Public Transportation
New Starts Program Is in a Period of Transition Gao ID: GAO-06-819 August 30, 2006The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) authorized about $7.9 billion in commitment authority, through fiscal year 2009, for the Federal Transit Administration's (FTA) New Starts program, which is used to select fixed guideway transit projects, such as rail and trolley projects, and to award full funding grant agreements (FFGAs). The New Starts program serves as an important source of federal funding for the design and construction of transit projects throughout the country. SAFETEA-LU requires GAO to report each year on FTA's New Starts process. As such, GAO examined (1) the number of projects that were evaluated, rated, and proposed for FFGAs for the fiscal year 2007 evaluation cycle and the proposed funding commitments for the fiscal year 2007 budget; (2) procedural changes that FTA proposed for the New Starts program beginning with the fiscal year 2008 evaluation cycle; and (3) changes SAFETEA-LU made to the New Starts program and FTA's implementation of these changes. GAO reviewed New Starts documents and interviewed FTA officials and project sponsors, among other things, as part of its review. GAO is not making recommendations in this report. In commenting on a draft of this report, FTA provided technical clarifications, which we incorporated as appropriate.
For the fiscal year 2007 evaluation cycle, FTA evaluated and rated 20 projects, recommended 5 projects for new FFGAs and 2 projects with pending FFGAs. FTA also identified 5 other projects that may be eligible for funding outside of FFGAs. The administration's fiscal year 2007 budget proposal requests $1.47 billion for the New Starts program, which is about $200 million more than the amount received last year. FTA proposed nine procedural, or nonregulatory, changes for the New Starts program beginning with the fiscal year 2008 evaluation cycle that were generally intended to improve the management of the New Starts process. These changes include linking the New Starts and National Environmental Policy Act planning requirements and processes and capping New Starts funding when projects enter the final design phase. As required by SAFETEA-LU, FTA published these proposals in policy guidance and sought public input. Members of the transit community supported changes that they thought would make the New Starts process more efficient, but many commenters expressed strong opposition to other changes, citing, for example, the time and resources required to analyze ridership and cost uncertainties. Consequently, FTA implemented only 4 of the proposed procedural changes, but indicated that a final decision on the other 5 proposed changes would be made through the rulemaking process. SAFETEA-LU introduced eight statutory changes to the New Starts program that include establishing the Small Starts program and identifying new evaluation criteria. FTA has taken some initial steps to implement these changes, including issuing an Advanced Notice of Proposed Rulemaking (ANPRM) for the Small Starts program and proposed policy guidance for the New Starts program, both in January 2006. The Small Starts program is a new component of the New Starts program and is intended to offer an expedited and streamlined application and review process for small projects. The transit community, however, questioned whether the Small Starts program, as outlined in the ANPRM, would provide such a process. In July 2006, FTA introduced a new eligibility category called Very Small Starts, which is for the simplest and least costly projects. Very Small Starts projects will qualify for an even simpler and more expedited evaluation process. FTA also identified and sought public input on possible changes to the New Starts program that would have an impact on traditional New Starts projects, such as revising the evaluation process to incorporate the new evaluation criteria identified by SAFETEA-LU. According to FTA, a potential challenge in moving forward is incorporating both land use and economic development as separate criteria in the evaluation process, including developing appropriate measures for the criteria and avoiding duplication in counting benefits.
GAO-06-819, Public Transportation: New Starts Program Is in a Period of Transition
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
August 2006:
Public Transportation:
New Starts Program Is in a Period of Transition:
New Starts Program:
GAO-06-819:
GAO Highlights:
Highlights of GAO-06-819, a report to congressional committees
Why GAO Did This Study:
The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A
Legacy for Users (SAFETEA-LU) authorized about $7.9 billion in
commitment authority, through fiscal year 2009, for the Federal Transit
Administration‘s (FTA) New Starts program, which is used to select
fixed guideway transit projects, such as rail and trolley projects, and
to award full funding grant agreements (FFGAs). The New Starts program
serves as an important source of federal funding for the design and
construction of transit projects throughout the country.
SAFETEA-LU requires GAO to report each year on FTA‘s New Starts
process. As such, GAO examined (1) the number of projects that were
evaluated, rated, and proposed for FFGAs for the fiscal year 2007
evaluation cycle and the proposed funding commitments for the fiscal
year 2007 budget; (2) procedural changes that FTA proposed for the New
Starts program beginning with the fiscal year 2008 evaluation cycle;
and (3) changes SAFETEA-LU made to the New Starts program and FTA‘s
implementation of these changes. GAO reviewed New Starts documents and
interviewed FTA officials and project sponsors, among other things, as
part of its review. GAO is not making recommendations in this report.
In commenting on a draft of this report, FTA provided technical
clarifications, which we incorporated as appropriate.
What GAO Found:
For the fiscal year 2007 evaluation cycle, FTA evaluated and rated 20
projects, recommended 5 projects for new FFGAs and 2 projects with
pending FFGAs. FTA also identified 5 other projects that may be
eligible for funding outside of FFGAs. The administration‘s fiscal year
2007 budget proposal requests $1.47 billion for the New Starts program,
which is about $200 million more than the amount received last year.
FTA proposed nine procedural, or nonregulatory, changes for the New
Starts program beginning with the fiscal year 2008 evaluation cycle
that were generally intended to improve the management of the New
Starts process. These changes include linking the New Starts and
National Environmental Policy Act planning requirements and processes
and capping New Starts funding when projects enter the final design
phase. As required by SAFETEA-LU, FTA published these proposals in
policy guidance and sought public input. Members of the transit
community supported changes that they thought would make the New Starts
process more efficient, but many commenters expressed strong opposition
to other changes, citing, for example, the time and resources required
to analyze ridership and cost uncertainties. Consequently, FTA
implemented only 4 of the proposed procedural changes, but indicated
that a final decision on the other 5 proposed changes would be made
through the rulemaking process.
SAFETEA-LU introduced eight statutory changes to the New Starts program
that include establishing the Small Starts program and identifying new
evaluation criteria. FTA has taken some initial steps to implement
these changes, including issuing an Advanced Notice of Proposed
Rulemaking (ANPRM) for the Small Starts program and proposed policy
guidance for the New Starts program, both in January 2006. The Small
Starts program is a new component of the New Starts program and is
intended to offer an expedited and streamlined application and review
process for small projects. The transit community, however, questioned
whether the Small Starts program, as outlined in the ANPRM, would
provide such a process. In July 2006, FTA introduced a new eligibility
category called Very Small Starts, which is for the simplest and least
costly projects. Very Small Starts projects will qualify for an even
simpler and more expedited evaluation process. FTA also identified and
sought public input on possible changes to the New Starts program that
would have an impact on traditional New Starts projects, such as
revising the evaluation process to incorporate the new evaluation
criteria identified by SAFETEA-LU. According to FTA, a potential
challenge in moving forward is incorporating both land use and economic
development as separate criteria in the evaluation process, including
developing appropriate measures for the criteria and avoiding
duplication in counting benefits.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-819].
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:
FTA Proposed Five New Projects for FFGAs and Requested $1.47 Billion
for the New Starts Program in Fiscal Year 2007:
FTA Proposed Nine Procedural Changes to the New Starts Program and
Adopted Four after Considering Comments from the Transit Community:
SAFETEA-LU's Changes to the New Starts Program Include Identifying New
Evaluation Criteria to Establishing the Small Starts Program:
Concluding Observations:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: FTA's Proposed Changes to the New Starts Program:
Tables:
Table 1: Comparison of the Fiscal Year 2006 and Fiscal Year 2007 Rating
Scales:
Table 2: Projects Proposed for FFGAs and Other Funding, Fiscal Year
2007:
Table 3: Procedural Changes Proposed by FTA:
Table 4: Summary of Common Transit Community Concerns and FTA's
Responses to the New Starts Procedural Changes:
Table 5: Comparison of SAFETEA-LU's and TEA-21's New Starts Provisions:
Table 6: Comparison of Small Starts and New Starts Program Statutory
Requirements:
Table 7: Changes to the New Starts Program Proposed by FTA and the
Transit Community's Response:
Figures:
Figure 1: New Starts Planning and Development Process:
Figure 2: New Starts Project Evaluation Criteria:
Figure 3: New Starts Projects in Final Design and Preliminary
Engineering, Fiscal Year 2007:
Figure 4: Planned Uses of Administration's Proposed Fiscal Year 2007
Budget for New Starts:
Figure 5: Time Line for Implementing SAFETEA-LU Changes to the New
Starts Program:
Figure 6: FTA's "Option 1" for Revising the New Starts Evaluation and
Ratings Framework:
Figure 7: FTA's "Option 2" for Revising the New Starts Evaluation and
Ratings Framework:
Abbreviations:
ANPRM: Advanced Notice of Proposed Rulemaking:
BRT: bus rapid transit:
DOT: Department of Transportation:
FD: Final design:
FEIS: Final environmental impact statement:
FFGA: full funding grant agreement:
FHWA: Federal Highway Administration:
FONSI: Finding of no significant impact:
FTA: Federal Transit Administration:
HOV: High-occupancy vehicle:
LPA: locally preferred alternative:
LRT: light rail transit:
MOS: minimum operable segment:
MPO: Metropolitan Planning Organization:
NEPA: National Environmental Policy Act:
NPRM: Notice of Proposed Rulemaking:
PDA: Project development agreements:
PE: Preliminary engineering:
PMP: Project Management Plans:
ROD: Record of decision:
ROW: right-of-way:
SAFETEA-LU: Safe, Accountable, Flexible, Efficient Transportation
Equity Act: A Legacy for Users:
TEA-21: Transportation Equity Act for the 21ST Century:
United States Government Accountability Office:
Washington, DC 20548:
August 30, 2006:
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 Democratic Member:
Committee on Transportation and Infrastructure:
House of Representatives:
A significant portion of the federal government's share of new capital
investment in mass transportation since the early 1970s has come
through the Federal Transit Administration's (FTA) New Starts program,
which awards full funding grant agreements (FFGAs) for fixed guideway
projects, including rail, bus rapid transit, and ferry systems across
the country.[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 fiscal year 1998, the New Starts
program has provided state and local agencies with more than $10.4
billion to help design and construct transit projects throughout the
country[Footnote 2].
