Mass Transit
FTA Needs to Better Define and Assess Impact of Certain Policies on New Starts Program Gao ID: GAO-04-748 June 25, 2004The Transportation Equity Act for the 21st Century (TEA-21) and subsequent legislation authorized about $8.3 billion in guaranteed funding for the Federal Transit Administration's (FTA) New Starts program, which funds fixed guideway transit projects, such as rail and trolley projects, through FFGAs. GAO assessed the New Starts process for the fiscal year 2005 cycle. GAO identified (1) the number of projects that were evaluated, rated, and proposed for new FFGAs and how recent changes to the process were reflected in ratings; (2) the proposed funding commitments in the administration's budget request and legislative reauthorization proposals; and (3) the extent to which amounts appropriated since 1998 fulfilled FFGAs.
For the fiscal year 2005 cycle, FTA evaluated 38 projects, rated 29 projects, and proposed 7 projects for funding. FTA recommended 5 of the 7 projects for full funding grant agreements (FFGAs). FTA considered the remaining 2 projects to be meritorious and recommended a total of $50 million for these projects in fiscal year 2005. However, FTA does not clearly explain how it decides which projects will be recommended for funding outside of FFGAs or what project sponsors must do to qualify for such a recommendation. Last year, in response to language contained in appropriations committee reports, FTA instituted a policy favoring projects that seek a federal New Starts share of no more than 60 percent of the total project cost--even though the law allows projects to seek up to 80 percent--in its recommendation for FFGAs. According to FTA officials, this policy allows more projects to receive funding and ensures that local governments play a major role in funding such projects. FTA describes the 60 percent policy as a general preference; however, FTA's fiscal year 2005 New Starts report suggests that this policy is absolute in that projects proposing more than a 60 percent federal New Starts share will not be recommended for an FFGA. Therefore, FTA agreed to describe the policy as a general preference in future reporting instructions, thus allowing for the possibility of exceptions. Although most of the projects evaluated during the current cycle proposed a federal New Starts share of less than 60 percent of total project costs, some project sponsors GAO interviewed raised concerns about the difficulties of securing the local funding share. However, the overall impact of this policy on projects is unknown. The administration's fiscal year 2005 budget proposal requests $1.5 billion for the New Starts program, a $225 million increase over the amount appropriated for the fiscal year 2004 cycle. Congress is currently considering legislative reauthorization proposals, which contain a number of provisions and initiatives for the New Starts program including streamlining the New Starts evaluation process for projects requesting less than $75 million in New Starts funds, expanding the definition of eligible projects, changing the ratings categories, and maintaining the maximum federal New Starts share at 80 percent of total project cost. Project sponsors GAO interviewed had varying views on these provisions, but most said that clear definitions would be needed for any proposed changes to the New Starts process. All 26 projects with existing FFGAs have not received funds as scheduled--the amount of funding appropriated was less than the amount authorized and scheduled by the FFGA. According to FTA, all completed projects have received the total amount authorized in the FFGAs, but not necessarily according to the original FFGA schedule. As of March 2004, the 26 projects have received a total of $294 million, or 5 percent, less than the amount scheduled by the projects' FFGAs. The amount and timing of differences varied for each project. Project sponsors GAO interviewed have developed methods to mitigate the impact of receiving less than the scheduled annual amount for their project, but these methods can generate additional costs.
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-04-748, Mass Transit: FTA Needs to Better Define and Assess Impact of Certain Policies on New Starts Program
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Report to Congressional Committees:
June 2004:
MASS TRANSIT:
FTA Needs to Better Define and Assess Impact of Certain Policies on New
Starts Program:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-748]:
GAO Highlights:
Highlights of GAO-04-748, a report to congressional committees
Why GAO Did This Study:
The Transportation Equity Act for the 21st Century (TEA-21) and
subsequent legislation authorized about $8.3 billion in guaranteed
funding for the Federal Transit Administration‘s (FTA) New Starts
program, which funds fixed guideway transit projects, such as rail and
trolley projects, through FFGAs. GAO assessed the New Starts process
for the fiscal year 2005 cycle. GAO identified (1) the number of
projects that were evaluated, rated, and proposed for new FFGAs and
how recent changes to the process were reflected in ratings; (2) the
proposed funding commitments in the administration‘s budget request
and legislative reauthorization proposals; and (3) the extent to which
amounts appropriated since 1998 fulfilled FFGAs.
What GAO Found:
For the fiscal year 2005 cycle, FTA evaluated 38 projects, rated 29
projects, and proposed 7 projects for funding. FTA recommended 5 of
the 7 projects for full funding grant agreements (FFGAs). FTA
considered the remaining 2 projects to be meritorious and recommended a
total of $50 million for these projects in fiscal year 2005. However,
FTA does not clearly explain how it decides which projects will be
recommended for funding outside of FFGAs or what project sponsors must
do to qualify for such a recommendation. Last year, in response to
language contained in appropriations committee reports, FTA instituted
a policy favoring projects that seek a federal New Starts share of no
more than 60 percent of the total project cost”even though the law
allows projects to seek up to 80 percent”in its recommendation for
FFGAs. According to FTA officials, this policy allows more projects to
receive funding and ensures that local governments play a major role in
funding such projects. FTA describes the 60 percent policy as a
general preference; however, FTA‘s fiscal year 2005 New Starts report
suggests that this policy is absolute in that projects proposing more
than a 60 percent federal New Starts share will not be recommended for
an FFGA. Therefore, FTA agreed to describe the policy as a general
preference in future reporting instructions, thus allowing for the
possibility of exceptions. Although most of the projects evaluated
during the current cycle proposed a federal New Starts share of less
than 60 percent of total project costs, some project sponsors GAO
interviewed raised concerns about the difficulties of securing the
local funding share. However, the overall impact of this policy on
projects is unknown.
The administration‘s fiscal year 2005 budget proposal requests $1.5
billion for the New Starts program, a $225 million increase over the
amount appropriated for the fiscal year 2004 cycle. Congress is
currently considering legislative reauthorization proposals, which
contain a number of provisions and initiatives for the New Starts
program including streamlining the New Starts evaluation process for
projects requesting less than $75 million in New Starts funds,
expanding the definition of eligible projects, changing the ratings
categories, and maintaining the maximum federal New Starts share at 80
percent of total project cost. Project sponsors GAO interviewed had
varying views on these provisions, but most said that clear definitions
would be needed for any proposed changes to the New Starts process.
All 26 projects with existing FFGAs have not received funds as
scheduled”the amount of funding appropriated was less than the amount
authorized and scheduled by the FFGA. According to FTA, all completed
projects have received the total amount authorized in the FFGAs, but
not necessarily according to the original FFGA schedule. As of March
2004, the 26 projects have received a total of $294 million, or 5
percent, less than the amount scheduled by the projects‘ FFGAs. The
amount and timing of differences varied for each project. Project
sponsors GAO interviewed have developed methods to mitigate the impact
of receiving less than the scheduled annual amount for their project,
but these methods can generate additional costs.
What GAO Recommends:
GAO recommends that the Secretary of Transportation direct the
Administrator of FTA to (1) clearly explain the basis on which it
decides which projects will be recommended for funding outside of
FFGAs, such as projects considered to be meritorious, and what projects
must do to qualify for such a recommendation and (2) examine the
impact of FTA‘s policy favoring projects requesting less than 60
percent New Starts funds.
Department officials generally agreed with the information provided
and concurred with the recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-04-748.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Katherine Siggerud at
(202)512-2834 or siggerudk@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Recent Changes to the Evaluation and Rating Process Present Challenges
and Raise Concerns:
Administration's Proposal Requests Increased New Starts Funds and
Legislative Reauthorization Proposals Would Expand and Streamline the
Program:
Project Sponsors Have Taken Steps to Address Variances in Funding:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Projects Evaluated for the Fiscal Year 2005 Cycle:
Appendix III: Cumulative Shortfalls by Project with Full Funding Grant
Agreements:
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: FTA's Criteria for Assigning Overall Project Ratings:
Table 2: Cost-Effectiveness and Land Use Ratings for Projects Proposed
for Funding:
Table 3: Criteria for New Starts Share Rating:
Table 4: Projects Contacted for Our Review:
Figures:
Figure 1: New Starts Planning and Project Development Process:
Figure 2: New Starts Evaluation and Ratings Process:
Figure 3: The Number and Percentage of Projects Rated by Category,
Fiscal Years 2003 to 2005:
Figure 4: Total New Starts Funding Proposed for Fiscal Year 2005 Equals
$1.5 Billion:
Abbreviations:
FFGA: full funding grant agreement:
FTA: Federal Transit Administration:
LRT: Light Rail Transit:
MOS: minimal operating segment:
TEA-21: Transportation Equity Act for the 21ST Century:
TSUB: Transportation System User Benefits:
Letter June 25, 2004:
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. The New Starts program
awards full funding grant agreements (FFGAs) for fixed-guideway rail,
certain bus projects, trolley, and ferry projects.[Footnote 1] An FFGA
establishes the terms and conditions for federal participation in a
project, including the maximum amount of federal funds available for
the project, which by statute cannot exceed 80 percent of its net cost.
Since 1998, FTA has funded or recommended 26 projects for FFGAs--the
total estimated cost of these projects exceeds $17.5 billion.
