects that seek no more than 60 percent of
total New Starts funding from the federal government, which, in effect,
generally reduced the level of New Starts
federal funding share for projects from 80 percent to 60
percent.[Footnote 7] Although FTA has discretion in deciding how the
local share of funding contributions should be considered in selecting
New Starts projects for funding, the agency is required to issue
regulations defining the criteria for evaluating and rating projects,
including the degree of local financial commitment. However, FTA's 60
percent preference policy for the amount of federal funding share for
New Starts projects is not reflected in its current regulations. By not
amending its regulations to reflect this change, FTA has not provided
an opportunity for public comment on this new policy. Furthermore,
explicitly stating all of FTA's criteria and procedures in regulations
would allow project sponsors, Metropolitan Planning Organizations, and
others involved in considering potential New Starts projects to make
their investment decisions on the basis of a transparent evaluation and
ratings process.
A second change to the evaluation and ratings process involved FTA
revising its cost-effectiveness and mobility improvements evaluation
criteria for rating proposed New Starts projects to include a new
measure for Transportation System User Benefits that gives equal weight
to benefits for both new and existing transit system riders. Project
sponsors we interviewed generally endorsed the new benefits measure,
but implementing it has been difficult for both FTA and the project
sponsors because of the variety of local travel forecasting models that
exist and problems with the models. For example, FTA officials told us
that some of the local models had errors in their underlying
assumptions or in the data used to generate the measure. In addition,
project sponsors reported that FTA did not provide adequate
documentation on the computer software used to calculate the measure or
how FTA used the measure in determining project ratings. As a result of
these difficulties, 11 project sponsors were unable to generate
accurate data needed to calculate a value for the new benefits measure.
FTA officials have taken some steps to provide technical assistance,
training, and guidance about the measure to project sponsors, but they
also acknowledged the need to more systematically address the
underlying problems related to the local models.
For the fiscal year 2004 cycle, FTA evaluated 52 projects, rated 32
projects, and proposed 4 projects for new full funding grant agreements
as a result of its revised evaluation and ratings process. Twenty of
the evaluated projects were statutorily exempt from the ratings process
because they requested less than $25 million in New Starts
funding.[Footnote 8] In comparing fiscal year 2004 overall project
ratings with fiscal year 2003, we found that a similar number of
projects were evaluated, but significantly more projects were "not
recommended" or "not rated" due to problems with complying with the
reduced federal share, calculating the new user benefits measure, or
resolving other data problems. From fiscal year 2003 to fiscal year
2004, the number of projects that received an overall rating of "not
recommended" increased from 4 to 11 and the number that were "not
rated" due to lack of data or other reasons increased from 2 to 7.
The administration's fiscal year 2004 budget proposal requests that
$1.5 billion be made available for New Starts for that year. The budget
proposal contains three initiatives--reducing the maximum federal
statutory share to 50 percent, allowing nonfixed guideway projects to
be funded through New Starts, and replacing the "exempt" classification
with a streamlined ratings process for projects requesting less than
$75 million in New Starts funding. These proposed initiatives have
advantages and disadvantages. For example, they may allow FTA to fund
more projects and give local communities more flexibility in choosing
between transit modes. However, they may also create challenges for
future transit projects. For example, proposed transit projects may
have difficulties generating an increased local funding share. The
initiatives may also change the original fixed guideway emphasis of New
Starts by allowing nonfixed guideway projects to be funded through New
Starts, which some project sponsors believe may disadvantage
traditional New Starts projects. Additionally, replacing the "exempt"
classification may reduce the number of smaller communities that will
participate in New Starts.
This report makes recommendations to ensure that FTA's New Starts
regulations reflect its current 60 percent preference policy on the
federal share for projects and to address problems found in the
implementation of the new user benefits measure by issuing additional
guidance to transit agencies. Department of Transportation officials
agreed with the information provided in this report and they concurred
with the recommendation about providing guidance on the user benefits
measure. They also said that they will consider the recommendation
about amending the regulations related to the federal funding share.
Background:
TEA-21 authorized a total of $36 billion in "guaranteed" funding
through fiscal year 2003 for a variety of transit programs, including
financial assistance to states and localities to develop, operate, and
maintain transit systems.[Footnote 9] Under one of these programs, the
New Starts program, FTA identifies and funds worthy fixed guideway
transit projects, including heavy, light, and commuter rail, ferry, and
certain bus projects (such as bus rapid transit). FTA funds New Starts
projects through full funding grant agreements (FFGA), which establish
the terms and conditions for federal participation in a project. By
statute, the federal funding share of a New Starts project cannot
exceed 80 percent of its net cost. To obtain a FFGA, a project must
progress through a regional review of alternatives and meet a number of
federal requirements, including providing data for the New Starts
evaluation and ratings process.[Footnote 10]
Projects presented to FTA for evaluation go through a lengthy process
from planning to preliminary engineering and final design,[Footnote 11]
which may culminate in a FFGA and the actual construction phase. FTA
conducts management oversight of projects from the preliminary
engineering stage through construction. All projects that do not have
an existing or pending FFGA and are in preliminary engineering or final
design are considered to be in the New Starts pipeline. There are
currently 52 projects in the pipeline. Figure 1 illustrates the overall
planning and project development process for New Starts projects.