The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A
Legacy for Users (SAFETEA-LU) authorized the New Starts program through
fiscal year 2009 and provided approximately $7.9 billion in commitment
authority[Footnote 3] from fiscal year 2005 through fiscal year 2009.
Competition for New Starts funds continues to grow: According to FTA,
SAFETEA-LU identified over 300 projects as eligible to compete for New
Starts funding, compared with 190 such projects identified by the
previous authorization legislation, the Transportation Equity Act for
the 21st Century (TEA-21). For that reason, SAFETEA-LU, like TEA-21,
directs FTA to continue to prioritize projects for funding by
evaluating, rating, and recommending potential projects on the basis of
specific financial and project justification criteria including
mobility improvements, cost-effectiveness, environmental benefits, and
operating efficiencies. However, SAFETEA-LU made several changes to the
New Starts evaluation and rating process, including identifying a new
eligibility category for smaller fixed guideway projects and
establishing new evaluation criteria. FTA is currently implementing
these changes.
SAFETEA-LU also requires us to report each year on FTA's processes and
procedures for evaluating, rating, and recommending New Starts projects
for funding and on FTA's implementation of these processes and
procedures. This report discusses (1) the number of projects that were
evaluated, rated, and proposed for FFGAs for the fiscal year 2007
evaluation cycle[Footnote 4] and the proposed funding commitments for
the fiscal year 2007 budget; (2) procedural changes that FTA proposed
for the New Starts program beginning with the fiscal year 2008
evaluation cycle; and (3) changes SAFETEA-LU made to the New Starts
program and FTA's implementation of these changes. To address these
objectives, we reviewed SAFETEA-LU; FTA guidance and regulations
governing the New Starts program; and other relevant FTA documents,
including the annual New Starts report. We also interviewed FTA
officials, project sponsors from five projects in preliminary
engineering and final design that were rated in the fiscal year 2007
evaluation cycle, and representatives from the American Public
Transportation Association and the New Starts Working Group.[Footnote
5] In addition, we reviewed comments to FTA's docket on New Starts and
Small Starts and the Advanced Notice of Proposed Rulemaking (ANPRM) for
Small Starts. Finally, we attended one of FTA's three meetings with
project sponsors--the New Starts/Small Starts Seminar and Listening
Sessions--in March 2006. We conducted our work from February 2006
through August 2006 in accordance with generally accepted government
auditing standards. (See app. I for more information on our scope and
methodology.)
Results in Brief:
For the fiscal year 2007 evaluation cycle, FTA evaluated and rated 20
projects, proposed 5 projects for new FFGAs, and requested $1.47
billion for the New Starts program. Of the 20 projects rated, 1 was
rated as "high," 17 were rated as "medium," and 2 were rated as "low."
FTA recommended 12 of the 20 projects for funding. Specifically, FTA
recommended 5 projects for new FFGAs and 2 projects with pending
FFGAs.[Footnote 6] In addition, FTA identified 5 other projects that
may be eligible for funding outside of FFGAs. The administration's
budget request of $1.47 billion for the New Starts program is about
$200 million more than the amount received last year. The majority of
the $1.47 billion would be allocated to projects with existing and
pending FFGAs and projects proposed for new FFGAs.
FTA proposed nine procedural changes for the New Starts program,
beginning with the fiscal year 2008 evaluation cycle that were
generally intended to improve the management of the New Starts process.
These changes include linking the New Starts and the National
Environmental Policy Act (NEPA) planning requirements and processes and
capping New Starts funding when projects enter the final design phase.
As required by SAFETEA-LU, FTA published these proposals in policy
guidance and sought public input. A total of 41 transit agencies,
government entities, consultants, associations, and organizations
submitted written comments to FTA's docket in response to the proposed
procedural changes. Project sponsors and other members of the transit
community supported changes that they thought would make the New Starts
process more efficient, but many commenters expressed strong opposition
to other changes. For example, many commenters opposed FTA's proposal
that project sponsors analyze ridership and cost uncertainties, citing
concerns about the lack of guidance on how to conduct the analysis as
well as about the time and resources required to perform such an
analysis. FTA implemented four of the nine proposed procedural changes
and, on the basis of the comments received, did not implement the other
five changes. FTA, however, noted that it may revisit these proposed
changes in the future.
SAFETEA-LU introduced eight changes to the New Starts program, such as
establishing the Small Starts program and identifying new evaluation
criteria. FTA has taken some initial steps to implement these changes,
including issuing an ANPRM for the Small Starts program and guidance
for the New Starts program, both in January 2006. The Small Starts
program is a component of the New Starts program and is intended to
offer an expedited and streamlined application and review process for
small projects. The transit community, however, questioned whether the
Small Starts program, as outlined in the ANPRM, would provide such a
process. In July 2006, FTA simplified how Small Starts projects would
be evaluated and rated and introduced a new eligibility category within
the Small Starts program called Very Small Starts, which is for the
least costly projects.[Footnote 7] Very Small Starts projects will
qualify for an even simpler and more expedited evaluation process.
FTA's actions appear to have streamlined the Small Starts program more
than was originally proposed in the ANPRM. FTA will have the
opportunity to make additional modifications, as appropriate, as it
works to develop the final rule for the Small Starts program over
approximately the next 18 months. In its January 2006 guidance, FTA
also identified and sought public input on possible changes to the New
Starts program that would have an impact on traditional New Starts
projects, such as revising the evaluation process to incorporate the
new evaluation criteria identified by SAFETEA-LU. According to FTA,
potential challenges in moving forward are incorporating both land use
and economic development as separate criteria in the evaluation
process, as required by the statute--including developing appropriate
measures for these criteria and avoiding duplication in counting
benefits. We have also previously reported similar challenges in
measuring these types of benefits and noted that experts have suggested
potential solutions, such as using qualitative information about the
benefits rather than relying strictly on quantitative information and
expanding the use of risk assessment or probability analysis in
conjunction with economic analysis.[Footnote 8] Some of FTA's proposed
changes to the New Starts process, which would consider qualitative
information about the project and the project's uncertainties, appear
to be in line with these suggestions.
The Department of Transportation, including FTA, reviewed a draft of
this report. FTA officials provided technical clarifications, which we
incorporated as appropriate.
Background:
SAFETEA-LU authorized a total of $45.3 billion for a variety of transit
programs, including financial assistance to states and localities to
develop, operate, and maintain transit systems from fiscal year 2005
through fiscal year 2009. Under one program, New Starts, FTA identifies
and selects fixed guideway transit projects for funding--including
heavy, light, and commuter rail; ferry; and certain bus projects (such
as bus rapid transit). The New Starts program serves as an important
source of federal funding for the design and construction of transit
projects throughout the country. FTA generally funds New Starts
projects through FFGAs, which establish the terms and conditions for
federal participation in a New Starts project and also define a
project's scope, including the length of the system and the number of
stations; its schedule, including the date when the system is expected
to open for service; and its cost.