Under the Transportation Equity Act for the 21ST Century (TEA-
21)[Footnote 2] and subsequent amendments, Congress authorized
approximately $8.3 billion:
in New Starts contract authority through 2003.[Footnote 3] Although
this level of funding was higher than it had ever been, the demand for
these resources is also increasing. For example, in 1998, TEA-21
identified over 190 projects nationwide as eligible to compete for New
Starts funding. Several additional projects not authorized in TEA-21
have since received congressional appropriations. Because of this
demand, TEA-21 directed FTA to prioritize projects for funding by
evaluating, rating, and recommending potential projects on the basis of
specific financial and project justification criteria and to issue
regulations outlining its evaluation and rating process. FTA issued the
regulations for evaluating and rating New Starts projects in fiscal
year 2001. For the fiscal year 2004 cycle, FTA made two changes to the
evaluation and ratings process. First, FTA implemented the
Transportation System User Benefits (TSUB) measure as a variable in the
calculation of cost-effectiveness and mobility improvements. The new
measure is intended to calculate the change in the amount of travel
time and costs that people incur for taking a trip. Second, in response
to language contained in appropriations committee reports, FTA
instituted a preference policy favoring projects that seek a federal
New Starts share of no more than 60 percent of the total project cost.
Both of the changes are reflected in the project justification and
financial ratings of a project, respectively, which, in turn, are
combined to form a project's overall rating.
TEA-21 also requires us to report each year on FTA's processes and
procedures for evaluating, rating, and recommending New Starts projects
for federal funding and on the implementation of these processes and
procedures. This report discusses (1) the number of projects that were
evaluated, rated, and proposed for new FFGAs for fiscal year 2005 and
on how the recent changes to the process were reflected in ratings; (2)
the proposed funding commitments for New Starts in the administration's
fiscal year 2005 budget request and legislative reauthorization
proposals; and (3) the extent to which amounts appropriated since 1998
fulfilled FFGAs. To address these objectives, we reviewed the
administration's fiscal year 2005 budget request and legislative
reauthorization proposals as well as FTA's annual New Starts reports
and records on funding authorized and appropriated to projects with
existing FFGAs. We also interviewed FTA officials, representatives of
the American Public Transportation Association and sponsors of 15
projects in preliminary engineering or final design, and 5 projects
with existing FFGAs. In addition, we attended FTA's meeting with
project sponsors, the New Starts Roundtable, in April 2004. We
conducted our work from February 2004 through June 2004 in accordance
with generally accepted government auditing standards. (See app. I for
more information about our scope and methodology.)
Results in Brief:
For the fiscal year 2005 cycle, FTA evaluated 38 projects, rated 29
projects, and proposed 7 projects for funding.[Footnote 4] FTA
recommended 5 of the 7 projects for full funding grant agreements
(FFGAs). FTA considered the remaining 2 projects to be "meritorious and
worthy of funding" and proposed a total of $50 million for the 2
projects--a substantial increase over amounts proposed for similar
projects in prior years. FTA has not, however, clearly explained to
project sponsors how it decides which projects will be recommended for
funding outside of FFGAs or what they must do to qualify for such a
recommendation. Last year, FTA made two changes to its evaluation and
ratings process. First, FTA instituted a new measure to calculate a
project's cost-effectiveness--the cost per hour of Transportation
System User Benefits (TSUB)--to replace the "cost per new rider"
measure. Project sponsors we interviewed generally believe the TSUB
measure is an improvement over the old measure. Although FTA has
provided training and technical assistance, many project sponsors
continue to experience difficulties producing reliable local travel
forecasts that are used in the calculation of the new measure. Second,
in response to appropriations committee reports, FTA instituted a
preference policy favoring projects that seek a federal New Starts
share of no more than 60 percent of the total project cost--even though
the law allows projects to seek up to 80 percent--in its
recommendations for FFGAs. According to FTA officials, this policy will
allow more projects to receive funding and ensure that local
governments play a major role in funding such projects. Although FTA
has the statutory authority to favorably rate proposed projects that
request a lower New Starts share, in our view, FTA's policy is
permissible as long as projects are not required to request less than
an 80 percent federal New Starts share in order to be considered for a
recommendation for an FFGA. FTA describes the policy as a general
preference; however, FTA's fiscal year 2005 New Starts report suggests
that this policy is absolute in that projects proposing more than a 60
percent federal New Starts share will not be recommended for an FFGA.
Therefore, FTA agreed to describe the policy as a general preference in
future reporting instructions, thus allowing for the possibility of
exceptions. Although the majority of the projects evaluated during the
current cycle proposed a federal New Starts share of less than 60
percent, some project sponsors we contacted raised concerns about the
difficulties of securing the local funding share and state that FTA's
push for a lower federal New Starts share would likely affect other
transit projects in their area or their decision to advance future
transit projects. However, the overall impact of this policy on
projects is unknown.
The administration's fiscal year 2005 budget proposal requests $1.5
billion for the New Starts program, a $225 million increase over the
amount appropriated for the fiscal year 2004 cycle. The majority of the
$1.5 billion, $931 million or 61 percent, would be allocated to
existing FFGAs. In addition to the fiscal year 2005 budget for New
Starts, Congress is currently considering legislation to reauthorize
federal surface transportation programs, including the New Starts
program. Proposed reauthorization in both the Senate and House bills
contains a number of provisions and initiatives for the New Starts
program.[Footnote 5] Some of the key provisions would streamline the
New Starts evaluation process for projects requesting less than $75
million in New Starts funds, expand the definition of eligible
projects, change the rating categories, and maintain the maximum
federal funding share for a New Starts project at 80 percent of the
project's net cost. The project sponsors we interviewed had varying
views on these provisions, but most said that clear definitions would
be needed for any proposed changes to the New Starts process. For
example, most project sponsors we interviewed were supportive of
implementing a streamlined evaluation process for less expensive
projects, but stated that clearly defined criteria would be necessary
in implementing the new process.
All 26 projects with existing FFGAs have not received the level of
federal funding that was scheduled and authorized by the projects'
FFGAs. Variances in funding can occur for several reasons, including
congressional decision making and project management oversight costs.
As of March 2004, the 26 projects have received a total of $294
million, or 5 percent, less than the amount authorized by the projects'
FFGAs. The amount and timing of these differences in funding varied for
each project. According to FTA, all completed projects have received
the total amount authorized in the FFGAs but not necessarily according
to the original FFGA schedule. FTA officials also stated that FTA will
continue to request funds to be appropriated to fulfill the amounts
authorized in existing FFGAs. Project sponsors we interviewed have
developed methods to mitigate the impact of receiving less than the
scheduled annual amount for their project. For example, some project
sponsors entered into partnerships with the state and/or local
government, while others implemented interim funding mechanisms to
cover any funding differences, including issuing bonds or loans to
generate necessary funds. Although project sponsors have used these
methods to avoid delays and changes in scope, they can generate
additional costs.
We are making two recommendations to the Secretary of Transportation to
direct the Administrator, FTA, to (1) clearly explain the basis on
which it decides which projects will be recommended for funding outside
of FFGAs, such as projects considered to be meritorious, and what
projects must do to qualify for such a recommendation and (2) examine
the impact of the preference policy on projects seeking or considering
New Starts funding and examine whether its policy results in maximizing
New Starts funds and local participation.
The Department of Transportation, including FTA, reviewed a draft of
this report. FTA officials generally agreed with the information
provided and concurred with its recommendations.
Background:
TEA-21 authorized a total of $36 billion in "guaranteed" funding for a
variety of transit programs, including financial assistance to states
and localities to develop, operate, and maintain transit
systems.[Footnote 6] Under one of these programs, New Starts, 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). We have recognized the New Starts program as a
model that the federal government could use for approving other
transportation projects.
FTA generally funds New Starts projects through full funding grant
agreements (FFGAs). An FFGA establishes the terms and conditions for
federal participation in a project, including the maximum amount of
federal funds available for the project, as well as the project's
scope, schedule, and cost. By statute, the federal funding share for a
New Starts project cannot exceed 80 percent of its net cost. To obtain
an FFGA, projects must go through an extensive process from a regional
multimodal transportation planning process to preliminary engineering
to final design and construction. (See fig. 1.) As required by TEA-21,
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 corridor-
level options, such as rail lines or bus routes. The alternatives
analysis phase results in the selection of a locally preferred
alternative--which is intended to be the New Starts project that FTA
evaluates for funding. After a locally preferred alternative is
selected, project sponsors submit a request to FTA for entry into the
preliminary engineering phase.[Footnote 7] Following completion of
preliminary engineering, the project may be approved by FTA to advance
into final design, after which the project may be approved by FTA for
an FFGA and proceed to construction. FTA oversees the management of
projects from the preliminary engineering phase through construction
and evaluates the projects for advancement into each phase of the
process, as well as annually for the New Starts report to Congress.
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 on the basis of a variety of
financial and project justification criteria and determines 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. As figure 2 shows, FTA has developed a series of
measures for the project justification criteria. 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. However,
FTA does not weigh each individual criterion equally when calculating
the summary financial and project justification ratings. For the
summary project justification rating, FTA uses primarily two criteria-
-cost-effectiveness and land use.[Footnote 8] Each of these criteria
account for 50 percent of the summary project justification. Although
FTA considers the full range of criteria, according to an FTA official,
the other criteria do not produce meaningful distinctions among
projects and, therefore, are not given an official weight in the
ratings process.[Footnote 9] FTA plans to consider revisions to the
measures for the other criteria after the authorizing legislation is
passed.
Figure 2: New Starts Evaluation and Ratings Process:
[See PDF for image]
Note: The shaded boxes indicate changes in the evaluation process made
in fiscal year 2004. The share of non-New Starts funding has always
been a measure used in the New Starts evaluation; however, for the
fiscal year 2004 cycle, FTA instituted a policy favoring projects that
request less than 60 percent.
[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]
On the basis of the summary project justification and financial
ratings, FTA develops the overall project rating. (Table 1 describes
the criteria FTA uses to assign overall project ratings.) The
exceptions to the evaluation process are statutorily "exempt" projects,
which are those that request less than $25 million in New Starts
funding.[Footnote 10] These projects are not required to submit
project justification information and do not receive ratings.
Table 1: FTA's Criteria for Assigning Overall Project Ratings:
Overall rating category: Highly recommended;
Criteria: Requires at least a "medium-high" for both the financial and
project justification summary ratings.