Figure 1: New Starts Planning and Project Development Process:
[See PDF for image]
[End of figure]
To determine whether a project should receive federal funds, FTA's New
Starts evaluation process assigns ratings based on a variety of
financial and project justification criteria and then assigns an
overall rating. These criteria are identified in TEA-21 and reflect a
broad range of benefits and effects of the proposed projects, such as
capital and operating finance:
plans, mobility improvements, and cost-effectiveness.[Footnote 12] FTA
assigns proposed projects a rating of high, medium-high, medium, low-
medium, or low for each criterion. The individual criterion ratings are
combined into the summary financial and project justification ratings.
On the basis of these two summary ratings, FTA develops the overall
project rating using the following decision rules:
* Highly Recommended requires at least a medium-high for both the
financial and project justification summary ratings.
* Recommended requires at least a medium for both the financial and
project justification summary ratings.
* Not Recommended is assigned to projects not rated at least medium for
both the financial and project justification summary ratings.
* Not Rated indicates that FTA has serious concerns about the
information submitted for the mobility improvements and cost-
effectiveness criteria because the underlying assumptions used by the
project sponsor may have inaccurately represented the benefits of the
project.
* Not Available is the rating given to projects that did not submit
complete data to FTA for evaluation for the fiscal year 2004 cycle.
Although many projects receive an overall rating of "recommended" or
"highly recommended," only a few are proposed for FFGAs in a given
fiscal year. FTA proposes "recommended" or "highly recommended"
projects for FFGAs when it believes that the projects will be able to
meet certain conditions during the fiscal year that the proposals are
made. These conditions include the following:
* The local contribution to funding for the project must be made
available for distribution.
* The project must be in the final design phase and have progressed to
the point where uncertainties about costs, benefits, and impacts (e.g.,
environmental or financial) are minimized.
* The project must meet FTA's tests for readiness and technical
capacity. These tests confirm that there are no cost, project scope, or
local financial commitment issues remaining.
Changes to the New Starts Process for Fiscal Year 2004 Have Caused
Difficulties for Some Project Sponsors:
FTA implemented two changes to the New Starts process for fiscal year
2004. First, in response to language contained in a conference report
prepared by the House Appropriations Committee, FTA instituted a
preference policy in its ratings process favoring current and future
projects that do not request more than a 60 percent federal share.
Second, FTA revised its cost-effectiveness and mobility improvements
criteria by adopting a Transportation System User Benefits (TSUB)
measure that gives equal weight to benefits for both new and existing
transit system riders. Project sponsors we interviewed endorsed the
TSUB measure, but implementing it has been difficult for both FTA and
the project sponsors because of the variety of local travel forecasting
models that exist and problems with those models.[Footnote 13] These
difficulties resulted in some projects not being rated for the fiscal
year 2004 cycle.
FTA Made Two Changes to the New Starts Process for Fiscal Year 2004:
The New Starts evaluation and ratings process for fiscal year 2004 was
generally similar to that of fiscal year 2003, but FTA implemented two
changes that are described in its Annual Report on New Starts for
Fiscal Year 2004.[Footnote 14] First, in response to language contained
in a conference report prepared by the House Appropriations Committee,
FTA instituted a preference policy in its ratings process favoring
current and future projects that do not request more than a 60 percent
federal share. To achieve this, FTA changed its criterion related to
capital finance plans to give projects seeking a federal share greater
than 60 percent a "low" financial rating. A "low" financial rating is
likely to result in a "not recommended" overall rating. Second, FTA
changed the calculation of the cost-effectiveness and mobility
improvements criteria by adopting the TSUB measure. The TSUB measure
replaced the "cost per new rider" measure that had been used in past
ratings cycles. According to FTA, the new TSUB measure reflects an
important goal of any major transportation investment--reducing the
amount of travel time and out-of-pocket costs that people incur for
taking a trip (i.e., the cost of mobility). In contrast to the previous
"cost per new rider" measure, the TSUB measure gives equal weight to
both new and existing transit system riders by measuring not only the
benefits to people who change transportation modes (e.g., highways to
transit) but also benefits to existing transit riders and highway
users.
Figure 2 illustrates the New Starts evaluation and ratings process,
including the changes made to the process for fiscal year 2004.
Figure 2: Changes to the New Starts Evaluation and Ratings Process for
Fiscal Year 2004:
[See PDF for image]
Note: The shaded boxes indicate areas where changes were made to the
process for fiscal year 2004.
[A] According to FTA, this optional criterion of "other factors" gives
grantees the opportunity to provide additional information about a
project's likelihood for overall success.