For a project to obtain an FFGA, it must progress through a local or
regional review of alternatives and meet a number of federal
requirements, including requirements for information used in the New
Starts evaluation and rating process (see fig. 1). As required by
SAFETEA-LU, 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, as required by statute. After a locally
preferred alternative is selected, project sponsors submit a request to
FTA for entry into the preliminary engineering phase.[Footnote 9]
Following completion of preliminary engineering and federal
environmental requirements, the project may be approved by FTA to
advance into final design,[Footnote 10] after which the project may be
approved by FTA for an FFGA and proceed to construction, as provided
for in statute. FTA oversees grantee 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 Development Process:
[See PDF for image]
Source: FTA.
Legend:
LPA = locally preferred alternative:
MPO = Metropolitan Planning Organization:
NEPA = National Environmental Policy Act:
PE = Preliminary engineering:
PMP = Project Management Plans:
ROW = right-of-way:
Note: NEPA requires federal agencies to prepare detailed statements
assessing the environmental impact of and alternatives to major federal
actions significantly affecting the environment. In the transportation
context, the NEPA evaluation measures the impact of different
alternatives by the extent to which the alternative meets the project
purpose, need, and consistency with the goals and objectives of any
local urban planning.
[End of figure]
To help inform administration and congressional decisions about which
projects should receive federal funds, FTA assigns ratings on the basis
of various financial and project justification criteria, and then
assigns an overall rating. For the fiscal year 2007 evaluation cycle,
FTA primarily used the financial and project justification criteria
identified in TEA-21.[Footnote 11] These criteria reflect a broad range
of benefits and effects of the proposed project, such as cost-
effectiveness, as well as the ability of the project sponsor to fund
the project and finance the continued operation of its transit system
(see fig. 2). Projects are rated at several points during the New
Starts process--as part of the evaluation for entry into preliminary
engineering and final design, and yearly for inclusion in the New
Starts annual report.
Figure 2: New Starts Project Evaluation Criteria:
[See PDF for image]
Source: GAO analysis of FTA data.
[End of figure]
FTA assigns the proposed project a rating for each criterion and then
assigns a summary rating for local financial commitment and project
justification. Finally, FTA develops an overall project rating. The
exceptions to this process are statutorily "exempt" projects, which are
those with requests for less than $25 million in New Starts funding.
These projects do not have requirements for submitting project
justification information--although FTA encourages their sponsors to do
so--do not receive ratings from FTA and are not eligible for FFGAs;
thus, the number of projects in preliminary engineering or final design
may be greater than the number of projects evaluated and rated by FTA.
As required by statute, the administration uses the FTA evaluation and
rating process, along with the stage of development of New Starts
projects, to decide which projects to recommend to Congress for
funding.[Footnote 12] Although many projects receive a summary rating
that would make them eligible for FFGAs, only a few are proposed for
FFGAs in a given fiscal year. FTA proposes projects for FFGAs when it
believes that the projects will be able to meet certain conditions
during the fiscal year for which funding is proposed. These conditions
include the following:
* All non-New Starts funding must be committed and available for the
project.
* 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.
FTA Proposed Five New Projects for FFGAs and Requested $1.47 Billion
for the New Starts Program in Fiscal Year 2007:
FTA's Annual Report on New Starts: Proposed Allocations of Funds for
Fiscal Year 2007 (annual report) identified 24 projects in preliminary
engineering and final design (see fig. 3). FTA evaluated and rated 20
of these projects,[Footnote 13] and 4 projects were statutorily exempt
from being rated because their sponsors requested less than $25 million
in New Starts funding.[Footnote 14] FTA evaluated and rated fewer
projects during the fiscal year 2007 cycle than in fiscal year 2006.
According to FTA, this decrease occurred because 12 proposed projects
are no longer in preliminary engineering or final design.[Footnote 15]
FTA stated in its annual report that the sponsors of these projects
have either (1) fully implemented the project; (2) received the total
New Starts funding requested to implement the project; (3) terminated
or suspended project development activities; (4) withdrawn from the New
Starts process while they address outstanding issues; or (5) decided
not to pursue New Starts funding.
Figure 3: New Starts Projects in Final Design and Preliminary
Engineering, Fiscal Year 2007:
[See PDF for image]
Source: FTA.
[End of figure]
Of the 20 projects that were rated in the fiscal year 2007 evaluation
cycle, 1 was rated as "high," 17 were rated as "medium," and 2 were
rated as "low." Under TEA-21, during fiscal years 2000 through 2006,
FTA designated projects as highly recommended, recommended, or not
recommended, based on the results of FTA's evaluation of each of the
criteria for project justification and local financial commitment.
SAFETEA-LU replaced this rating scale with a 5-point scale of high,
medium-high, medium, medium-low, and low. To help transition to the new
rating scale, FTA used a 3-point scale of high, medium, and low for the
fiscal year 2007 evaluation cycle, but used the same decision rules to
determine overall project ratings as it did in previous years (see
table 1). According to FTA officials, FTA intends to work closely with
the industry to implement the SAFETEA-LU provisions so that they can be
applied in subsequent annual project evaluation cycles. In addition,
FTA's current schedule anticipates that the final rule will be
completed in time to use the 5-point scale for the fiscal year 2010
evaluation cycle.
Table 1: Comparison of the Fiscal Year 2006 and Fiscal Year 2007 Rating
Scales:
Decision rule: At least "medium-high" for finance and project
justification;
Fiscal year 2006 evaluation cycle rating scale: Highly recommended;
Fiscal year 2007 evaluation cycle rating scale: High.
Decision rule: At least "medium" for finance and project justification;
Fiscal year 2006 evaluation cycle rating scale: Recommended;
Fiscal year 2007 evaluation cycle rating scale: Medium.
Decision rule: Not rated at least "medium" for finance and project
justification;
Fiscal year 2006 evaluation cycle rating scale: Not recommended;
Fiscal year 2007 evaluation cycle rating scale: Low.
Source: FTA's New Starts annual report.
[End of table]
FTA's evaluation process informed the administration's recommendation
to fund 12 projects. FTA recommended five projects for new FFGAs. The
total capital cost of these five projects is estimated to be $3.3
billion, of which the total federal New Starts share is expected to be
$1.9 billion. In addition, FTA recommended funding for two projects
with pending FFGAs. The total capital cost of these two projects is
estimated to be $8.2 billion, of which the total federal New Starts
share is expected to be $2.8 billion. FTA also recommended reserving
$101.9 million in New Starts funding for five "other projects." In its
annual report, FTA stated that four of the five other projects (1) were
in or nearing final design, (2) received overall medium or higher
ratings, and (3) had medium or better cost-effectiveness ratings, or
(4) were exempt from the requirement to achieve a medium cost-
effectiveness rating.[Footnote 16] According to FTA, no other project
in preliminary engineering or final design met these criteria. The
fifth project--Washington, D.C., Largo Metrorail Extension--did not
meet these criteria but was congressionally designated for funding in
SAFETEA-LU.[Footnote 17] Similar to last year, FTA did not specify
funding levels for the five other projects because it wanted to ensure
that the projects were moving forward as anticipated before making
specific funding recommendations to Congress. FTA also notes in its
annual report that some projects may encounter unexpected obstacles
that slow their progress. For example, FTA stated that some of the
projects must still complete the environmental planning process and
address FTA-identified concerns related to capital costs or project
scope. Reserving funds for these projects without specifying a
particular amount for any given project will allow the administration
to make "real time" funding recommendations when Congress is making
appropriations decisions. FTA does not expect that all five other
projects will be recommended for funding in fiscal year 2007. (See
table 2 for more information about the 12 projects recommended for
funding.)
Table 2: Projects Proposed for FFGAs and Other Funding, Fiscal Year
2007:
Dollars in millions[A].
Project name: West Corridor LRT;
Location: Denver, CO;
New Starts project category: New FFGA;
Total capital cost: $593.0;
New Starts share of capital cost: 49%.
Project name: South Corridor I-205/Portland Mall LRT;
Location: Portland, OR;
New Starts project category: New FFGA;
Total capital cost: 557.4;
New Starts share of capital cost: 60.
Project name: Wilsonville to Beaverton Commuter Rail;
Location: Washington County, OR;
New Starts project category: New FFGA;
Total capital cost: 117.3;
New Starts share of capital cost: 50.
Project name: Northwest/Southeast LRT MOS;
Location: Dallas, TX;
New Starts project category: New FFGA;
Total capital cost: 1,406.2;
New Starts share of capital cost: 50.
Project name: Weber County to Salt Lake City Commuter Rail;
Location: Salt Lake City, UT;
New Starts project category: New FFGA;
Total capital cost: 611.7;
New Starts share of capital cost: 80.
Project name: Long Island Rail Road East Side Access;
Location: New York, NY;
New Starts project category: Pending FFGA;
Total capital cost: 7,779.3;
New Starts share of capital cost: 34.