Overall rating category: Recommended;
Criteria: Requires at least a "medium" for both the financial and
project justification summary ratings.
Overall rating category: Not recommended;
Criteria: Assigned to projects not rated at least "medium" for both the
financial and project justification summary ratings.
Overall rating category: Not rated;
Criteria: Indicates that insufficient information was submitted or
that FTA has serious concerns about the information submitted for the
mobility improvements and cost-effectiveness criteria because the
underlying travel forecasting assumptions used by the project sponsor
may have inaccurately represented the benefits of the project.
Source: FTA.
[End of table]
Last year, we reported that FTA implemented two changes to the New
Starts process for the fiscal year 2004 cycle.[Footnote 11] (These
changes are shaded in fig. 2.) First, FTA changed the calculation of
the cost-effectiveness and mobility improvements criteria by adopting
the Transportation System User Benefits (TSUB) measure. This measure
replaced the "cost per new rider" measure that had been used in past
ratings cycles. According to FTA, the new measure reflects an important
goal of any major transportation investment--reducing the amount of
travel time that people incur for taking a trip (i.e., the cost of
mobility). In contrast to the "cost per new rider" measure, the new
measure considers travel time savings to both new and existing transit
system riders. Second, in response to appropriations committee reports,
FTA instituted a preference policy favoring projects that seek a
federal New Starts share of no more than 60 percent of the total
project cost. Under this preference policy, FTA gives projects seeking
a federal share of New Starts funding greater than 60 percent a "low"
financial rating, which further results in a "not recommended" overall
project rating.[Footnote 12]
As required by statute, FTA uses the evaluation and ratings process,
along with its consideration of the stage of development of New Starts
projects, to decide which projects to recommend to Congress for
funding.[Footnote 13] 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, which confirm that there are no cost, project scope, or local
financial commitment issues remaining.
Recent Changes to the Evaluation and Rating Process Present Challenges
and Raise Concerns:
Of the 38 projects evaluated for the fiscal year 2005 cycle, 29 were
rated and 9 were statutorily exempt from the rating process because
they requested less than $25 million in New Starts funding. While the
project ratings for the fiscal year 2005 cycle reflect a general
improvement over the previous year, ratings are not as high as those
achieved for the fiscal year 2003 cycle. FTA proposed 7 projects for
funding for the fiscal year 2005 cycle, including 5 projects for FFGAs.
The remaining 2 projects were considered to be "meritorious and worthy
of funding" and FTA proposed a total of $50 million for these projects-
-substantially more than amounts proposed for similar projects in prior
years. FTA did not, however, clearly explain to project sponsors how it
decides which projects will be recommended for funding outside of FFGAs
or what they must do to qualify for such a recommendation. FTA
implemented two changes to its evaluation and ratings process for the
fiscal year 2004 cycle: implementation of a new cost-effectiveness
measure and adoption of the 60 percent federal New Starts share
preference policy that contributed to lower ratings. Although many of
those projects were able to overcome challenges with the new measure
for the current cycle, ratings reflected that some projects were still
unable to generate reliable local travel forecasts. Also, while the
majority of the projects evaluated during the current cycle requested a
federal New Starts share of less than 60 percent, some project sponsors
raised concerns about FTA's preference policy, including the challenges
associated with securing the local funding share.
Project Ratings for the Current Cycle Reflect Improvement but Have Not
Returned to Fiscal Year 2003 Levels:
Project ratings are generally higher for the fiscal year 2005 cycle
than for the fiscal year 2004 cycle but are still lower than ratings
for fiscal year 2003. Of the 38 projects FTA evaluated for the fiscal
year 2005 cycle, 29 were rated, and 9 were statutorily exempt from the
ratings process because project sponsors requested less than $25
million in New Starts funding. Figure 3 shows that the percentage of
projects that received ratings of "recommended" or "highly recommended"
rose from 44 percent for the fiscal year 2004 cycle to 59 percent for
the fiscal year 2005 cycle. FTA attributes the increase in
"recommended" projects over last year's total to improved submissions,
notably improved financial plans, and a better understanding of and
increased comfort with the estimation of project benefits among project
sponsors. In addition, FTA rated 7 projects as "not recommended" and
designated 5 projects as "not rated." According to FTA, most of the
projects that received a rating of "not recommended" submitted poor
financial plans--that is, plans that FTA considered overly optimistic
in their assumptions about costs and revenue growth, or demonstrated no
commitment of funds. For the projects that received a rating of "not
rated," either FTA had significant concerns with the travel forecasts
submitted by the project sponsor or the project sponsor did not provide
all of the information necessary for a complete submission. (See app.
II for a full listing of ratings for projects evaluated for the fiscal
year 2005 cycle.)
Figure 3: The Number and Percentage of Projects Rated by Category,
Fiscal Years 2003 to 2005:
[See PDF for image]
[End of figure]
FTA proposed 7 projects for funding for the fiscal year 2005 cycle. FTA
proposed 5 of the 7 projects for FFGAs, including Cleveland, Euclid
Corridor Transportation Project; Las Vegas, Resort Corridor Fixed
Guideway; New York, Long Island Rail Road East Side Access; Phoenix,
Central Phoenix/East Valley Light Rail Transit (LRT) Corridor; and
Pittsburgh, North Shore LRT Connector. These projects are expected to
be ready for FFGAs by the end of fiscal year 2005. The total costs of
these 5 projects are estimated to be $7.6 billion. The total federal
New Starts share is expected to be $3.7 billion.
In addition, FTA considered 2 other projects in final design to be
meritorious and recommended a total of $50 million for these projects
in fiscal year 2005. FTA proposed $30 million for the Charlotte South
Corridor LRT Project and $20 million for the Raleigh Regional Rail
Project--substantially more than amounts proposed for similar projects
in prior years. According to the fiscal year 2005 New Starts report,
these meritorious projects are "located in areas that are highly
congested or rapidly growing, and that have demonstrated a high level
of local financial commitment and strong support from local citizens,
businesses, and elected officials."[Footnote 14] However, the report
does not clearly explain to project sponsors how FTA decides which
projects will be recommended for funding outside of FFGAs or what they
must do to qualify for such a recommendation. FTA officials explained
that the 2 projects considered to be meritorious this cycle are closer
to being ready for an FFGA than the other projects evaluated; however,
FTA did not believe the 2 projects would be ready for an FFGA in fiscal
year 2005. FTA officials also told us that decisions to recommend
funding for projects outside of FFGAs are made on an annual basis and
are dependent on the readiness of the projects and the availability of
funds after funding for existing or new FFGAs is allocated. This
explanation, however, is not included in its New Starts report or other
published guidance.
FTA has funded similar projects in the past. For example, for the
fiscal year 2003 cycle, FTA considered 5 projects in preliminary
engineering to be meritorious.[Footnote 15] At that time, FTA had
proposed $4 million for 4 of the 5 projects and $15 million for the
remaining project. FTA reported in its annual New Starts report that
the 5 projects "may be ready to progress through final design and
construction by the end of fiscal year 2003."[Footnote 16] However, by
the fiscal year 2005 cycle, only 1 of the projects had an FFGA. The
remaining 4 projects were either being proposed for an FFGA for the
fiscal year 2005 cycle (3) or still in preliminary engineering (1).
Therefore, in the past, FTA's recommendation for funding for projects
considered to be meritorious does not guarantee that a project will
advance to final design and construction as quickly as anticipated.
Cost-effectiveness Ratings Indicate Continued Problems with the
Implementation of the TSUB Measure:
Project sponsors continue to experience challenges calculating cost-
effectiveness. Last year, we reported that many project sponsors
experienced difficulties that prevented them from producing accurate
local travel forecasts to calculate the TSUB measure, resulting in 11
projects designated as "not rated" for cost-effectiveness. Since that
time, the sponsors for 8 of those 11 projects were able to submit
sufficient information to receive a rating for cost-effectiveness,
suggesting that they were able to overcome the travel forecasting
problem that they had experienced during the first year of the
measure's implementation. However, 6 additional project sponsors were
unable to generate reliable local travel forecasts and thus could not
calculate a valid TSUB value for the fiscal year 2005 cycle, resulting
in a total of 9 of the 29 projects designated as "not rated" for cost-
effectiveness.[Footnote 17] According to FTA, the major problem in
implementing the measure this cycle stemmed from problems with the
underlying local travel forecasting models, not FTA's software or the
TSUB measure. For example, FTA noted that 22 of the 29 projects rated
this year required some involvement by FTA to improve the accuracy of
their travel forecasts. Last year, we recommended that FTA issue
additional guidance describing its expectations regarding the local
travel forecasting models and the specific types of data FTA requires
to calculate the measure. FTA concurred with this recommendation and
provided additional guidance in its updated reporting instructions,
issued in June 2003, and has continued to provide technical assistance
to project sponsors.[Footnote 18]
Despite the difficulties encountered in implementing TSUB, FTA and most
of the project sponsors we interviewed believe that this new measure is
an improvement over the "cost per new rider" measure because it takes
into account a broader set of benefits to transit riders. These
benefits include reductions in walk times, wait times, ride times, and
numbers of transfers, all of which produce perceived savings in travel
time or "travel time benefits" for new riders as well as existing
transit riders. By contrast, the "cost per new rider" measure
recognized benefits only for new transit riders and did not measure
benefits to existing transit riders.
Although the majority of project sponsors we interviewed believe the
new measure is an improvement over the old one, many raised concerns
about the implementation of TSUB, including the approach for
calculating TSUB and the weight FTA applies to the cost-effectiveness
criterion. For example, they were concerned that the measure did not
capture all benefits that accrue to the transportation corridor,
notably for highway users; the amount of time provided to incorporate
changes to their local travel forecasting software was insufficient;
and the weight FTA applies to the cost-effectiveness criterion is
disproportional to other criteria. Specifically, many project sponsors
were unclear about the basis for a 45-minute cap on travel time savings
included in the calculation of TSUB.[Footnote 19] According to an FTA
official, this cap allows FTA to limit travel time savings to less than
45 minutes, which they feel is appropriate, when examining the benefits
of each project. FTA's experience has been that time savings in excess
of 45 minutes is usually due to problems with the local travel
forecasting model. However, FTA has allowed for exceptions to the cap
in the past if well justified by local project sponsors.