[End of figure]
FTA Regulations Do Not Reflect Its Current Preference Policy Favoring
Projects with a Federal Funding Share That Does Not Exceed 60 Percent
of Total Project Funding:
The TEA-21 legislation that authorizes the New Starts program states
that federal grants are to be made "for 80 percent of the net project
cost, unless the grant recipient requests a lower grant
percentage."[Footnote 15] The legislation further provides that, in
evaluating grant applications, FTA shall consider the degree of local
financial commitment and the extent to which the local commitment
exceeds the minimum nonfederal share of 20 percent. For the fiscal year
2004 cycle, FTA instituted a 60 percent preference policy that
ultimately is likely to result in an overall rating of "not
recommended" for projects that seek more than a 60 percent federal
share.
Although TEA-21 authorized FTA to consider local financial commitments
that increase the local share of net project cost, and it vested FTA
with discretion as to how to achieve this, the Secretary of
Transportation is required by law to issue regulations defining the
manner in which projects will be evaluated and rated.[Footnote 16] In
December 2000, FTA finalized a regulation that stated that the
evaluation and ratings process would consider, among other things, the
extent to which projects have a local financial commitment that exceeds
the 20 percent minimum. Essentially, this regulation merely restated
the TEA-21 statutory criteria. Also, when FTA implemented its 60
percent preference policy, it did not amend its regulations to support
the change in policy or its current procedures. By not amending its
regulations, which have the full force and effect of law, to reflect
this change, FTA has not provided an opportunity for public comment on
its new policy. Furthermore, explicitly stating all of FTA's criteria
and procedures in regulations would help to ensure that project
sponsors, Metropolitan Planning Organizations, and others involved in
considering potential New Starts projects were fully aware of FTA's
preference policy and could make their investment decisions on the
basis of a transparent evaluation and ratings process.
FTA has stated that in instituting the 60 percent preference policy, it
was following congressional direction as expressed in a conference
report prepared by the House Appropriations Committee.[Footnote 17]
That report states "the conferees direct FTA not to sign any new full
funding grant agreements after September 30, 2002, that have a maximum
federal share of higher than 60 percent."[Footnote 18] As stated
previously, TEA-21 provides FTA with discretion to give priority to
projects that have a federal share lower than 80 percent. FTA officials
told us that favoring projects with a federal share that does not
exceed 60 percent would allow more projects to receive New Starts
funding and would help ensure that local governments play a major role
in funding such projects.
Reduction in Federal Share Affected Some Ongoing New Starts Projects
and May Adversely Affect Future Projects:
Of the 32 projects that were rated for the fiscal year 2004 cycle, 4
received a "low" financial rating and a "not recommended" overall
rating because, among other reasons, they proposed a federal share
above 60 percent.[Footnote 19] According to FTA, since the release of
FTA's Annual Report in February 2003, one of these projects--the San
Juan Tren Urbano Minillas Extension project--was withdrawn and the
three remaining projects are continuing to address their financial
issues. FTA officials expressed the view that reducing the level of
federal share to 60 percent has a minimal impact because, over the last
10 years, the federal share for New Starts projects' grant agreements
has averaged around 50 percent and has been trending lower. However,
many of the project sponsors we interviewed (7 of the 11) noted that
the reduced federal share did, in fact, have an impact on their
projects' schedule and financing, which had to be revised prior to or
during the ratings process.
FTA's decision to institute its preference policy for projects that
seek no more than a 60 percent federal share may also adversely affect
future projects, according to project sponsors that we interviewed, as
the following examples illustrate.
* Six of the 11 project sponsors said that continuing a 60 percent
preference policy for the amount of the federal share for projects
might reduce the number of future projects because of difficulties
faced by local and state governments in providing an increased local
share. Transit industry officials we interviewed agreed with this
statement.
* Nine of the 11 project sponsors said that the unequal federal share
for highway and transit projects could bias the local decision-making
process in favor of highway projects. Highway projects generally
receive a federal share of 80 percent or more, in contrast to the
current preference policy of a 60 percent federal share for New Starts
transit projects.
FTA's New Cost-effectiveness Criterion Was Endorsed by Project Sponsors
but Resulted in Some Implementation Difficulties:
The nine project sponsors we interviewed who were affected by the TSUB
measure believed it was an improvement over the previous "cost per new
rider" measure because the TSUB measure takes into account a broader
set of costs and benefits to the overall transit system.[Footnote 20]
For example, the measure considers mobility benefits related to
improved travel time for all users of a transportation corridor, rather
than benefits accruing from only new riders. However, many project
sponsors encountered difficulties in providing accurate data needed to
calculate the new TSUB measure.
To implement the TSUB measure, FTA developed a software package, called
Summit, to extract certain data from local travel forecasting models
that are used in planning transit projects. FTA hired contractors to
assist project sponsors in using the Summit software to calculate the
TSUB value. During the implementation process, FTA discovered that many
of the local travel forecasting models had underlying errors. Some of
these errors were significant due to faulty design and assumptions made
in some of the local travel forecasting models; others were simple
coding errors in the models. As a result, many projects experienced
difficulties that prevented them from calculating an acceptable value
for the TSUB measure.