Project name: North Shore LRT Connector;
Location: Pittsburgh, PA;
New Starts project category: Pending FFGA;
Total capital cost: 393.0;
New Starts share of capital cost: 55.
Project name: Second Avenue Subway MOS;
Location: New York, NY;
New Starts project category: Other;
Total capital cost: 4,947.8;
New Starts share of capital cost: 26.
Project name: Norfolk LRT;
Location: Norfolk, VA;
New Starts project category: Other;
Total capital cost: 203.7;
New Starts share of capital cost: 49.
Project name: Dulles Corridor Metrorail Project- Extension to Wiehle
Avenue;
Location: Northern VA;
New Starts project category: Other;
Total capital cost: 1,840.1;
New Starts share of capital cost: 50.
Project name: University Link LRT Extension;
Location: Seattle, WA;
New Starts project category: Other;
Total capital cost: 1,720.0;
New Starts share of capital cost: 41.
Project name: Largo Metrorail Extension;
Location: Washington, D.C;
New Starts project category: Other;
Total capital cost: 433.87;
New Starts share of capital cost: 60.
Source: GAO summary of information in the New Starts annual report.
Legend:
LRT = Light rail transit:
MOS = Minimum operable segment:
[A] The numbers included in this table are what was recommended by FTA
in the New Starts annual report but the actual total capital cost and
percent of New Starts share is subject to change at the time FTA
executes the FFGA.
[End of table]
The administration's fiscal year 2007 budget proposal requests that
$1.47 billion be made available for the New Starts program. This total
includes funding for 16 projects already under an FFGA. Figure 4
illustrates the planned uses of the administration's proposed fiscal
year 2007 budget for New Starts, including the following:
* $571.9 million would be shared among the 16 projects with existing
FFGAs,
* $355 million would be shared between the 2 projects with pending
FFGAs,
* $302.6 million would be shared by the 5 projects proposed for new
FFGAs,
* $101.9 million would be shared by as many as 5 "other" projects to
continue their development, and:
* $100 million would be used for new Small Starts projects.
Figure 4: Planned Uses of Administration's Proposed Fiscal Year 2007
Budget for New Starts:
[See PDF for image]
Source: GAO analysis of FTA data.
Note: FTA is authorized to use up to 1 percent of amounts made
available for the New Starts/Small Starts program for project
management oversight activities. SAFETEA-LU also authorized New Starts
funds to be set aside for each fiscal year from 2006 through 2009 for
projects in Alaska and Hawaii, for fixed guideway systems and extension
projects utilizing ferry boats, ferry boat terminals, or approaches to
ferry boat terminals. Finally, FTA is also authorized to provide $5
million for each fiscal year from 2006 through 2009 for the Denali
Commission, which provides critical utilities, infrastructure, and
economic support throughout Alaska, particularly in remote communities.
According to FTA, the Small Starts program, authorized in SAFETEA-LU,
does not go into effect until fiscal year 2007, and FTA had no projects
in the pipeline when this report was prepared.
[End of figure]
FTA Proposed Nine Procedural Changes to the New Starts Program and
Adopted Four after Considering Comments from the Transit Community:
In January 2006, FTA proposed nine procedural changes for the New
Starts program beginning with the fiscal year 2008 evaluation cycle.
These changes include linking the New Starts and NEPA planning
requirements and processes and capping New Starts funding when projects
enter the final design phase. FTA's guidance states that these
procedural changes are generally intended to improve the management of
the New Starts process and to ensure the accuracy and consistency of
the information submitted to the agency as part of the New Starts
evaluation and rating process. According to FTA, these procedural
changes do not alter the New Starts evaluation and rating framework,
and they are not subject to the formal rule-making process. Table 3
summarizes the proposed procedural changes and FTA's rationale for
proposing these changes.
Table 3: Procedural Changes Proposed by FTA:
Proposed procedural change: NEPA[A] interfaces;
Description: Sponsors must complete NEPA scoping before preliminary
engineering (PE);
FTA's rationale for change: To mitigate conflicts between NEPA and New
Starts by fostering earlier interaction and general consensus among
participants about the alternatives considered during NEPA review.
Proposed procedural change: NEPA interfaces;
Description: Sponsors must present New Starts evaluation of locally
preferred alternative with NEPA evaluation of alternatives;
FTA's rationale for change: To ensure the use and disclosure of
information for decision making.
Proposed procedural change: NEPA interfaces;
Description: Sponsors must achieve an acceptable New Starts rating
before the final environmental impact statement (FEIS), record of
decision (ROD), or finding of no significant impact (FONSI) is issued;
FTA's rationale for change: To minimize the need for additional
environmental reviews after a project's scope is changed to improve the
New Starts ratings, and to ensure the public is presented with accurate
information on projects that are acceptable for New Starts funding.
Proposed procedural change: Preservation of information for before and
after study[B];
Description: Sponsors must document the information produced during the
planning phase that will be needed for the before- and-after study and
update the information and analysis before entering final design (FD);
FTA's rationale for change: To ensure that information is preserved and
will be available to be analyzed in the before-and-after study required
by SAFETEA-LU.
Proposed procedural change: Certification of technical methods,
planning assumptions, and project development procedures;
Description: Individuals must certify the tools and techniques used in
the analysis to ensure that the approaches have been developed and
applied according to professional standards and FTA guidelines;
FTA's rationale for change: To ensure that local and federal decision
makers are provided with accurate information when evaluating New
Starts projects.
Proposed procedural change: Analysis of ridership and cost
uncertainties;
Description: Sponsors must analyze uncertainties when developing
ridership forecasts and cost estimates;
FTA's rationale for change: To respond to SAFETEA-LU's emphasis on
improving the reliability of forecasts used in the evaluation process.
Proposed procedural change: Project development agreements;
Description: FTA will selectively require projects to establish a
project development agreement (PDA);
FTA's rationale for change: To ensure that project sponsors advance
through phases of project development, to focus project sponsors'
effort/FTA oversight on principal issues, and to provide basis for FTA
rescission of PE/FD approval.
Proposed procedural change: New Starts FFGA funding level set at final
design approval;
Description: FFGA New Starts funding amount will be capped once the
project is approved for FD;
FTA's rationale for change: To ensure submission of reliable cost and
ridership forecasts for decision making, to minimize cost increases
between stages of development, and to clarify FTA's participation in
project costs.
Proposed procedural change: Mode-specific constants;
Description: All sponsors will be allowed to represent the benefits
from improvements in transit service attributes, such as reliability,
span of service, and passenger amenities, when developing their
projects;
FTA's rationale for change: To acknowledge and capture previously
unmeasured attributes of fixed guideway projects in areas considering
new modes, to enhance consistent treatment of projects nationally, and
to improve the reliability of travel forecasts.
Source: GAO summary of the proposed changes and FTA's rationale for
proposing these changes.
[A] NEPA requires federal agencies to prepare detailed statements
assessing the environmental impact of and alternatives to major federal
actions significantly affecting the environment. In the transportation
context, the NEPA evaluation measures the impact of different
alternatives by the extent to which the alternative meets the project
purpose, need, and consistency with the goals and objectives of any
local urban planning.
[B] A before and after study is similar to an outcome evaluation in
that it compares the forecasted benefits and costs of a project with
the actual benefits and costs of the project after the project is
completed.
[End of table]
As we have previously recommended and SAFETEA-LU now requires, FTA
published its proposed procedural changes in policy guidance and sought
public comments on them.[Footnote 18] FTA obtained comments on its
proposals by asking sponsors to submit comments to the docket for up to
60 days. In addition, FTA held three New Starts/Small Starts Seminar
and Listening Sessions ("listening sessions") across the country. The
listening sessions were intended to solicit comments from attendees on
the implementation of New Starts and Small Starts provisions of SAFETEA-
LU, as well as to share information about planning and project
development activities for projects seeking New Starts funding. FTA
received 41 written comments in response to these changes, including
submissions from 33 transit agencies and government entities and 8
consultants, associations, and organizations. Most of the project
sponsors and industry representatives we interviewed told us that they
appreciated FTA's efforts to obtain their input and to encourage an
open discussion about the proposed changes. Similarly, FTA officials
said that they were pleased with the volume of written comments they
received from the docket and the strong attendance at the three
listening sessions conducted in February and March 2006.