FTA assigns a significant weight to the cost-effectiveness criterion in
comparison with other criteria used to calculate the project
justification rating. According to the New Starts report, cost-
effectiveness accounts for 50 percent of the project justification
rating. Land use accounts for the other 50 percent. Thus, although
cost-effectiveness accounts for 50 percent of the project justification
rating, a "low" cost-effectiveness rating can be offset by a "high"
land use rating.[Footnote 20] This appears to be the case for the
majority of projects proposed for funding for the fiscal year 2005
cycle. As table 2 shows, five of the seven projects proposed for
funding received a "low-medium" cost-effectiveness rating. However, the
projects' land use ratings raised their summary project justification
ratings to "medium," which allowed them to receive an overall
"recommended" rating.
Table 2: Cost-Effectiveness and Land Use Ratings for Projects Proposed
for Funding:
Project: Charlotte, South Corridor LRT;
Cost-effectiveness rating: Low- medium;
Land use rating: Medium-high;
Project justification rating: Medium.
Project: Cleveland, Euclid Corridor Transportation Project;
Cost- effectiveness rating: Low-medium;
Land use rating: Medium-high;
Project justification rating: Medium.
Project: New York, Long Island Rail Road East Side Access;
Cost- effectiveness rating: Medium;
Land use rating: High;
Project justification rating: Medium-high.
Project: Phoenix, Central Phoenix/East Valley LRT Corridor;
Cost- effectiveness rating: Low-medium;
Land use rating: Medium;
Project justification rating: Medium.
Project: Pittsburgh, North Shore LRT Connector;
Cost-effectiveness rating: Low-medium;
Land use rating: Medium-high;
Project justification rating: Medium.
Project: Raleigh, Regional Rail Project;
Cost-effectiveness rating: Low-medium;
Land use rating: Medium;
Project justification rating: Medium.
Project: Las Vegas, Resort Corridor Fixed Guideway;
Cost-effectiveness rating: Medium-high;
Land use rating: Medium;
Project justification rating: Medium-high.
Source: FTA.
[End of table]
Most Project Sponsors Proposed a Federal New Starts Share of Less Than
60 Percent, but Some Raised Concerns about FTA's Push for Lower Federal
New Starts Share:
FTA instituted a policy favoring projects that seek a federal New
Starts share of no more than 60 percent of the total project cost in
fiscal year 2004. According to FTA, this preference policy responded to
language contained in a conference report, prepared in November 2001,
by the House Appropriations Committee. The report states "the conferees
direct FTA not to sign any new FFGAs after September 30, 2002, that
have a maximum federal share of higher than 60 percent."[Footnote 21]
Similar language has been included in all subsequent appropriations
committee reports. Further, FTA officials told us that this policy
would allow more projects to receive funding by spreading limited
resources among them and ensure that local governments whose regions
stand to receive substantial benefits for the project play a major role
in funding such projects. However, when FTA implemented the 60 percent
policy, it did not amend its regulations to support the change in
policy or its current procedures. As a result, we noted last year that
FTA did not provide an opportunity for public comment on the impact of
the preference policy. We further advised that explicitly stating
criteria and procedures in regulations would ensure that project
sponsors were fully aware of the preference policy. Accordingly, last
year we recommended that FTA amend its regulations governing the New
Starts share for projects to reflect its current policy. FTA disagreed
with our recommendation, noting it was not required to issue
regulations because the policy was not legally binding. Moreover,
according to FTA officials, the preference policy is explained in both
the fiscal year 2004 and 2005 New Starts reports and in its June 2003
reporting instructions.
Although FTA's preference policy, as expressed in the recent New Starts
report, favors projects that request a federal New Starts share of no
more than 60 percent, FTA is encouraging project sponsors to request an
even lower federal New Starts share. Specifically, some project
sponsors have stated that FTA encourages project sponsors to propose a
federal New Starts share of no more than 50 percent--which is
consistent with the administration's reauthorization proposal. This
push for a lower New Starts share is reflected in FTA's rating process.
As table 3 indicates, the lower the amount of New Starts funding
requested, the higher the New Starts share rating. According to the New
Starts report, the non-New Starts share rating accounts for 20 percent
of a project's financial rating.[Footnote 22]
Table 3: Criteria for New Starts Share Rating:
New Starts share: Less than 35 percent;
New Starts share rating: High;
Overall project rating: Dependent on the ratings for the other
financial criteria and the project justification rating.
New Starts share: Between 35 and 49 percent;
New Starts share rating: Medium-high;
Overall project rating: Dependent on the ratings for the other
financial criteria and the project justification rating.
New Starts share: Between 50 and 59 percent;
New Starts share rating: Medium;
Overall project rating: Dependent on the ratings for the other
financial criteria and the project justification rating.
New Starts share: 60 percent or greater;
New Starts share rating: Low;
Overall project rating: Not recommended.
Source: GAO analysis of FTA data.
[End of table]
The project sponsors we contacted expressed concerns about the
preference policy.[Footnote 23] Although the majority of the projects
evaluated during the current cycle requested a federal New Starts share
of less than 60 percent, many of the project sponsors we interviewed
indicated that they had proposed a share that was in line with FTA's
policy in order to remain competitive. More than half of those
interviewed told us they faced difficulties in advancing New Starts
projects under such a policy. For example, some project sponsors told
us that transit projects have a difficult time competing with highway
projects in the local planning process because highway projects
typically require a 20 percent local match, whereas New Starts projects
require a match of at least 40 percent. Other project sponsors
described the limited resources available at the local level to advance
New Starts projects. A number of project sponsors also expressed
concerns about FTA's efforts to lower the federal New Starts share to
50 percent. For example, one project sponsor indicated that their
project would have to drop out of the process, others indicated that
the projects would have to be redesigned, and one project sponsor
indicated that requesting a lower federal New Starts share would weaken
the project's financial plan.
According to the fiscal year 2005 New Starts report, projects that
request more than a 60 percent federal New Starts share are not
recommended to Congress for FFGAs. Specifically, the fiscal year 2005
New Starts report states that "projects seeking a federal New Starts
share over 60 percent of total costs are given a 'low' rating for local
financial commitment, regardless of the ratings received for the
capital plan and operating plan. This 'low' rating further results in a
'not recommended' overall project rating." Projects receiving an
overall "not recommended" rating are not proposed for an FFGA. An FTA
official told us that for the fiscal year 2005 cycle, no project
received an overall "not recommended" rating solely due to this policy
preference.
The enabling legislation for this program states that federal grants
are to be for 80 percent of the net project cost, unless the grant
recipient requests a lower grant percentage.[Footnote 24] TEA-21
required FTA to consider the strength of the local financial
commitment, including the extent to which the project will have a
federal New Starts share of less than 80 percent. In our view, FTA's
policy to favor projects with a lower federal share is permissible as
long as projects are not required to request less than an 80 percent
federal New Starts share in order to be considered for recommendation
for an FFGA. FTA's description of the preference policy in its fiscal
year 2005 New Starts report suggests that this policy is absolute in
that projects proposing more than a 60 percent federal New Starts share
will not be recommended for an FFGA. However, FTA has assured us that
this is a general preference and it may make exceptions to this
policy.[Footnote 25] FTA has agreed to clarify in its upcoming
reporting instructions that this is a general preference policy, thus
allowing for the possibility of exceptions.
FTA Continues to Develop Guidance for Two New Requirements That It
Instituted for the Fiscal Year 2005 Cycle:
FTA instituted two new requirements for New Starts projects for the
fiscal year 2005 cycle that were independent of the rating process.
First, FTA required project sponsors to submit a supplemental document-
-a "make the case" document--that articulates the benefits of the
proposed New Starts project. Project sponsors are expected to "make the
case" by describing why the project is needed and why it is the best
alternative available to meet these needs. According to an FTA
official, the "make the case" document is intended to help FTA
interpret the data produced by the local travel forecasting models. For
example, the supplemental document could be used to explain unusual
results produced by the local travel forecasts. In addition, an FTA
official stated that the document would aid FTA in preparing the
profile summaries of projects for the annual New Starts reports. FTA
officials note, however, that many of the "make the case" submissions
for the current cycle did not meet their expectations. For example,
some of the submissions provided only a justification of the need for a
corridor improvement; others consisted solely of a summary of financial
and political commitment. An FTA official acknowledged that FTA could
have done a better job in defining the purpose of the document and
stated that FTA plans to provide more guidance in the near future.
The second new requirement instituted for the fiscal year 2005 cycle is
a risk assessment. The risk assessments are intended to identify the
issues that could affect schedule or cost, as well as the probability
that they will do so. It is also used as a project management tool by
the project sponsor and an FTA oversight tool. FTA's project management
oversight contractors have been conducting the assessments, focusing on
the projects that are closest to receiving an FFGA. As of May 2004, FTA
has completed risk assessments for four projects.[Footnote 26]
Eventually, FTA intends to conduct risk assessments on projects in
earlier phases of development. FTA officials plan to issue more
guidance on this new requirement. In addition, FTA continues to share
and exchange information with project sponsors through FTA-sponsored
roundtables and New Starts workshops.[Footnote 27]
Administration's Proposal Requests Increased New Starts Funds and
Legislative Reauthorization Proposals Would Expand and Streamline the
Program:
The administration's fiscal year 2005 budget proposal requests $1.5
billion for the New Starts program, a $225 million increase over the
amount appropriated for fiscal year 2004. Proposed legislation to
reauthorize federal surface transportation programs in the House and
Senate would expand the New Starts program to include a wider variety
of transit projects as well as streamline the New Starts evaluation
process for projects requesting less than $75 million in New Starts
funding, among other things. Project sponsors had mixed reactions to
these proposals and called for clear definitions.