According to FTA's Annual Report, 11 of the 32 projects rated for the
fiscal year 2004 cycle were identified as being unable to calculate a
valid TSUB value.[Footnote 21] As a result, these projects were "not
rated" for the cost-effectiveness criterion. Additionally, 7 of the 9
project sponsors we interviewed who were affected by the TSUB measure
encountered difficulties in the measure's implementation:
* 5 had difficulty getting their local transit forecasting models to
generate the data needed for FTA's software to calculate the measure,
* 3 did not have adequate data to develop the measure, and:
* 2 said that FTA did not provide enough documentation about the
measure and the software used to calculate the TSUB.
As described above, FTA officials told us that they believe the major
problem in implementing the TSUB measure stemmed from problems with the
underlying local travel forecasting models, not FTA's software or
guidance on the measure. Nonetheless, FTA is taking some steps to
address the problems raised in the implementation of the TSUB measure.
For example, FTA hired contractors to work with transit sponsors to
correct problems with the local travel forecasting models and the
software used to calculate the TSUB measure. These contractors provided
technical support to all affected project sponsors and assisted some
sponsors in correcting the underlying problems identified in their
local travel forecasting models. FTA officials also told us that they
are continuing to work closely with the 11 project sponsors who were
unable to calculate values for the TSUB measure. When the problems in
the projects' local travel forecasting models are corrected and data
are resubmitted to FTA for evaluation, FTA plans to re-rate these
projects. As soon as a project receives a revised rating, FTA officials
told us that they would inform Congress and other appropriate parties.
Project sponsors we interviewed told us that they would have benefited
from additional guidance and other technical support, such as
documentation for the software used to calculate the TSUB measure. They
also requested additional opportunities to discuss their concerns and
provide input to FTA officials about the measure. FTA officials told us
that they are developing software documentation for the TSUB measure
and plan to release it in June 2003. Furthermore, FTA has held a series
of four roundtable discussions with project sponsors and transit
industry officials, specifically on the TSUB measure and its
implementation. FTA plans to hold two additional roundtable discussions
during fiscal year 2004.
FTA officials and a FTA consultant told us that they anticipate that
fewer projects will have difficulties calculating accurate TSUB values
in future New Starts evaluation and ratings cycles. FTA plans to
continue addressing technical problems related to inaccurate local
travel forecasting models on a case-by-case basis. FTA officials also
acknowledged the need to develop a more systematic approach for dealing
with these problems.
FTA Evaluated 52 Projects for the Fiscal Year 2004 Cycle, Rated 32, and
Proposed 4 for New Grant Agreements:
Of the 52 projects FTA evaluated for the fiscal year 2004 cycle, 32
were rated and 20 were statutorily exempt from the ratings process
because they requested less than $25 million in New Starts funding.
Figure 3 shows the results of the process for the fiscal year 2004
cycle and how they compare with those of fiscal year 2003, when 50
projects were evaluated. From fiscal years 2003 to 2004, the number of
"recommended" projects decreased from 25 to 12, while the number of
projects that received a rating of "not recommended" rose from 4 to 11.
The primary reasons for these changes were (1) lower financial ratings,
which resulted from the inability of some projects to conform to the
reduced federal share, and (2) "low" ratings received on the cost-
effectiveness and mobility improvements criteria resulting from
implementation of the new TSUB measure. In addition, the number of
projects that were "not rated" or "not available" rose from 2 to 7,
largely due to difficulties project sponsors had in determining a value
for the TSUB measure.
Figure 3: Distribution of New Starts Project Ratings for Fiscal Years
2003 and 2004:
[See PDF for image]
[End of figure]
Following the fiscal year 2004 New Starts evaluation and ratings
process, FTA proposed four projects for new federal funding
commitments. Inclusion of one of them--the Chicago Ravenswood Line
Expansion project--is unusual because FTA assigned it an overall
project rating of "not rated" even though, on the basis of FTA's New
Starts regulations, a project must have an overall rating of at least
"recommended" to receive a grant agreement. According to FTA officials,
this project could not be rated because its local travel forecasting
data and models did not support calculation of the new benefits
measure. However, the officials told us that they decided to select
this project for a proposed grant agreement because they believed that
the data problems would be corrected, and the project would be able to
achieve a "recommended" rating. Along with the other three proposed
projects, FTA officials believe that the Chicago Ravenswood Line
Expansion project will be ready for a grant agreement by the end of
fiscal year 2004. Officials said that other projects that received
overall ratings of "recommended" or "highly recommended" would not be
ready at that time. Figure 4 summarizes the ratings of the four
proposed projects, which are further described in appendix I.
Figure 4: Ratings of Projects Proposed for New Starts Funding in Fiscal
Year 2004:
[See PDF for image]
Note: According to FTA officials, some ratings criteria are weighted
more heavily than others when the project justification summary rating
is determined.