Although the project sponsors and industry representatives were
supportive of some proposals that they thought would improve the New
Starts program, they also expressed a number of concerns about all of
the changes. (See table 4 for a summary of these concerns.) For
example, the commenters were generally supportive of FTA's proposal to
require sponsors to keep and update the information produced during
alternatives analysis prior to each phase of project development until
the FFGA is awarded, since this information is necessary for the before-
and-after study. In contrast, most project sponsors and transit
industry groups opposed FTA's proposed certification of technical
methods, planning assumptions, and project development procedures,
citing concerns that such a certification would raise questions about
professional liability and lead to potential federal prosecution, and
noting that a single individual is typically not responsible for
producing all the underlying assumptions used to develop cost estimates
and ridership forecasts. On the basis of the comments received, FTA
adopted four proposals, including the mandatory completion of NEPA
scoping before entry into preliminary engineering (PE), the
presentation of the New Starts information in the NEPA documents, the
preservation of information for the before and after study, and the
capping of New Starts funds upon approval into final design. For two of
the four adopted proposals, FTA slightly revised its original proposals
on the basis of the comments received. FTA did not adopt five
proposals; however, FTA noted that it may revisit these proposed
changes in the future.
Table 4: Summary of Common Transit Community Concerns and FTA's
Responses to the New Starts Procedural Changes:
Proposed procedural change: NEPA interfaces (Sponsors must complete
NEPA scoping before preliminary engineering.);
Common concerns expressed by the transit community:
* Increases time and cost of project development;
* Makes it more difficult to achieve local buy-in of the planning
process;
FTA's response: Adopted.
Proposed procedural change: NEPA interfaces (Sponsors must present New
Starts evaluation of locally preferred alternative with NEPA evaluation
of alternatives.);
Common concerns expressed by the transit community:
* FTA is not using the formal rule-making process;
* Subjects FTA to litigation;
FTA's response: Adopted. However, FTA clarified that it will not
develop a new rating for the NEPA document, but simply report on the
project's most recent rating.
Proposed procedural change: NEPA interfaces (Sponsors must achieve an
acceptable New Starts rating before the final environmental impact
statement (FEIS), record of decision (ROD), or finding of no
significant impact (FONSI).);
Common concerns expressed by the transit community:
* Recommended that FTA use the formal rule-making process due to the
extent of changes;
* Could escalate project costs;
* May jeopardize nonfederal funding;
FTA's response: Not adopted. But if FTA needs to issue a supplemental
document to reflect a scope change required to justify a "medium" or
better rating, then a rating will not be issued until this document is
completed. FTA will also describe the impact that a New Starts rating
of less than "medium" may have on advancing projects.
Proposed procedural change: Preservation of information for before and
after study;
Common concerns expressed by the transit community:
* The lack of guidance on before and after study and data collection
methods;
* FTA is not using the formal rule-making process;
* Encourages FTA to consider land use and economic development in
analyses;
FTA's response: Adopted.
Proposed procedural change: Certification of technical methods,
planning assumptions, and project development procedures;
Common concerns expressed by the transit community:
* Technical information and key assumptions are often generated by
multiple individuals or organizations, making it difficult to assign
responsibility for certification;
* No industry-accepted standards to use for certification;
* May create liability concerns for companies and consultants;
* Duplicates other FTA reviews;
FTA's response: Not adopted. However, FTA expanded the scope of
technical procedures and assumptions covered by existing Chief
Executive Officer certification.
Proposed procedural change: Analysis of ridership and cost
uncertainties;
Common concerns expressed by the transit community:
* Increases time and cost of project development;
* No guidance on characterizing uncertainties;
* No discussion of how uncertainties will be addressed in cost-
effectiveness measure;
FTA's response: Not adopted. FTA plans to issue guidance clarifying the
information needed to identify uncertainties, which will be subject to
the notice and comment process.
Proposed procedural change: Project development agreements (PDA);
Common concerns expressed by the transit community:
* No criteria for when PDAs will be used;
* May increase time of project development;
* PDAs will be used in a punitive way;
* Process may be duplicative of FTA's PE and FD approval points;
FTA's response: Not adopted. However, FTA will work with sponsors who
request the use of a PDA, and this proposal may be revisited during the
rule-making process.
Proposed procedural change: New Starts FFGA funding level set at final
design approval;
Common concerns expressed by the transit community:
* No acknowledgment of increased costs due to higher prices of
materials or unforeseeable circumstances;
* Negotiation of FFGA should be moved forward to coincide with FD
entry;
* May inhibit innovative contracting procedures (e.g., design build);
* FTA is not using the formal rule- making process;
FTA's response: Adopted. FTA will broaden the scope of PE activities
and establish PE "exit criteria," consider requests for additional New
Starts funding for costs out of the sponsor's control, and exempt
projects in FD from future New Starts policy changes.
Proposed procedural change: Mode-specific constants;
Common concerns expressed by the transit community:
* May be unnecessary for areas with existing data for different modes;
* Unclear how values were developed;
* Experts need to be involved in establishing constants and guidance;
FTA's response: Not adopted. FTA will analyze options and may set
values in the future, which will be subject to the Notice and Comment
process.
Source: GAO summary of public comments and FTA's response to these
comments.
Note: The concerns summarized in this table reflect the comments
submitted by members of the transit community and do not necessarily
reflect our views or opinions.
[End of table]
More recently, FTA hired a consulting firm to conduct an assessment of
the New Starts project development process. According to FTA's Deputy
Administrator, the impetus for the review is to streamline the project
development process while still ensuring that projects recommended for
funding are delivered in a timely manner and stay within budget. We
have previously reported that project sponsors have raised concerns
about the number of changes FTA has made to the New Starts process,
such as requiring project sponsors to prepare risk assessments, and the
time and cost associated with implementing these changes.[Footnote 19]
According to FTA, the results of the review may help inform the
development of the Notice of Proposed Rulemaking (NPRM) for the New
Starts program.
SAFETEA-LU's Changes to the New Starts Program Include Identifying New
Evaluation Criteria to Establishing the Small Starts Program:
SAFETEA-LU made a number of changes to the New Starts program,
including establishing a new eligibility category, the Small Starts
program, and identifying new evaluation criteria. The Small Starts
program is intended to expedite and streamline the application and
review process for small projects, but the transit community has
questioned whether FTA would implement the program in a way that would
do so. FTA has also proposed and sought public input on the new
evaluation criteria and other possible changes to the New Starts
program that would affect traditional New Starts projects. In addition,
FTA identified possible implementation challenges, including how to
distinguish between land use and economic development criteria in the
evaluation framework.
FTA Has Started to Implement SAFETEA-LU Changes and Will Continue to Do
So through the Rule-making Process:
SAFETEA-LU introduced eight changes to the New Starts program, codified
an existing practice, and clarified federal funding requirements. The
changes include the creation of the Small Starts program and the
introduction of new evaluation criteria, such as economic development.
In addition, SAFETEA-LU codified FTA's requirement that project
sponsors conduct before and after studies for all completed projects.
SAFETEA-LU also clarified the federal share requirements for New Starts
projects. Specifically, SAFETEA-LU continues to require that the
federal share for a New Starts project may be up to 80 percent of the
project's net capital project cost, unless the project sponsor requests
a lower amount, and prohibits the Secretary of Transportation from
requiring a nonfederal share of more than 20 percent of the project's
total net capital cost. This language changes FTA's policy of rating a
project as low if it seeks a federal New Starts share of more than 60
percent of the total cost. FTA had instituted this policy beginning
with the fiscal year 2004 evaluation cycle in response to language
contained in appropriation committee reports. Table 5 describes SAFETEA-
LU provisions for the New Starts program and compares them with TEA-
21's requirements.
Table 5: Comparison of SAFETEA-LU's and TEA-21's New Starts Provisions:
Provisions: Establish the Small Starts program;
SAFETEA-LU:
* Projects seeking less than $25 million in New Starts funds will no
longer be exempt from the ratings process once the Small Starts rule is
finalized;
* Establishes a new capital investment program called Small Starts for
projects that (1) have a total project cost of less than $250 million
and (2) are seeking less than $75 million in federal Small Starts
funding;
TEA-21:
* Projects seeking less than $25 million in New Starts funding were
exempt from ratings process;
* No separate program for small fixed guideway or nonfixed guideway
projects;
Status of implementation: FTA issued the ANPRM in January 2006 and
interim final guidance in August 2006 for the Small Starts program. By
law, exempt projects will continue to be eligible for funding without
being rated until the final rule on Small Starts is issued.
Provisions: Codify the before-and-after study requirement;
SAFETEA-LU: Project sponsors with FFGAs must conduct a study that (1)
describes and analyzes the impacts of the new fixed guideway capital
project on transit services and transit ridership, (2) evaluates the
consistency of predicted and actual project characteristics and
performance, and (3) identifies sources of differences between
predicted and actual outcomes. Project sponsors must prepare an
information collection and analysis plan, which must be approved prior
to execution of the FFGA;
TEA-21: Not required under TEA-21, but FTA required, as part of its
December 2000 Final Rule, project sponsors to conduct a before and
after study on completed projects;
Status of implementation: FTA's May 2006 guidance requires that project
sponsors document the information produced during the planning phase
that will be needed for the before- and-after study and update the
information and analysis before entering FD.