Administration's Proposed Fiscal Year 2005 Budget Requests a 15 Percent
Increase in New Starts Funding:
In its budget proposal for fiscal year 2005, the administration
requests $1.5 billion for the construction of new transit systems and
the expansion of existing systems through the New Starts program--an
increase of $225 million, or 15 percent, over the amount appropriated
for fiscal year 2004. Figure 4 illustrates the specific allocations FTA
has proposed for fiscal year 2005, including the following:
* $931 million (61 percent) would be allocated among 26 projects under
construction with existing FFGAs,
* $295 million (19 percent) would be allocated among the 5 projects
proposed for new FFGAs,
* $151 million (10 percent) would be allocated among other projects in
final design and preliminary engineering that do not have existing
FFGAs,[Footnote 28] and:
* $50 million (3 percent) would be allocated for 2 projects considered
to be meritorious by FTA.
Figure 4: Total New Starts Funding Proposed for Fiscal Year 2005 Equals
$1.5 Billion:
[See PDF for image]
[End of figure]
FTA has limited commitment authority remaining--about $200 million--
through June 2004. According to FTA officials, the commitment authority
for fiscal year 2005 and beyond will be addressed in the next surface
transportation authorization legislation. FTA officials told us that
neither the amount of commitment authority remaining nor the delay in
reauthorizing TEA-21 affected the number of projects proposed for an
FFGA for the fiscal year 2005 cycle. However, FTA officials noted that
FTA will not be able to execute all 5 proposed FFGAs until additional
commitment authority is provided through congressional authorization.
Sponsors Have Mixed Reactions to Legislative Reauthorization Proposals
and Call for Clear Definitions:
Congress is currently considering legislation that would reauthorize
all surface transportation programs, including the New Starts
program.[Footnote 29] Both the Senate and House bills contain a number
of provisions and initiatives for the New Starts program.[Footnote 30]
Some of the key provisions of these bills would (1) streamline the
evaluation process for projects under $75 million, (2) expand the
definition of eligible projects, (3) change the ratings categories, and
(4) maintain the maximum federal New Starts share at 80
percent.[Footnote 31] The project sponsors we interviewed had mixed
reactions to these provisions. In addition, most of the sponsors called
for clear definitions to any changes to the New Starts process.
* Streamline the New Starts evaluation process for projects under $75
million. The Senate proposal would allow the Secretary of
Transportation discretion to develop a streamlined evaluation process
for projects requesting less than $75 million in New Starts funds. This
provision would eliminate the "exempt" classification for projects
requesting less than $25 million in New Starts funding and would allow
FTA to analyze and rate all projects through a streamlined process. The
House proposal would establish a "Small Starts" program for projects
requesting between $25 million and $75 million in New Starts funding,
and these projects would be evaluated through a streamlined ratings
process. In addition, the House proposal would maintain the exempt
classification allowing projects requesting less than $25 million in
New Starts funding to be exempt from the evaluation and ratings
process. Most project sponsors we interviewed were supportive of
implementing a streamlined evaluation process for less expensive
projects. Some stated that a less robust evaluation process for less
expensive projects makes sense, and others said it would allow cities
to consider a range of potential projects without having to develop an
expensive project. However, some said that clear definitions and
criteria would be necessary in implementing the streamlined evaluation
process.
* Expand the definition of eligible projects. Currently, TEA-21 limits
New Starts funding to fixed-guideway projects.[Footnote 32] Both the
House and Senate reauthorization proposals would allow certain
nonfixed-guideway transit projects (e.g., bus rapid transit operating
in nonexclusive lanes) to be eligible for New Starts funding, opening
the program up to projects that currently are ineligible. Specifically,
the Senate proposal would allow nonfixed-guideway projects requesting
less than $75 million to be eligible for New Starts funding. The House
proposal would expand New Starts funding eligibility to include
nonfixed-guideway projects with a majority of fixed-guideway components
seeking between $25 million and $75 million, as part of its "Small
Starts" initiative. The majority of project sponsors we interviewed
supported this initiative, some noting that broadening the program to
include nonfixed-guideway projects would open more transit
possibilities for localities. However, some project sponsors did
express concerns about the already high demand on New Starts funding
and noted that nonfixed-guideway projects could receive funds through
other federal programs or capital funds. As a result, a number of
project sponsors that support expanding the program said increased and/
or separate funding and a clear definition of eligible projects are
needed. Others were reluctant to support the expansion of New Starts to
include nonfixed-guideways projects, citing a lack of funds and the
importance of maintaining the fixed-guideway focus of New Starts.
* Change the rating categories. Under TEA-21, FTA assigns summary
ratings of "highly recommended," "recommended," and "not recommended"
to projects requesting New Starts funding. The Senate reauthorization
proposal would revise the current rating system and implement five
levels of ratings: "high," "medium-high," "medium," "medium-low," and
"low." The House proposal would maintain the current ratings system.
Project sponsors were unsure of the impact of the proposed changes, and
a few requested clearly defined criteria for each new rating category.
Some sponsors told us they were not concerned with the ratings scale as
long as it was clearly defined. Other project sponsors said they did
not care what the new rating categories were called--they just want to
know what rating is needed to secure an FFGA. In addition, two sponsors
said the new system could be more easily conveyed to local officials.
* Maintain a maximum New Starts share at 80 percent. Currently, TEA-21
allows a maximum New Starts share of 80 percent for individual
projects. Both the House and the Senate versions of the TEA-21
reauthorization proposals would maintain the maximum New Starts share
at 80 percent, in contrast to the administration's reauthorization
proposal, which would lower the maximum New Starts share to 50 percent.
Furthermore, the House bill specifically prohibits FTA from requiring a
nonfederal share that is more than 20 percent of the project's cost.
Currently, FTA is encouraging project sponsors to request no more than
50 percent in New Starts funding for their projects. As noted earlier,
some project sponsors we interviewed were concerned about the potential
impact of reducing the New Starts share to 50 percent, including the
effect of this change on the balance between highway and transit
project funding.
Project Sponsors Have Taken Steps to Address Variances in Funding:
All 26 projects with existing FFGAs have not received funds as
scheduled--that is, the amount of funding appropriated was less than
the amount scheduled in the FFGA. FFGAs are multiyear contractual
agreements between FTA and project sponsors for a specified amount of
funding, which are subject to the annual appropriations process. The
full amount of funding is committed to the projects over a set period,
and the FFGA contains a schedule of annual federal payments to fulfill
FTA's commitment. According to FTA, all completed New Starts projects
received the total FFGA amount but not necessarily according to the
original FFGA schedule. FTA will continue to request funds to be
appropriated to meet the amounts authorized in existing FFGAs. As of
March 2004, the 26 projects have received a total of $294 million, or 5
percent, less than the amount authorized by the projects' FFGAs.
The amount and timing of the differences in funding varied for each
project, but all 26 projects with FFGAs received less than the
scheduled amount at some point. As of March 2004, 7 had received over
10 percent less than the scheduled amount, 2 had received between 5 and
10 percent less than scheduled, and 17 projects had received up to 5
percent less than scheduled. The timing of the differences in funding
also varied. Some projects experienced substantial differences between
appropriated and scheduled amounts at the beginning or near the end of
their FFGA, but it was more common for projects to experience funding
differences throughout. (See app. III for the total amount of
differences for each project with an existing FFGA.)
Several factors contributed to projects receiving less New Starts
funding than scheduled. The amount of funding authorized by an FFGA is
subject to the annual appropriations process and, therefore,
differences may arise because of congressional decision making. In
addition, projects receive less than the amounts authorized by the
FFGAs because FTA retains 1 percent of the funding provided each year
to cover the cost of its project management oversight.[Footnote 33]
According to FTA officials, each year FTA requests funding to cover the
project management oversight costs, but these funds are typically not
appropriated. FTA may also request that less New Starts funding be
appropriated to a project than scheduled by the FFGA if it is concerned
about a specific project's progress; however, FTA officials said they
rarely recommend less funding than is scheduled.
Faced with these variances in funding, project officials we interviewed
have developed methods to mitigate the impact of receiving less than
the scheduled annual amount for their project. Some project officials
entered into partnerships with the state and/or local government. For
example, one transit agency arranged for the state to contribute more
funds early on in the project and, as a result, the funding schedule
did not adversely affect the project. Other projects implemented
interim funding mechanisms to cover any FFGA variances, including
issuing bonds or loans to generate necessary funds. None of the 5
project officials we contacted had to change the scope or schedule of
their project solely due to funding variances. However, officials from
these projects said that interim financing ultimately increased the
cost of the project. For example, the Portland Interstate MAX project
incurred approximately $3 million in borrowing costs, which equaled 4
percent of the total local commitment to the project.
Conclusions:
To receive an FFGA, projects must go through a lengthy evaluation
process by FTA--from planning to preliminary engineering to final
design. The steps for advancing through the evaluation process and
securing an FFGA are well documented in FTA's New Starts reports and
other published guidance. Documentation of these steps is important to
ensure a common understanding among projects sponsors and to increase
the transparency of the process. Like other programs, the transparency
of the New Starts process is critical in ensuring that project sponsors
view the process as fair and objective. Although the process for
securing an FFGA is well-defined, FTA's identification of meritorious
projects--and the subsequent proposed funding of these projects--is
not. While FTA officials were able to provide us additional insight
regarding funding recommendations for these projects, FTA's New Starts
reports and other published guidance are not clear in its meaning. In
particular, the rationale for the funding recommendation for these two
projects in FTA's New Starts Report for Fiscal Year 2005 is very broad
and lacks necessary detail. FTA does not explain how it decides which
projects will be recommended for funding outside of FFGAs and what
project sponsors must do to qualify for such a recommendation. In
addition, FTA did not justify the level of funding proposed for these
projects for fiscal year 2005--which is a substantial increase compared
to amounts proposed for similar projects in the past. Consequently, it
is difficult to understand why these two meritorious projects are more
worthy of funding than other projects in the pipeline.