[End of figure]
Proposed Initiatives in FTA's Fiscal Year 2004 Budget Proposal Have
Some Advantages, but May Create Challenges for Future New Starts
Projects:
The administration's fiscal year 2004 budget proposal requests that
$1.5 billion be made available for New Starts, a $0.3 billion increase
over the fiscal year 2003 level. The budget proposal also contains
three initiatives--reducing the federal share to 50 percent, allowing
nonfixed guideway projects to be funded through New Starts, and
replacing the "exempt" classification with a streamlined ratings
process for projects requesting less than $75 million in New Starts
funding.
Administration's Proposed Fiscal Year 2004 Budget Requests 25 Percent
Increase in New Starts Funding:
The administration's budget proposal for fiscal year 2004 requests that
$1.5 billion be made available for the construction of new transit
systems and expansion of existing systems through the New Starts
program--an increase of $0.3 billion, or 25 percent over the $1.2
billion appropriated for fiscal year 2003. The commitment authority for
fiscal year 2004 and beyond will be addressed in the next surface
transportation authorization legislation.[Footnote 22] Because FTA's
fiscal year 2004 budget proposes that $1.5 billion in commitments be
made available for the New Starts program, FTA expects that the new
commitment authority adopted in the authorization legislation will, at
a minimum, be sufficient to cover this amount.[Footnote 23]
Figure 5 illustrates the specific allocations FTA has requested for
fiscal year 2004. It shows that:
* $1.08 billion would be allocated among 21 projects with existing
grant agreements;
* $235 million would be allocated among the 4 projects proposed for new
FFGAs;
* $121.2 million would be allocated among other projects in final
design and preliminary engineering that do not have existing, pending,
or proposed FFGAs (these projects may include those designated by
Congress);
* $55 million would be allocated to 1 project with a pending grant
agreement (i.e., the FFGA was proposed in an earlier year, but has not
yet been completed); and:
* the remainder of the funds would be allocated to other mandated
projects and oversight activities.
Figure 5: New Starts Funding Proposals for Fiscal Year 2004:
[See PDF for image]
Note: The percentages in the figure do not total 100 percent due to
rounding.
[End of figure]
Proposed Initiatives in FTA's Fiscal Year 2004 Budget Proposal Have
Advantages and Disadvantages:
The administration has proposed that the federal share of New Starts
project costs be reduced from the current statutory maximum level of 80
percent to a statutory maximum of 50 percent.[Footnote 24] The possible
advantages of this proposed reduction would be similar to those cited
by FTA officials as justification for the 60 percent preference policy-
-that is, the change may allow FTA to fund additional projects and the
local governments sponsoring the projects would be encouraged to
provide a greater degree of financial commitment. However, a reduction
in the federal share may adversely affect some future projects. Nine of
the 11 project sponsors we interviewed were opposed to a reduction of
the federal share for projects from the current statutory level of 80
percent to 50 percent. These sponsors said that a reduced federal share
may make it more difficult for communities to participate in the New
Starts program because they will have to provide an increased local
share. It may also affect local decision making because it would make
the federal share for transit projects higher than that required for
most highway projects, which generally receive a federal share of 80
percent or more. We reported in 2002 that a number of the nation's
leading transportation experts had suggested that federal matching
requirements should be equal for all transportation modes to avoid
creating incentives for local decision makers to pursue projects in one
mode that might be less effective than projects in other
modes.[Footnote 25] However, as we noted earlier, over the past 10
years requests for federal assistance for New Starts projects have
averaged around 50 percent and have been trending lower.
Another initiative proposed in the administration's fiscal year 2004
budget proposal would allow certain nonfixed guideway transit projects
(e.g., regular or express bus service) to be eligible for New Starts
funding. Currently, New Starts projects are exclusively on fixed
guideways and occupy a separate right-of-way. According to FTA, the
proposal would allow project sponsors to choose the most appropriate
mode to serve specific corridors. Three of the 11 project sponsors we
interviewed supported the initiative because they believed that it
gives local communities greater flexibility when choosing types of
transit projects. Seven of the 11 project sponsors we interviewed
questioned the need for allowing nonfixed guideway projects into the
New Starts process. They were concerned that there would be less
emphasis on traditional fixed guideway New Starts projects. Transit
industry officials we interviewed shared this concern.
Finally, the administration has proposed replacing the "exempt"
classification with a streamlined ratings process for projects
requesting less than $75 million in New Starts funding. Currently,
projects seeking less than $25 million in New Starts funding are exempt
from the ratings process and are not evaluated on the same project
justification criteria as projects requesting more than $25 million. By
eliminating the "exempt" classification and replacing it with a
streamlined ratings process for projects requesting less than $75
million, FTA would ensure that all projects receive a rating and are
evaluated on the basis of the same criteria. This is a hallmark of
performance-oriented evaluation. However, 6 of 11 project sponsors we
interviewed opposed eliminating the "exempt" classification. These
project sponsors believed that elimination of the "exempt"
classification would reduce the number of funding applications from
smaller cities because of the cost and time involved in providing the
full evaluation data.
Figure 6 summarizes the advantages and disadvantages of the three
proposed initiatives in the administration's fiscal year 2004 budget
proposal, as expressed by FTA officials and project sponsors we
interviewed.