Provisions: Revise New Starts overall project rating scale;
SAFETEA-LU: Overall project rating is based on a 5-point scale of
"high," "medium- high," "medium," "medium-low," and "low;" Projects are
required to receive an overall rating of "medium" or higher to be
recommended for funding;
TEA-21: Overall project rating was based on 3-point scale: "highly
recommended," "recommended," and "not recommended.";
Status of implementation: FTA used a 3-point scale for the fiscal year
2007 evaluation, but changed ratings to "high," "medium," and "low.".
Provisions: Identify reliability of cost estimate and ridership
forecast as a consideration in evaluation process;
SAFETEA-LU: Requires Secretary to analyze, evaluate, and consider the
reliability of the forecasting methods used by New Starts project
sponsors and their contractors to estimate costs and ridership;
TEA-21: Not required under TEA-21;
Status of implementation: FTA identified options for incorporating
reliability of forecasts in the evaluation process and sought public
input in its January 2006 guidance.
Provisions: Add economic development criterion to evaluation process;
SAFETEA-LU: Projects will be evaluated based on a review of their
effects on local economic development;
TEA-21: Not required under TEA- 21;
Status of implementation: FTA identified options for incorporating
economic development in the evaluation process and sought public input
in its January 2006 guidance and ANPRM for Small Starts.
Provisions: Identify land use as a specific evaluation criterion;
SAFETEA-LU: Projects will be evaluated based on a review of their
public transportation supportive land use policies and future patterns;
TEA-21: Land use was not identified as an evaluation criterion by TEA-
21. However, TEA-21 identified land use as a "consideration" in the
evaluation process, and FTA incorporated it into the evaluation
process;
Status of implementation: FTA identified options for incorporating land
use in the evaluation process and sought public input in its January
2006 guidance and ANPRM for Small Starts.
Provisions: Clarify nonfederal financial commitment;
SAFETEA-LU: The Secretary is not authorized to require a nonfederal
financial commitment for a project that is more than 20 percent of its
net capital cost;
TEA-21: Federal share could not exceed 80 percent. But, 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 beginning
with the fiscal year 2004 evaluation cycle;
Status of implementation: FTA implemented this provision in its fiscal
year 2007 evaluation cycle.
Provisions: Establish incentives for accurate cost and ridership
forecasts;
SAFETEA-LU: A higher share of New Starts funding may be made available
to project sponsors if project's cost is not more than 10 percent
higher and ridership is not less than 90 percent of those estimates
when project was approved for PE;
TEA-21: No similar provision in TEA-21;
Status of implementation: FTA's May 2006 guidance requires that
projects requesting entry into PE submit information on the variables
and assumptions used to prepare forecasts and the parties responsible
for developing the different elements of the forecasts. This
information could potentially be used to apply the incentive provision.
Provisions: Require FTA to publish policy guidance;
SAFETEA-LU: New Starts policy guidance must be published for notice and
comment no later than 120 days after the enactment of SAFETEA-LU, each
time significant changes are made, and at least every 2 years;
TEA-21: Not specifically addressed in TEA-21;
Status of implementation: FTA issued draft policy guidance in January
2006 and final guidance in May 2006. FTA also issued draft interim
Small Starts guidance in June 2006 and final interim guidance in July
2006.
Provisions: Assess contractors' performance;
SAFETEA-LU: The Secretary will submit an annual report to congressional
committees analyzing the consistency and accuracy of the cost and
ridership estimates made by contractors to public transportation
agencies developing new capital projects;
TEA-21: Not required under TEA-21;
Status of implementation: FTA's May 2006 guidance requires that
projects requesting entry into PE submit information on the variables
and assumptions used to prepare forecasts and the parties responsible
for developing the different elements of the forecasts.
Source: GAO analysis of SAFETEA-LU and TEA-21.
[End of table]
FTA has taken some initial steps in implementing SAFETEA-LU changes.
For example, in January 2006, FTA published the proposed New Starts
policy guidance and, as will be discussed later in this report, the
ANPRM for the Small Starts program. In addition, in the final policy
guidance published in May 2006, FTA took steps to support its use of
incentives for accurate cost and ridership forecasts and assessing
contractors' performance by requiring that projects requesting entry
into PE submit information on the variables and assumptions used to
prepare forecasts and the parties responsible for developing the
different elements of the forecasts. FTA will continue to implement the
changes outlined in SAFETEA-LU through the rule-making process over the
next 1½ years. Specifically, in response to SAFETEA-LU changes, FTA is
developing the NPRM for the New Starts and Small Starts programs. FTA
plans to issue the NPRM in January 2007, with the goal of implementing
the final rule in January 2008. Figure 5 shows a time line of FTA's
actual and planned implementation of SAFETEA-LU changes.
Figure 5: Time Line for Implementing SAFETEA-LU Changes to the New
Starts Program:
[See PDF for image]
Source: GAO.
[End of figure]
Small Starts Program Is Intended to Offer a Streamlined Process, but
Transit Community Members Question Whether It Will Do So:
The creation of the Small Starts program was a significant change made
by SAFETEA-LU. The Small Starts program is a discretionary grant
program for public transportation capital projects that (1) have a
total cost of less than $250 million and (2) are seeking less than $75
million in federal Small Starts program funding. The Small Starts
program is a component of the existing New Starts program that,
according to the conference reports accompanying SAFETEA-LU, is
intended to provide project sponsors with an expedited and streamlined
evaluation and ratings process. Table 6 compares New Starts and Small
Starts program statutory requirements.
Table 6: Comparison of Small Starts and New Starts Program Statutory
Requirements:
Program requirements: Definition of eligibility;
Small Starts: Projects qualify as Small Starts if less than $75 million
in federal fixed guideway funding is sought, provided the total project
cost is also less than $250 million; Provides funding for new fixed
guideway systems and extensions, as well as corridor-based bus capital
projects;
New Starts: Projects qualify as New Starts if they are seeking $75
million or more in federal New Starts funding; Provides funding for new
fixed guideway systems and extensions.
Program requirements: Project justification criteria;
Small Starts:
* Cost-effectiveness;
* Public transportation supportive land-use policies;
* Economic development;
* Reliability of forecasting;
New Starts:
* Mobility improvements;
* Environmental benefits;
* Operating efficiencies;
* Cost-effectiveness;
* Public transportation supportive land-use policies;
* Economic development;
* Reliability of forecasting.
Program requirements: Local financial commitment criteria;
Small Starts:
* Stability and reliability of financial plan for capital costs;
* Stability and reliability of financial plan for operating and
maintenance costs;
* Level of non-Small Starts funding;
New Starts:
* Stability and reliability of financial plan for capital costs;
* Stability and reliability of financial plan for operating and
maintenance costs;
* Level of non-New Starts funding.
Program requirements: Project development process;
Small Starts:
* Alternatives analysis;
* Project development;
* Construction;
New Starts:
* Alternatives analysis;
* Preliminary engineering;
* Final design;
* Construction.
Program requirements: Funding instrument;
Small Starts: Project will use a Project Construction Grant Agreement;
New Starts: Project requires a signed FFGA, which sets scope, cost, and
schedule for the project, as well as the maximum New Starts share,
source of other funds, and schedule for obligating funds.
Source: GAO analysis of FTA data.
[End of table]
In January 2006, FTA published an ANPRM to give interested parties an
opportunity to comment on the characteristics of and requirements for
the Small Starts program. In its ANPRM, FTA suggested that the planning
and project development process for proposed Small Starts projects
could be simplified by allowing analyses of fewer alternatives for
small projects, allowing the development of evaluation measures for
mobility and cost-effectiveness without the use of complicated travel
demand modeling procedures in some cases, and possibly defining some
classes of preapproved low-cost improvements as effective and cost-
effective in certain contexts. FTA also sought the transit community's
input on three key issues in its ANPRM, including eligibility, the
rating and evaluation process, and the project development process. For
each of these issues, FTA outlined different options for how to proceed
and then posed questions for public comment.
FTA's ANPRM for Small Starts generated a significant volume of public
comment. Members of the transit community were supportive of some
proposals for the Small Starts program, but also had a number of
concerns. In particular, the transit community questioned whether FTA's
proposals would, as intended, provide smaller projects with a more
streamlined evaluation and rating process. As a result, some commenters
recommended that FTA simplify some of its original proposals in the
NPRM to reflect the smaller scope of these projects. For example,
several project sponsors and industry representatives thought that FTA
should redefine the baseline alternative as the "no-build"
option[Footnote 20] and make the before-and-after study optional for
Small Starts projects to limit the time and cost of their development.
In addition, others were concerned that FTA's proposals minimized the
importance of the new land use and economic development evaluation
criteria introduced by SAFETEA-LU, and they recommended that the
measures for land use and economic development be revised.