The implementation of FTA's policy favoring projects requesting a
federal New Starts share of less than 60 percent also continues to
create challenges for some project sponsors and raises concerns.
According to FTA, its policy is in response to language contained in
appropriations committee reports and will result in more projects
receiving funding by spreading limited resources among them and
ensuring that local governments whose regions would benefit from the
project play a major role in funding such projects. However, many of
the project sponsors we interviewed experienced challenges in trying to
secure a larger local match to comply with FTA's preference policy.
Several project sponsors also stated that FTA's push for a lower
federal New Starts share would likely affect their decision to advance
future transit projects. Therefore, it is important for FTA to
understand how this policy affects local decision making with regard to
proposing and funding New Starts projects, as well as whether the
policy is maximizing New Starts funds and local participation.
Recommendations for Executive Action:
To ensure that FTA's New Starts evaluation process and policies are
objective, transparent, and comply with federal statute, we recommend
that the Secretary of Transportation direct the Administrator, FTA, to
take the following two actions:
* Clearly explain the basis on which it decides which projects will be
recommended for funding outside of FFGAs, such as projects considered
to be meritorious, and what projects must do to qualify for such a
recommendation. These explanations should be included in FTA's annual
New Starts report and other published New Starts guidance.
* FTA should also examine the impact of its preference policy on
projects currently in the evaluation process, as well as projects in
the early planning stages, and examine whether its policy results in
maximizing New Starts funds and local participation.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Department of Transportation
for review and comment. Officials from the Department and FTA,
including the Associate Administrator for Planning and the Environment,
indicated that they generally agreed with the report and its
recommendations. According to FTA officials, the FTA New Starts program
has been recognized as well-managed, with consistent, proven results
and accomplishments. They recognized, however, the need to further
improve program guidance and operation. Specifically, FTA agreed to
more clearly explain, in its guidance to project sponsors, the basis on
which it decides which projects will be recommended for funding outside
of FFGAs. In addition, in the draft of this report, we recommended that
FTA revise its guidance to clarify that exceptions to the preference
policy are permissible. In discussions with FTA officials about the
draft of this report, FTA agreed to clarify the preference policy by
clearly stating it is a general, rather than an absolute, preference in
its upcoming reporting instructions and other appropriate sources,
making a recommendation to take such action unnecessary. Therefore, we
eliminated our recommendation on this matter in our final report.
Finally, FTA officials also provided technical clarifications, which we
incorporated as appropriate.
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 also will make copies available to
others upon request. In addition, this report will be available at no
charge on the GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions on matters discussed in this
report, please contact me at [Hyperlink, siggerudk@gao.gov]. GAO
contacts and key contributors to this report are listed in appendix
IV.
Signed by:
Katherine A. Siggerud:
Director, Physical Infrastructure:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To address our objectives, we reviewed the administration's fiscal year
2005 budget request and legislative reauthorization proposals, the
Federal Transit Administration's (FTA) annual New Starts reports,
records on funding authorized and appropriated to projects with
existing full funding grant agreements (FFGAs), and federal statutes
pertaining to the New Starts program. In addition, we interviewed FTA
officials and representatives from the American Public Transportation
Association and attended FTA's New Starts roundtable with project
sponsors in April 2004.
We also conducted semistructured interviews with project sponsors from
15 projects in preliminary engineering or final design to gain their
perspectives on recent and proposed changes to the New Starts program
and 5 projects with FFGAs to discuss their experiences in dealing with
shortfalls in federal funding for their New Starts projects. (See table
4 for a listing of all projects contacted.) The results of these
interviews are not generalizable to all project sponsors, however we
used multiple criteria in selecting the projects to ensure we evaluated
a diverse group of projects. Specifically, to select the 15 projects in
preliminary engineering or final design, we considered projects'
overall ratings for the fiscal year 2005 cycle, mobility and cost-
effectiveness ratings for fiscal years 2003 to 2005, percentage of New
Starts funding requested for fiscal years 2003 through 2005, total
cost, and location. We obtained this information from FTA's annual New
Starts reports for fiscal years 2003 through 2005. In selecting the 5
projects with FFGAs, we considered the size and timing of any
differences between the amount of funding authorized in projects' FFGAs
and the amount of funding appropriated to the projects for fiscal years
1998 through 2004. We obtained information on the amount of funding
authorized and appropriated to projects with existing FFGAs from FTA.
Table 4: Projects Contacted for Our Review:
Projects in preliminary engineering or final design:
City, state: Boston, MA;
Project: Silver Line Phase III.
City, state: Charlotte, NC;
Project: South Corridor Light Rail Transit (LRT).
City, state: Columbus, OH;
Project: North Corridor LRT.
City, state: Denver, CO;
Project: West Corridor LRT.
City, state: Fort Collins, CO;
Project: Mason Transportation Corridor.
City, state: Los Angeles, CA;
Project: Mid-City Exposition LRT.
City, state: Louisville, KY;
Project: Transportation Tomorrow South Central Corridor LRT.
City, state: Miami, FL;
Project: North Corridor Metrorail Extension.
City, state: Minneapolis-Rice, MN;
Project: Northstar Corridor Rail Project.
City, state: New Orleans, LA;
Project: Desire Streetcar Line.
City, state: New York, NY;
Project: Long Island Railroad East Side Access.
City, state: Norfolk, VA;
Project: Norfolk LRT project.
City, state: Philadelphia, PA;
Project: Schuylkill Valley MetroRail.
City, state: Phoenix, AZ;
Project: Central Phoenix/East Valley LRT Corridor.
City, state: Pittsburgh, PA;
Project: North Shore LRT Connector.
Projects with existing FFGAs:
City, state: Chicago, IL;
Project: Ravenswood Line Extension.
City, state: Denver, CO;
Project: Southeast Corridor LRT.
City, state: Fort Lauderdale, FL;
Project: South Florida Commuter Rail Upgrades.
City, state: Portland, OR;
Project: Interstate MAX LRT Extension.
City, state: Washington, D.C. metropolitan area;
Project: Largo Metrorail Extension.
Sources: GAO and FTA.
[End of table]
To ensure the reliability of information presented in this report, we
interviewed FTA officials about FTA's policies and procedures for
compiling the annual New Starts reports, including FTA's data
collection and verification practices for New Starts information. We
also reviewed documentation for the database FTA uses to compile,
analyze, and store data for New Starts projects. In addition, during
our semistructured interviews with project sponsors, we asked about the
accuracy of the information about their projects presented in the
annual New Starts reports. Finally, we tested the reliability of FTA's
records of the amount of funding authorized and appropriated to
projects with existing FFGAs by comparing a nonprobability sample of
the records with FFGAs. We concluded that the FTA information presented
is sufficiently reliable for the purposes of this report.
[End of section]
Appendix II: Projects Evaluated for the Fiscal Year 2005 Cycle:
Projects with existing full funding grant agreements (FFGAs):
Phase of project: Atlanta-North Springs Extension;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: $370.
Phase of project: Baltimore-Central Light Rail Transit (LRT) Double
Tracking;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 120.
Phase of project: Chicago-Douglas Branch Reconstruction;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 320.
Phase of project: Chicago-North Central Corridor Commuter Rail;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 135.
Phase of project: Chicago-Southwest Corridor Commuter Rail;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 103.
Phase of project: Chicago-Union Pacific West Line Extension;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 81.
Phase of project: Chicago-Ravenswood Line Extension;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 246.
Phase of project: Denver-Southeast Corridor LRT;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 525.
Phase of project: Fort Lauderdale-South Florida Commuter Rail
Upgrades;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 111.
Phase of project: Los Angeles-North Hollywood;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 681.
Phase of project: Minneapolis-Hiawatha Corridor LRT;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 334.
Phase of project: New Orleans-Canal Street Light Rail Line;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 129.
Phase of project: Northern New Jersey-Hudson Bergen Minimal Operating
Segment (MOS1);
Overall project rating/ status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 604.
Phase of project: Northern New Jersey-Hudson Bergen (MOS2);
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 500.
Phase of project: Northern New Jersey-Newark Rail Link;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 142.
Phase of project: Pittsburgh-Stage II LRT Reconstruction;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 100.
Phase of project: Portland-Interstate MAX LRT Extension;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 239.
Phase of project: Salt Lake City-CBD to University LRT;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 85.
Phase of project: Salt Lake City-Medical Center Extension;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 54.
Phase of project: San Diego-Mission Valley East LRT Extension;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 330.
Phase of project: San Diego-Oceanside Escondido Rail Corridor;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 152.
Phase of project: San Francisco-Bay Area Rapid Transit Extension to
Airport;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 750.
Phase of project: San Juan-Tren Urbano;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 302.
Phase of project: Seattle-Central Link Initial Segment;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 500.
Phase of project: St. Louis-Metrolink St. Clair Extension;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 244.
Phase of project: Washington, D.C./MD Largo Metrorail Extension;
Overall project rating/status: FFGA;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 260.
Phase of project: Subtotal;
Overall project rating/ status: [Empty];
Total New Starts funding scheduled by FFGA or requested by project
sponsors: $7,417.
Projects with pending federal funding commitments:
Phase of project: Los Angeles-Metro Gold Line East Side Extension;
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 491.
Subtotal;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: $491.
Projects in final design:
Phase of project: Charlotte-South Corridor LRT[A];
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 193.
Phase of project: Cleveland-Euclid Corridor[B];
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 82.