Figure 6: Advantages and Disadvantages of Proposed New Starts
Initiatives:
[See PDF for image]
[End of figure]
Conclusions:
Although FTA has the authority to favorably rate proposed projects that
request a lower federal share, it also has a responsibility to fully
inform all transit agencies of changes that are made to the evaluation
and ratings process. Because FTA has not revised its regulations to
reflect its 60 percent preference policy, transit sponsors, other
members of the transit community, and the public may not be fully aware
of FTA's preference policy and have not had the opportunity to formally
comment on it. By revising its regulations to reflect its current
policy, FTA would have the opportunity to obtain public comments on its
proposed rulemaking, thus increasing the transparency of the agency's
decision-making process and ensuring that the views of affected transit
agencies and other interested parties are considered in that process.
In its implementation of the Transportation System User Benefits
measure, FTA discovered that many local travel forecasting models used
by project sponsors in planning New Starts projects were flawed or had
difficulty generating the required data. FTA officials considered this
to be a major problem and they acknowledged the need for a more
systematic way to address the problem across all transit agencies that
are current or future New Starts project sponsors. FTA has assisted
project sponsors on a case-by-case basis and plans to do so in the
future. Additional guidance from FTA on what specific information is
required from local travel forecasting models could help transit
agencies generate accurate data for the measure.
Recommendations for Executive Action:
To ensure that the New Starts regulations reflect FTA's actual
evaluation and ratings process and procedures, the Secretary of
Transportation should direct the Administrator, FTA, to amend the
agency's regulations governing the level of federal funding share for
projects to reflect its current policy.
To systematically address the problems with the implementation of the
Transportation System User Benefits measure, the Secretary of
Transportation should direct the Administrator, FTA, to issue
additional guidance to transit agencies describing FTA's expectations
regarding the local travel forecasting models and the specific type of
data FTA requires to calculate the measure.
Agency Comments:
We obtained oral comments on a draft of this report from the Department
of Transportation. Department officials generally agreed with the
information presented in the report and they provided technical
clarifications, which we incorporated as appropriate. They concurred
with the recommendation about providing guidance on the user benefits
measure and said that they will consider the recommendation about
amending the regulations related to federal funding share.
Scope and Methodology:
To describe the changes in the New Starts process, we analyzed
information in FTA's Annual Report on New Starts for Fiscal Year 2004.
To identify any issues related to those changes, we interviewed:
* FTA officials and contractors hired by FTA to implement those
changes;
* 11 of the 52 sponsors of fixed guideway transit projects being
considered for New Starts funding in fiscal year 2004;[Footnote 26]
* Metropolitan Planning Organization (MPO) officials involved in 5 of
the projects whose sponsors we interviewed; and:
* transit industry officials, including senior officials at the
American Public Transportation Association and the Chair of the New
Starts Working Group--an organization of New Starts project sponsors,
MPOs, and private transit industry firms, who advocate improvements to
the New Starts evaluation and ratings process.
To determine how many New Starts projects were evaluated, rated, and
proposed for funding in fiscal year 2004, we analyzed information in
FTA's Annual Report and in various budget and financial documents
prepared by FTA. To identify proposed funding commitments and
initiatives related to New Starts in the administration's fiscal year
2004 budget proposal--and the challenges they might present for future
projects--we reviewed pertinent FTA documents, including its Annual
Report and proposed budget, and we interviewed a wide variety of
officials affected by the changes. These included the individuals
listed above (FTA officials, project sponsors, MPO officials, and
transit industry representatives). We conducted our review from March
2003 through June 2003 in accordance with generally accepted government
auditing standards.
We are sending copies of this report to congressional committees with
responsibilities for transit issues; the Secretary of Transportation;
the Administrator, Federal Transit Administration; and the Director,
Office of Management and Budget. We will also make copies available to
others upon request. In addition, this report will be available at no
charge on our Web site at http://www.gao.gov.
If you or your staffs have any questions on matters discussed in this
report, please contact me at siggerudk@gao.gov. An additional key GAO
contact and contributors to this report are listed in appendix III.
Katherine A. Siggerud
Acting Director,
Physical Infrastructure Issues:
Signed by Katherine A. Siggerud:
[End of section]
Appendixes:
Appendix I: Additional Information on Four Projects Proposed for New
Full Funding Grant Agreements in Fiscal Year 2004:
Chicago Ravenswood Line Expansion Project:
* The Chicago Transit Authority (CTA) is planning a series of capital
improvements to enhance the operation of the Ravenswood heavy rail
line, which currently experiences capacity problems through a high-
density 9.3-mile corridor.
* The Ravenswood Line Expansion Project would allow CTA to expand
platforms and stations along the existing line to accommodate longer
trains.
* The overall capital cost of the project is estimated at $529.9
million. The federal share requested is $245.5 million (46 percent).
* At present, this project has been identified as "not rated" due to
concerns about some of the information underlying the calculation of
the Transportation System User Benefits (TSUB) measure. However, on the
basis of work conducted to date, the Federal Transit Administration
(FTA) believes that the remaining issues will be resolved in the near
future and that an overall project rating of "recommended" is likely to
be granted.