Since FTA does not plan to issue its final rule for the New Starts and
Small Starts programs until early 2008, FTA issued final interim
guidance for the Small Starts program in July 2006 to ensure that
project sponsors would have an opportunity to apply for Small Starts
funding and proposed projects could be evaluated in the upcoming cycle
(i.e., the fiscal year 2008 evaluation cycle).[Footnote 21] The final
interim guidance describes the process that FTA plans to evaluate
proposed Small Starts projects to support (1) the decision to approve
or disapprove their advancement to project development and (2)
decisions on project construction grant agreements, including whether
proposed projects are part of a broader strategy to reduce
congestion.[Footnote 22] In addition, FTA introduced a separate
eligibility category within the Small Starts program for "Very Small
Starts" projects in the final interim guidance. Small Starts projects
that qualify as Very Small Starts are projects that have all of the
following elements:
* have substantial transit stations;
* include traffic signal priority and preemption, where appropriate;
* provide low-floor vehicles or level boarding;
* include branding of the proposed service;
* offer 10 minute peak and 15 minute off-peak headways or better while
operating at least 14 hours per weekday;[Footnote 23]
* are in corridors with existing riders who will benefit from the
proposed project and number more than 3,000 on an average weekday; and:
* have a total capital cost of less than $50 million (including all
project elements) and less than $3 million per mile (excluding rolling
stock).
According to the final interim guidance, FTA intends to scale the
planning and project development process to the size and complexity of
the proposed projects. Therefore, Very Small Starts projects will
undergo a very simple and streamlined evaluation and rating process.
For instance, according to the guidance, Very Small Starts projects are
cost-effective and produce land use and economic development benefits
commensurate with their costs; thus, if a project meets the Very Small
Starts eligibility criteria, it will automatically receive "medium"
ratings for land use and cost-effectiveness. Small Starts projects that
do not meet all of the criteria for Very Small Starts projects will be
evaluated and rated using a framework similar to that used for
traditional New Starts projects, with the exception that fewer measures
are required and their development is simplified. In particular, FTA's
evaluation and rating process for Small Starts will diverge from the
traditional New Starts process in several ways. For example,
* the project's cost-effectiveness will be rated based on a shorter
time frame (i.e., opening year);
* other technically acceptable ridership forecasting procedures,
besides traditional "four-step" travel demand models can be used;
* the opening year's estimate of user benefits will be adjusted upward
when determining a project's cost-effectiveness;
* the financial and land use reporting requirements have been
simplified; and:
* the project's economic development benefits and inclusion in a
congestion reduction strategy will be considered an "other factor" in
the evaluation process.
FTA Also Identified Possible Changes to the New Starts Program in
Response to SAFETEA-LU as Well as Implementation Challenges:
In response to SAFETEA-LU, FTA identified possible changes to the New
Starts program that would affect traditional New Starts projects in its
January 2006 guidance. According to FTA, some SAFETEA-LU provisions
could lead to changes in the definition of eligibility, the evaluation
and rating process, and the project development process. (See app. II
for a description of the different changes FTA is considering.) In the
guidance, FTA outlined changes it is considering and solicited public
input, through a series of questions, on the potential changes. For
example, FTA identified two options for revising the evaluation and
rating process to reflect SAFETEA-LU's changes to the evaluation
criteria. The first option would extend the current process to include
economic development impacts and the reliability of cost and ridership
forecasts. (See fig. 6.)
Figure 6: FTA's "Option 1" for Revising the New Starts Evaluation and
Ratings Framework:
[See PDF for image]
Source: GAO analysis of FTA data.
[End of figure]
Specifically, FTA suggested that economic development impacts and the
reliability of forecasts simply be added to the list of criteria
considered in developing the project justification rating. The second
option would be to develop a broader process to include the evaluation
criteria identified by SAFETEA-LU and to organize the measures to
support a more analytical discussion of the project and its merits.
(See fig. 7.) According to FTA, the second option would broaden the
evaluation process beyond a computation of overall ratings based on
individual evaluation measures and develop better insights into the
merit of a project than are possible from using the quantified
evaluation measures alone. In addition, the second option would also
consider the major uncertainties associated with any of the information
used to evaluate the project, such as ridership forecasts, cost
estimates, projected land use, and other assumptions. According to FTA,
understanding a project's uncertainties is needed for informed decision
making.
Figure 7: FTA's "Option 2" for Revising the New Starts Evaluation and
Ratings Framework:
[See PDF for image]
Source: FTA.
[End of figure]
In its guidance, FTA also identified potential challenges in
implementing some SAFETEA-LU changes. In particular, FTA described the
challenges of incorporating and distinguishing between two measures of
indirect benefits[Footnote 24] in the New Starts evaluation process--
land use and economic development impacts.[Footnote 25] For example,
FTA noted that its current land-use measures (e.g., land-use plans and
policies) indicate the transit-friendliness of a project corridor both
now and in the future, but do not measure the benefits generated by the
proposed project. Rather, the measures describe the degree to which the
project corridor provides an environment in which the proposed project
can succeed. According to FTA's guidance, FTA's evaluation of land use
does not include economic development benefits because FTA has not been
able to find reliable methods of predicting these benefits. FTA further
stated that because SAFETEA-LU introduces a separate economic
development criterion, the potential role for land use as a measure of
development benefits becomes even less clear, given its potential
overlap with the economic development criterion. In addition, FTA noted
that many economic development benefits result from direct benefits
(e.g., travel time savings), and therefore including them in the
evaluation could lead to double counting the benefits FTA already
measures and uses to evaluate projects. Furthermore, FTA noted that
some economic development impacts may represent transfers between
regions rather than a net benefit for the nation,[Footnote 26] raising
questions of whether these impacts are useful for a national comparison
of projects. To address some of the challenges, FTA suggested that an
appropriate strategy might be combining land use and economic
development into a single measure.
In our January 2005 report on the costs and benefits of highway and
transit investments, we identified many of the same challenges of
measuring and forecasting indirect benefits, such as economic
development and land-use impacts.[Footnote 27] For example, we noted
that it is challenging to predict changes in land use because current
transportation demand models are unable to predict the effect of a
transportation investment on land-use patterns and development, since
these models use land-use forecasts as inputs into the model. In
addition, we noted that certain benefits are often double counted when
evaluating transportation projects. In particular, indirect benefits,
such as economic development, may be more correctly considered
transfers of direct user benefits or economic activity from one area to
another. Therefore, estimating and adding such benefits to direct
benefits could constitute double counting and lead to overestimating a
project's benefits. Despite these challenges, experts told us that
evaluating land use and economic development impacts is important since
they often drive local transportation investment choices.[Footnote 28]
To help overcome some of the challenges, experts suggested several
potential solutions, including using qualitative information about the
benefits rather than relying strictly on quantitative information and
expanding the use of risk assessment or probability analysis in
conjunction with economic analysis. For example, weather forecasters
talk about the probability of rain rather than suggesting that they can
accurately predict what will happen. This approach could illustrate
that projects with similar rates of return have very different risk
profiles and different probabilities of success. FTA's second option
for revising the New Starts evaluation process, which would consider
qualitative information about the project and the project's
uncertainties, appear to be in line with these suggestions.
FTA received a large number of written comments on its online docket in
response to its proposed changes. (See app. II for common comments
submitted for each proposed change.) While members of the transit
community were supportive of some proposals, they expressed concerns
about a number of FTA's proposed changes. For example, a number of
commenters expressed concerns about FTA's options for revising the
evaluation process, noting that both proposals deemphasized the
importance of economic development and land use. For example, as
described in FTA's January 2006 guidance, land use would receive less
weight in calculating the overall project rating in both proposals than
it receives in the current process. Some commenters also noted that
land use and economic development should not be combined into a single
measure and that they should receive the same weight as cost-
effectiveness in the evaluation and rating process. These commenters
argued that combining land use and economic development into a single
measure or assigning them less weight than cost-effectiveness serves to
deemphasize these benefits.
Concluding Observations:
FTA's New Starts program is in a period of transition. SAFETEA-LU made
a number of significant changes to the program, and FTA is off to a
good start in implementing these changes. Tough decisions and
implementation challenges remain, however. For example, FTA must
determine how to incorporate economic development into the evaluation
process and implement the Small Starts program in the upcoming
evaluation cycle. Through the issuance of the final interim guidance on
the Small Starts program, FTA has acted to provide a streamlined
evaluation process for small projects by simplifying the evaluation
measures and introducing the Very Small Starts eligibility category. As
the Small Starts program is implemented in the upcoming cycle, FTA
officials will have the opportunity to determine whether the Small
Starts program is sufficiently streamlined and whether the streamlined
evaluation process provides adequate information to differentiate among
projects for funding purposes. FTA will also have the opportunity to
make necessary modifications to the Small Starts program as it learns
through its experience in implementing the program and working to
develop the final rule. Thus, the coming months will be a critical
period for the New Starts program, as FTA works through these remaining
decisions and implementation challenges to fully incorporate SAFETEA-LU
changes.