Phase of project: Galveston-Rail Trolley Extension;
Overall project rating/status: Exempt;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 8.
Phase of project: Kansas City-Southtown BRT;
Overall project rating/status: Exempt;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 12.
Phase of project: Nashville-East Corridor Commuter Rail;
Overall project rating/status: Exempt;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 23.
Phase of project: New York-Long Island Rail Road East Side Access[B];
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 2,633.
Phase of project: Phoenix-Central Phoenix/East Valley LRT Corridor[B];
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 587.
Phase of project: Pittsburgh-North Shore LRT Connector[B];
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 218.
Phase of project: Raleigh-Regional Rail Project[A];
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 414.
Subtotal;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: $4,170.
Projects in preliminary engineering:
Phase of project: Boston-Silver Line Phase III;
Overall project rating/status: Not recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 378.
Phase of project: Bridgeport, CT-Intermodal Transportation Center;
Overall project rating/status: Exempt;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 25.
Phase of project: Columbus, OH-North Corridor LRT;
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 264.
Phase of project: Dallas-Northwest/Southeast LRT;
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 700.
Phase of project: Denver-West Corridor LRT;
Overall project rating/status: Not rated;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 412.
Phase of project: El Paso-Sun Metro Area Rapid Transit Starter Line;
Overall project rating/status: Exempt;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 8.
Phase of project: Fort Collins, CO-Mason Transportation Center;
Overall project rating/status: Not recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 33.
Phase of project: Harrisburg, PA-CORRIDORone Rail;
Overall project rating/status: Exempt;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 25.
Phase of project: Hartford, CT-New Britain/ Hartford Busway;
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 88.
Phase of project: Johnson County, KS-Kansas City, MO-I-35 Commuter
Rail;
Overall project rating/status: Exempt;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 25.
Phase of project: Las Vegas-Resort Corridor Fixed Guideway[B];
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 160.
Phase of project: Los Angeles-Mid-City Exposition LRT;
Overall project rating/status: Not recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 253.
Phase of project: Louisville-Transportation Tomorrow South Central
Corridor;
Overall project rating/status: Not rated;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 373.
Phase of project: Lowell, MA/Nashua, NH-Commuter Rail Extension;
Overall project rating/status: Exempt;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 18.
Phase of project: Miami-North Corridor Metrorail Extension;
Overall project rating/status: Not rated;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 435.
Phase of project: Minneapolis-Northstar Corridor Rail Project;
Overall project rating/status: Not rated;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 155.
Phase of project: New Orleans-Desire Streetcar Line;
Overall project rating/status: Not recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 69.
Phase of project: New York-Second Avenue Subway;
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 8,404.
Phase of project: Norfolk, VA-Norfolk LRT;
Overall project rating/status: Not rated;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 95.
Phase of project: Orange County, CA-CenterLine LRT;
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 483.
Phase of project: Philadelphia-Schuykill Valley MetroRail;
Overall project rating/status: Not recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 2,071.
Phase of project: Salt Lake City-Weber County to Salt Lake Commuter
Rail;
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 204.
Phase of project: San Diego-Mid-Coast Extension;
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 66.
Phase of project: San Francisco-New Central Subway;
Overall project rating/status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 532.
Phase of project: Santa Clara County, CA-Silicon Valley Rapid Transit
Corridor;
Overall project rating/status: Not recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 973.
Phase of project: Tampa-Tampa Bay Regional Rail;
Overall project rating/status: Not recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 728.
Phase of project: Washington County, OR- Wilsonville to Beaverton
Commuter Rail;
Overall project rating/ status: Recommended;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 62.
Phase of project: Wasilia, AK-Alaska Railroad- South Wasilia Track
Realignment;
Overall project rating/status: Exempt;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: 23.
Subtotal;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: $17,062[C].
Total;
Total New Starts funding scheduled by FFGA or requested by project
sponsors: $29,140.
Sources: GAO and FTA.
[A] Projects considered to be meritorious.
[B] Projects proposed for federal funding commitments.
[C] This amount reflects the total New Starts funding requested by
project sponsors for projects in preliminary engineering.
[End of table]
[End of section]
Appendix III: Cumulative Shortfalls by Project with Full Funding Grant
Agreements:
Project: Atlanta-North Springs Extension;
Full funding grant agreement amount: $370,543,200;
Total appropriations fiscal year 2004 and prior: $370,182,415;
Total authorized and scheduled in full funding grant agreement:
$370,543,200;
Cumulative shortfall: ($360,785);
Percentage of shortfall: 0.10%.
Project: Baltimore-Central Light Rail Transit (LRT) Double Tracking;
Full funding grant agreement amount: $120,000,000;
Total appropriations fiscal year 2004 and prior: $78,566,416;
Total authorized and scheduled in full funding grant agreement:
$90,984,609;
Cumulative shortfall: ($12,418,193);
Percentage of shortfall: 10.35%.
Project: Chicago-Douglas Branch Reconstruction;
Full funding grant agreement amount: $320,100,000;
Total appropriations fiscal year 2004 and prior: $189,954,810;
Total authorized and scheduled in full funding grant agreement:
$194,779,647;
Cumulative shortfall: ($4,824,837);
Percentage of shortfall: 1.51%.
Project: Chicago-North Central Corridor Commuter Rail;
Full funding grant agreement amount: $135,319,330;
Total appropriations fiscal year 2004 and prior: $94,705,878;
Total authorized and scheduled in full funding grant agreement:
$96,843,093;
Cumulative shortfall: ($2,137,215);
Percentage of shortfall: 1.58%.
Project: Chicago-Southwest Corridor Commuter Rail;
Full funding grant agreement amount: $103,018,670;
Total appropriations fiscal year 2004 and prior: $75,737,275;
Total authorized and scheduled in full funding grant agreement:
$76,974,890;
Cumulative shortfall: ($1,237,615);
Percentage of shortfall: 1.20%.
Project: Chicago-Union Pacific West Line Extension;
Full funding grant agreement amount: $80,762,000;
Total appropriations fiscal year 2004 and prior: $54,476,251;
Total authorized and scheduled in full funding grant agreement:
$60,445,851;
Cumulative shortfall: ($5,969,600);
Percentage of shortfall: 7.39%.
Project: Chicago-Ravenswood Line Extension;
Full funding grant agreement amount: $245,520,000;
Total appropriations fiscal year 2004 and prior: $20,687,385;
Total authorized and scheduled in full funding grant agreement:
$55,845,596;
Cumulative shortfall: ($35,158,211);
Percentage of shortfall: 14.32%.
Project: Denver-Southeast Corridor LRT;
Full funding grant agreement amount: $525,000,000;
Total appropriations fiscal year 2004 and prior: $208,447,242;
Total authorized and scheduled in full funding grant agreement:
$233,439,516;
Cumulative shortfall: ($24,992,274);
Percentage of shortfall: 4.76%.
Project: Fort Lauderdale-South Florida Commuter Rail Upgrades;
Full funding grant agreement amount: $110,500,000;
Total appropriations fiscal year 2004 and prior: $102,259,515;
Total authorized and scheduled in full funding grant agreement:
$110,500,000;
Cumulative shortfall: ($11,210,695);
Percentage of shortfall: 10.15%.
Project: Los Angeles-North Hollywood;
Full funding grant agreement amount: $681,037,000;
Total appropriations fiscal year 2004 and prior: $680,373,661;
Total authorized and scheduled in full funding grant agreement:
$681,037,000;
Cumulative shortfall: ($663,339);
Percentage of shortfall: 0.10%.
Project: Minneapolis-Hiawatha Corridor LRT;
Full funding grant agreement amount: $334,300,000;
Total appropriations fiscal year 2004 and prior: $301,166,243;
Total authorized and scheduled in full funding grant agreement:
$303,836,915;
Cumulative shortfall: ($2,670,672);
Percentage of shortfall: 0.80%.
Project: New Orleans-Canal Street Light Rail Line;
Full funding grant agreement amount: $129,047,010;
Total appropriations fiscal year 2004 and prior: $112,591,804;
Total authorized and scheduled in full funding grant agreement:
$129,047,010;
Cumulative shortfall: ($16,455,206);
Percentage of shortfall: 12.75%.
Project: Northern New Jersey-Hudson Bergen (MOS1);
Full funding grant agreement amount: $500,000,000;
Total appropriations fiscal year 2004 and prior: $147,597,005;
Total authorized and scheduled in full funding grant agreement:
$150,000,000;
Cumulative shortfall: ($2,402,995);
Percentage of shortfall: 0.48%.
Project: Northern New Jersey-Hudson Bergen (MOS2);
Full funding grant agreement amount: $604,088,750;
Total appropriations fiscal year 2004 and prior: $603,774,854;
Total authorized and scheduled in full funding grant agreement:
$604,088,750;
Cumulative shortfall: ($313,896);
Percentage of shortfall: 0.05%.
Project: Northern New Jersey-Newark Rail Link;
Full funding grant agreement amount: $141,950,000;
Total appropriations fiscal year 2004 and prior: $140,607,998;
Total authorized and scheduled in full funding grant agreement:
$141,950,074;
Cumulative shortfall: ($1,342,076);
Percentage of shortfall: 0.95%.
Project: Pittsburgh-Stage II LRT Reconstruction;
Full funding grant agreement amount: $100,200,000;
Total appropriations fiscal year 2004 and prior: $99,079,146;
Total authorized and scheduled in full funding grant agreement:
$100,200,000;
Cumulative shortfall: ($1,120,854);
Percentage of shortfall: 1.12%.
Project: Portland-Interstate MAX LRT Extension;
Full funding grant agreement amount: $257,500,000;
Total appropriations fiscal year 2004 and prior: $215,915,290;
Total authorized and scheduled in full funding grant agreement:
$257,500,000;
Cumulative shortfall: ($41,584,710);
Percentage of shortfall: 16.15%.