Las Vegas Resort Corridor Project:
* The Las Vegas Regional Transportation Commission (RTC) is proposing a
2.28-mile Resort Corridor Automated Guideway Transit (elevated
monorail) project.
* The monorail will serve the Las Vegas central business district and
the resort corridor along the Las Vegas "strip.":
* The estimated capital cost for the project is $324.8 million. RTC is
seeking $159.7 million (50 percent) in New Starts funding.
* The Las Vegas Resort Corridor Project received a "high" rating for
cost-effectiveness, as demonstrated by its high transit system user
benefits.
New York East Side Access Project:
* The New York Metropolitan Transit Authority (MTA) is designing a
direct access for Long Island Rail Road (LIRR) passengers to a new
passenger concourse in Grand Central Station in Midtown Manhattan.
* The 4-mile, two-station commuter rail extension under the East River
will contribute to the overall growth of the nation's largest commuter
rail system.
* The projected capital cost of the project is $5.3 billion. MTA is
requesting $2.6 billion (49 percent) in New Starts funding.
* LIRR has 162,000 daily riders, and this project will allow them to
access the east side of New York by connecting LIRR with Grand Central
Station. FTA officials believe that the project will reduce travel time
for many riders.
Seattle Central Link Project:
* The Central Puget Sound Regional Transit Authority (Sound Transit) is
proposing a 24-mile Central Link light rail transit line from central
Seattle toward, but not connecting to, the Seattle-Tacoma airport.
* The total capital cost for the project is estimated at $2.5 billion.
Sound Transit is expected to seek $500 million (20 percent) in New
Starts funding.
* The Central Link project entered Preliminary Engineering in July 1997
and Final Design in February 2000. FTA originally entered into a full
funding grant agreement for the "Seattle Sound Move Corridor" project
in January 2001.
* Congress and the Department of Transportation's Office of the
Inspector General raised significant questions about the project costs
and directed Sound Transit to reexamine the entire project to reduce
risks and better meet budget limitations. Sound Transit identified the
Central Link component of the larger Seattle Sound Move Corridor
project as its new minimum operable segment.
[End of section]
Appendix II: Transit Sponsors and Metropolitan Planning Organizations
Contacted by GAO:
Project: Chicago (Ravenswood Line Expansion); Transit agencies
contacted: Chicago Transit Authority.
Project: Cleveland (Euclid Corridor Bus Rapid Transit); Transit
agencies contacted: Greater Cleveland Regional Transit Authority.
Project: Las Vegas (Resort Corridor Fixed Guideway); Transit agencies
contacted: Regional Transportation Commission of Clark County.
Project: Little Rock (River Rail Project); Transit agencies contacted:
Central Arkansas Transit Authority.
Project: Nashville (East Corridor Commuter Rail); Transit agencies
contacted: Regional Transportation Authority.
Project: New York (Long Island Railroad Eastside Access); Transit
agencies contacted: Metropolitan Transportation Authority.
Project: Philadelphia (Schuylkill Valley Metrorail); Transit agencies
contacted: Southeastern Pennsylvania Transportation Authority.
Project: Pittsburgh (North Shore Connector Light Rail Transit); Transit
agencies contacted: Port Authority of Allegheny County.
Project: San Francisco (New Central Subway Project); Transit agencies
contacted: San Francisco Municipal Railway.
Project: Seattle (Central Link Initial Segment); Transit agencies
contacted: Puget Sound Regional Transit Authority.
Project: Washington, D.C. (Dulles Corridor Bus Rapid Transit); Transit
agencies contacted: Washington Metropolitan Area Transportation
Authority.
Project: Geographic location; Transit agencies contacted: Metropolitan
Planning Organizations contacted.
Project: Chicago, Illinois; Transit agencies contacted: Chicago Area
Transportation Study.
Project: Las Vegas, Nevada; Transit agencies contacted: Regional
Transportation Commission of Clark County.
Project: Philadelphia, Pennsylvania; Transit agencies contacted:
Delaware Valley Regional Planning Commission.
Project: Seattle, Washington; Transit agencies contacted: Puget Sound
Regional Council.
Project: Washington, D.C.; Transit agencies contacted: National Capital
Region Transportation Planning Board at the Metropolitan Washington
Council of Governments.
[End of table]
Source: GAO.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Rita Grieco, (202) 512-9047 or griecor@gao.gov:
Acknowledgments:
In addition to the person named above, other key contributors to this
report were Alan Belkin, Christine Bonham, R. Stockton Butler, Brandon
Haller, Bert Japikse, Ryan Petitte, and David Laverny-Rafter.
:
(542020):
:
FOOTNOTES
[1] Fixed guideway systems use and occupy a separate right-of-way for
the exclusive use of public transportation services. They include fixed
rail, exclusive lanes for buses and other high-occupancy vehicles, and
other systems.
[2] According to FTA, the term "full funding grant agreement" refers to
a multiyear contractual agreement between FTA and project sponsors for
a specified amount of funding. The full amount of funding is committed
to the projects over a set period.