Project: Salt Lake City-CBD to University LRT;
Full funding grant agreement amount: $84,600,000;
Total appropriations fiscal year 2004 and prior: $83,472,595;
Total authorized and scheduled in full funding grant agreement:
$84,600,000;
Cumulative shortfall: ($1,127,405);
Percentage of shortfall: 1.33%.
Project: Salt Lake City-Medical Center Extension;
Full funding grant agreement amount: $53,633,400;
Total appropriations fiscal year 2004 and prior: $49,914,024;
Total authorized and scheduled in full funding grant agreement:
$53,633,400;
Cumulative shortfall: ($3,719,376);
Percentage of shortfall: 6.93%.
Project: San Diego-Mission Valley East LRT Extension;
Full funding grant agreement amount: $329,958,000;
Total appropriations fiscal year 2004 and prior: $240,617,696;
Total authorized and scheduled in full funding grant agreement:
$282,107,170;
Cumulative shortfall: ($41,489,474);
Percentage of shortfall: 12.57%.
Project: San Diego-Oceanside Escondido Rail Corridor;
Full funding grant agreement amount: $152,100,000;
Total appropriations fiscal year 2004 and prior: $84,888,939;
Total authorized and scheduled in full funding grant agreement:
$92,271,633;
Cumulative shortfall: ($7,382,694);
Percentage of shortfall: 4.85%.
Project: San Francisco-BART Extension to Airport;
Full funding grant agreement amount: $750,000,000;
Total appropriations fiscal year 2004 and prior: $568,144,320;
Total authorized and scheduled in full funding grant agreement:
$577,804,031;
Cumulative shortfall: ($9,659,711);
Percentage of shortfall: 1.29%.
Project: San Juan-Tren Urbano;
Full funding grant agreement amount: $307,409,854;
Total appropriations fiscal year 2004 and prior: $252,590,914;
Total authorized and scheduled in full funding grant agreement:
$307,409,854;
Cumulative shortfall: ($54,818,940);
Percentage of shortfall: 17.83%.
Project: Seattle-Central Link Initial Segment;
Full funding grant agreement amount: $500,000,000;
Total appropriations fiscal year 2004 and prior: $164,785,265;
Total authorized and scheduled in full funding grant agreement:
$165,971,851;
Cumulative shortfall: ($1,186,586);
Percentage of shortfall: 0.24%.
Project: St. Louis-Metrolink St. Clair Extension;
Full funding grant agreement amount: $243,930,961;
Total appropriations fiscal year 2004 and prior: $243,877,578;
Total authorized and scheduled in full funding grant agreement:
$243,930,961;
Cumulative shortfall: ($53,383);
Percentage of shortfall: 0.02%.
Project: Washington, D.C./MD Largo Metrorail Extension;
Full funding grant agreement amount: $260,300,000;
Total appropriations fiscal year 2004 and prior: $184,867,113;
Total authorized and scheduled in full funding grant agreement:
$195,000,000;
Cumulative shortfall: ($10,132,887);
Percentage of shortfall: 3.89%.
Sources: GAO and FTA.
[End of table]
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contacts:
Katherine Siggerud, (202) 512-2834, s [Hyperlink, siggerudk@gao.gov]
iggerudk@gao.gov Nikki Clowers, (202) 512-4010 or c [Hyperlink,
clowersa@gao.gov] lowersa@gao.gov:
Staff Acknowledgments:
In addition to the individuals named above, other key contributors to
this report were Chris Bonham, Jay Cherlow, Elizabeth Eisenstadt, Rita
Grieco, Kara Finnegan Irving, Elizabeth McNally, Sara Ann Moessbauer,
and Stacey Thompson.
(542033):
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] Pub. L. No. 105-178, 112 Stat. 107 (1998).
[3] Contract authority is the amount of funding Congress has authorized
FTA to commit to New Starts projects for a given authorization period.
The Surface Transportation Extension Act of 2004, Part II, Pub. L. No.
108-224, 118 Stat. 627 (2004), extended TEA-21 until June 30, 2004.
Proposed reauthorization legislation in both the House and Senate would
authorize similar funding levels for the New Starts program. For
example, S. 1072 would authorize $9.6 billion in New Starts contract
authority over the next 6 years; H.R. 3550 would authorize $9.4
billion.
[4] Nine of the projects were statutorily exempt from the rating
process because project sponsors requested less than $25 million in New
Starts funding.
[5] H.R. 3550, 108TH Cong. (2004), and S. 1072, 108TH Cong. (2004).
[6] "Guaranteed" funds are subject to a procedural mechanism designed
to ensure that a minimum amount of funding is made available each year.
[7] 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., financial or environmental). According to FTA officials,
to gain approval for entry into preliminary engineering, a project must
(1) have been identified through the alternatives analysis process, (2)
be included in the region's long-term 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 preliminary engineering.
[8] The land use criterion examines the extent to which the levels of
population, employment, and other trip generators in the area are
sufficient to support a major transit investment, as well as the
community's commitment to land use policies that will facilitate and
promote transit use.
[9] According to FTA, these criteria may be considered by the
administration and Congress as funding recommendations and decisions
are made.
[10] 49 U.S.C. 5309(e)(8)(A).
[11] U.S. General Accounting Office, Mass Transit: FTA Needs to Provide
Clear Information and Additional Guidance on the New Starts Ratings
Process, GAO-03-701 (Washington, D.C.: June 23, 2003).
[12] Although the non-New Starts share accounts for only 20 percent of
the summary financial rating, FTA's preference policy supersedes the
overall financial rating when the non-New Starts share is greater than
60 percent.
[13] FTA makes these funding recommendations in its annual New Starts
report to Congress due in February.
[14] U.S. Department of Transportation, Federal Transit Administration,
Annual Report on New Starts: Proposed Allocations of Funds for Fiscal
Year 2005 (Washington, D.C.: 2004).
[15] The 5 meritorious projects for the fiscal year 2003 cycle were
Chicago Ravenswood Line Expansion, Cleveland/Euclid Corridor
Transportation Project, Las Vegas/Resort Corridor, Minneapolis/
Northstar Corridor Commuter Rail, and New York/East Side Access.
[16] U.S. Department of Transportation, Federal Transit Administration,
Annual Report on New Starts: Proposed Allocations of Funds for Fiscal
Year 2003 (Washington, D.C.: 2002).
[17] Projects receiving a "not rated" in cost-effectiveness for the
fiscal year 2005 cycle either received an overall rating of "not rated"
or "not recommended."
[18] U.S. Department of Transportation, Federal Transit Adminstration,
Office of Planning, Reporting Instructions for the Section 5309 New
Starts Criteria (Washington, D.C.: June 2003).
[19] In August 2003, FTA found that this cap was being applied
inconsistently in the software, requiring project sponsors to
recalculate TSUB measures. FTA officials extended submission deadlines
for an additional 2 weeks, but project sponsors we interviewed
indicated that more time was needed.
[20] According to FTA officials, FTA does not advance projects to the
next stage of development or funding unless they have at least a "low-
medium" cost-effectiveness rating.
[21] H.R. Conf. Rep. No. 107-308, p. 114 (Nov. 30, 2001).
[22] The strength and reliability of the project's capital and
operating plans account for 30 and 50 percent, respectively, of the
project's financial rating.
[23] In addition to concerns about the percentage of New Starts
funding, project sponsors from two projects expressed concerns about
FTA's practice of limiting the overall dollar amount for individual
projects. According to these project sponsors, FTA limits the total
amount of New Starts funding for an individual project to $500 million.
These project sponsors noted that for larger projects, a cap on the
overall dollar amount is of more concern than the percentage of the New
Starts share. An FTA official told us that they do not have a formal
policy to limit the overall dollar amount for individual projects.
Rather, FTA advises project sponsors that, historically, it has not
recommended more than $500 million in total, or $100 million per year,
for individual projects.
[24] 49 U.S.C. § 5309(h).
[25] FTA officials stated that it makes exceptions to the preference
policy and demonstrated its willingness to do so by recommending a
project for an FFGA at an 80 percent federal New Starts share in fiscal
year 2003.
[26] FTA is currently conducting risk assessments for five additional
projects.
[27] The roundtable is a forum for sharing information among FTA staff
and project sponsors considering New Starts projects.
[28] TEA-21 limits the amount of New Starts funding that can be used
for purposes other than final design and construction to not more than
8 percent of funds appropriated. FTA expects that no more than 8
percent of the $151 million will be allocated for purposes other than
final design and construction. However, FTA officials noted this
decision ultimately rests with Congress.
[29] Both the Senate and House bills have been passed by their
respective chamber and are currently awaiting conference.
[30] H.R. 3550, 108TH Cong. (2004), and S. 1072, 108TH Cong. (2004).
[31] Both the Senate and House proposals contain additional provisions
that would affect the New Starts program. For example, the Senate
proposal includes the creation of a new pilot program to demonstrate
the advantages of public/private partnerships for New Starts projects
and a provision to review the impact of allowing transit contractors to
receive performance incentive awards if projects are completed below
their original estimated cost. The House proposal would require FTA to
provide notice and an opportunity for public comment before issuing any
nonregulatory substantive policy statements.
[32] Fixed-guideway systems use and occupy a separate right-of-way for
the exclusive use of public transportation services. They include
fixed-rail systems, exclusive lanes for buses and other high-occupancy
vehicles, ferries, and other systems.
[33] The project management oversight program is designed primarily to
help ensure that grantees constructing major capital projects, such as
New Starts projects, have the qualified staff and procedures to
successfully build the projects according to accepted engineering
principles. To implement this program, FTA enters into contracts with
competitively selected engineering firms, which serve as an extension
of its limited technical staff. The project management oversight
activities are supported by a statutorily limited set-aside of the
funds made available annually for certain transit programs.
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