[3] The exception to the ratings process are projects that are
statutorily "exempt" because they request less than $25 million in New
Starts funding.
[4] Pub. L. 105-178 (1998).
[5] See U.S. General Accounting Office, Mass Transit: FTA's New Starts
Commitments for Fiscal Year 2003, GAO-02-603 (Washington, D.C.: Apr.
30, 2002), Mass Transit: FTA Could Relieve New Starts Program Funding
Constraints, GAO-01-987 (Washington, D.C.: Aug. 15, 2001), Mass
Transit: Implementation of FTA's New Starts Evaluation Process and FY
2001 Funding Proposals, GAO/RCED-00-149 (Washington, D.C.: Apr. 28,
2000), and Mass Transit: FTA's Progress in Developing and Implementing
a New Starts Evaluation Process, GAO/RCED-99-113 (Washington, D.C.:
Apr. 26, 1999).
[6] H.R. Conf. Rep. No. 107-308, p. 114 (Nov. 30, 2001).
[7] While FTA's preference policy reduced the level of New Starts
funding a project is likely to receive, the administration has proposed
in its reauthorization legislation that project sponsors may seek
additional federal funding from other sources.
[8] According to FTA, statutorily exempt projects must meet all
planning, environmental, project management, and other requirements
that demonstrate their readiness to advance into preliminary
engineering and final design. Statutorily exempt projects do not sign
full funding grant agreements, rather they are funded annually through
scheduled grants or congressional designation.
[9] "Guaranteed" funds are subject to a procedural mechanism designed
to ensure that a minimum amount of funding is authorized each year.
[10] The alternatives analysis stage provides information on the
benefits, costs, and impacts of alternative strategies leading to the
selection of a locally preferred solution to the community's mobility
needs.
[11] During the preliminary engineering phase, project sponsors refine
the design of the proposal, taking into consideration all reasonable
design alternatives, which results in estimates of costs, benefits, and
impacts (e.g., environmental or financial). 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.
[12] The exceptions to this process are statutorily "exempt" projects,
which are those that request less than $25 million in New Starts
funding. These projects are not required to submit project
justification information and do not receive ratings from FTA.
[13] We interviewed 11 sponsors of ongoing New Starts projects who were
chosen to include a cross-section of projects based on geographic
distribution, project size, and a range of cost-effectiveness and
financial ratings. For a more detailed description of interviewees, see
the Scope and Methodology section and app. II.
[14] See Federal Transit Administration, Annual Report on New Starts:
Proposed Allocations of Funds for Fiscal Year 2004 (Washington, D.C.:
Feb. 3, 2003).
[15] 49 U.S.C. § 5309.
[16] 49 U.S.C. § 5309(e)(5).
[17] H.R. Conf. Rep. No. 107-308, p. 114 (Nov. 30, 2001).
[18] We note that statements in a committee or conference report do not
have the force or effect of law and cannot supercede or repeal
statutory requirements. See U.S. General Accounting Office, Welfare
Reform: Competitive Grant Selection Requirement for DOT's Job Access
Program Was Not Followed, GAO-02-213 (Washington, D.C.: Dec. 7, 2001),
11.
[19] The four projects proposing a federal share greater than 60
percent were San Juan Tren Urbano Minillas Extension, Ft. Collins Mason
Street Transportation Corridor, Philadelphia Schuylkill Valley
Metrorail, and San Francisco New Central Subway.
[20] We interviewed a total of 11 project sponsors, but 2 of these
sponsors were exempt from the evaluation and ratings process because
they are seeking less than $25 million in New Starts funding and,
therefore, were not affected by the TSUB measure.
[21] There were 52 projects evaluated in the fiscal year 2004 cycle.
However, 20 of these were exempt from the ratings process and not
affected by the TSUB measure because they requested less than $25
million in New Starts funding.
[22] FTA's New Starts commitment authority is the amount of funding
Congress has authorized FTA to commit to New Starts projects for a
given authorization period.
[23] FTA expects to end fiscal year 2003 with about $0.2 billion in
unused commitment authority. Under TEA-21 and subsequent amendments,
Congress authorized approximately $10.0 billion in total New Starts
commitment authority from fiscal year 1998 through fiscal year 2003.
FTA committed about $9.8 billion for New Starts projects during those
years, resulting in the $0.2 billion in unused commitment authority.
[24] FTA first proposed reducing the statutory maximum level of the
federal share to 50 percent in its fiscal year 2002 budget proposal.
Congress rejected the proposal.
[25] See U.S. General Accounting Office, Surface and Maritime
Transportation: Developing Strategies for Enhancing Mobility: A
National Challenge, GAO-02-775 (Washington, D.C.: Aug. 30, 2002).
[26] The views expressed by the 11 transit sponsors we interviewed may
not reflect the views of all sponsors of New Starts projects, but they
are a sample chosen to include a cross-section of projects based on
geographic distribution, project size, and a range of cost-
effectiveness and financial ratings.
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