Agency Comments:
We provided a draft of this report to the Department of Transportation,
including FTA, for review and comment. FTA officials provided technical
clarifications, which we incorporated as appropriate.
[See PDF for image]
[End of figure]
Figure 22: We are sending copies of this report to the 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 GAO's 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 on (202) 512-2834 or at siggerudk@gao.gov.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. Individuals
making key contributions to this report were Nikki Clowers, Assistant
Director, Vidhya Ananthakrishnan, and Daniel Hoy.
Signed by:
Katherine Siggerud:
Director, Physical Infrastructure:
[End of section]
Appendix I: Scope and Methodology:
To address our objectives, we reviewed the administration's fiscal year
2007 budget request, the Federal Transit Administration's (FTA) annual
New Starts report, FTA's New Starts policy guidance and Small Starts
Advanced Notice of Proposed Rulemaking (ANPRM), public comments
received on FTA's docket on New Starts and Small Starts, FTA's fiscal
year 2008 reporting instructions for the New Starts program, federal
statutes pertaining to the New Starts program, and previous GAO
reports. We also interviewed FTA officials and representatives from the
American Public Transportation Association and the New Starts Working
Group. In addition, we attended FTA's New Starts/Small Starts Seminar
and Listening Session with project sponsors in Washington, D.C., in
March 2006.
We also conducted semistructured interviews with the sponsors of five
projects that were evaluated and rated in the fiscal year 2007
evaluation cycle, including Raleigh, Regional Rail System; Dallas,
Northwest/Southeast Light Rail Transit MOS; Minneapolis, Northstar
Corridor Rail; Philadelphia, Schuylkill Valley Metrorail; and Seattle,
University Link Light Rail Transit Extension. We selected these
projects because they represent different phases of project development
(preliminary engineering and final design), received different overall
project justification and finance ratings, varied in size based on the
project's total capital cost, received different levels of New Starts
funding, and are geographically diverse. We obtained this information
from FTA's annual New Starts report for fiscal year 2007. Our
interviews were designed to gain project sponsors' perspectives on
three main topics, including the impact of FTA's proposed changes to
the New Starts application and project development process during the
fiscal year 2008 evaluation cycle, FTA's implementation of the newly
established Small Starts program, and FTA's plans to align and revise
its evaluation and ratings process with the changes required by the
Safe, Accountable, Flexible, Efficient Transportation Equity Act: A
Legacy for Users (SAFETEA-LU). Specifically, we asked for their
opinions on how FTA plans to measure and weight new criteria in its
evaluation framework. We provided all project sponsors with a list of
topics and questions prior to our interviews, and we reviewed the
comments they submitted to FTA's docket. Because the five projects were
selected as part of a nonprobability sample, the results cannot be
generalized to all projects.
In addition to our interviews, we analyzed the content of the comments
submitted to FTA's docket on the New Starts policy guidance and the
Small Starts ANPRM to systematically determine the project sponsors'
views on key issues and identify common themes in their responses to
different questions. We received from FTA a summary of all the written
comments submitted to the docket on both the Small Starts ANPRM and the
New Starts guidance on policies and procedures. These comments were
organized by topic. To verify the accuracy of the summaries, we checked
20 percent of the comments against the original source
documents.[Footnote 29] Two analysts reached consensus on the coding of
the responses, and a third analyst was consulted in case of
disagreement to ensure that our codes were reliable.
To ensure the reliability of the information presented in this report,
we interviewed FTA officials about FTA's policies and procedures for
compiling the New Starts annual reports, including FTA's data
collection and verification practices for New Starts information.
Specifically, we asked the officials whether their policies and
procedures had changed significantly since we reviewed them for our
2005 report on New Starts.[Footnote 30] FTA officials told us that
there were no significant changes in their data collection and
verification policies and procedures for New Starts information.
Therefore, we concluded that the FTA information presented is
sufficiently reliable for the purposes of this report.
We conducted our work from February 2006 through August 2006 in
accordance with generally accepted auditing standards, including
standards for data reliability.
[End of section]
Appendix II: FTA's Proposed Changes to the New Starts Program:
In its January 2006 guidance, FTA identified possible long-term changes
to the New Starts program. According to FTA, some of these changes were
driven by SAFETEA-LU, while others were designed to improve the New
Starts program or correct past problems. Table 7 summarizes FTA's
proposed changes to the definition of eligibility, the evaluation and
rating process, and the project development process as well as FTA's
rationale for the proposed changes and the transit community's response
to the proposed changes.
Table 7: Changes to the New Starts Program Proposed by FTA and the
Transit Community's Response:
Proposed change: Definition of Eligibility: Definition of a fixed
guideway: FTA asks whether a Bus Rapid Transit project is a "fixed
guideway" project and whether FTA should fund high-occupancy vehicle
(HOV) projects to the degree that they provide benefits to public
transit riders;
FTA's rationale for change: A fixed guideway has not been specifically
defined in the statute;
Comments submitted by the transit community:
* The current definition of fixed guideway works well; thus, FTA should
make no changes;
* A minimum percentage of the guideway (e.g., 30-75 percent) should be
dedicated in order for a project to get funding;
* HOV projects should be funded by the Federal Highway Administration
(FHWA).
Proposed change: Project evaluation and ratings process: Evaluation
framework: FTA proposes two options for revising the evaluation
framework. Option 1 would extend the current framework to include
economic development impacts and the reliability of forecasting methods
for costs and ridership. Option 2 would be a broader framework that
incorporates the new evaluation factors specified by SAFETEA-LU and,
according to FTA, organizes the measures to better describe the merits
of the project, its effectiveness, and its cost-effectiveness;
FTA's rationale for change: The current evaluation framework can be
restructured to provide a more informative analytical discussion of the
project and its merits for New Starts funding;
Comments submitted by the transit community:
* Both proposed options raise concerns because they continue to define
cost-effectiveness only in terms of mobility;
* Neither proposed option gives enough weight to land use and economic
development.
Proposed change: Project evaluation and ratings process: Nature of the
problem or opportunity evaluation measure: FTA asks (1) whether
measures that represent the nature of the problem or the opportunity
the proposed projects are designed to address should be included in the
evaluation framework and (2) how FTA should evaluate or rate projects
that address significant transportation problems compared with projects
that take advantage of opportunities to improve service;
FTA's rationale for change: New Starts projects are intended to solve
specific transportation problems, take advantage of opportunities to
improve transportation services, or support economic development. In
particular, it is important in evaluating projects to understand what
problem the project is intended to solve;
Comments submitted by the transit community:
* Funding should be available for projects seeking to shape economic
development or to provide a solution to mobility problems.
Proposed change: Economic development impacts measure: FTA identifies
two options for characterizing economic development benefits: (1)
regional economic benefits and (2) station area development impacts.
FTA sought comment on whether there was preference for either option,
as well as on how to evaluate economic development and land use as
distinct and separate measures;
FTA's rationale for change: SAFETEA-LU identified economic impacts as a
new evaluation criterion;
Comments submitted by the transit community:
* Station area development benefits better isolate the effect of the
transit project. There are too many other variables associated with
regional economic benefits;
* FTA should use both regional and station area economic benefits;
* Land use and economic development should be separate measures and
have as much weight as cost-effectiveness;
* Differentiating between land use and economic development is
difficult.
Proposed change: Mobility benefits measure: FTA proposes to measure
mobility by using a combination of user benefits per passenger mile and
project ridership. FTA also asked whether other measures of mobility
benefits could be used;
FTA's rationale for change: The measure of mobility benefits ought to
capture the number of travelers that will benefit as well as the
magnitude of the benefit;
Comments submitted by the transit community:
* FTA should continue to work toward capturing transportation benefits
to highway users in a project corridor;
* FTA should analyze the impact of nonhome-based trips, trips generated
by special events, and automobile trips not taken because of enhanced
pedestrian activity established in a project corridor.
Proposed change: Mobility for transit dependents measure: FTA proposes
to measure mobility for transit dependents by the share of user
benefits accruing to the passenger in the lowest income stratum,
compared with the regional share of the lowest income stratum. FTA
asked whether this proposed measure would cause any implementation
difficulties and whether there were other measures FTA should consider;
FTA's rationale for change:
* Since low-income populations and households without access to
automobiles depend critically on the public transportation system to
provide basic mobility, access to jobs, health care, and other critical
services, projects that improve transit services for these populations
have special merit;
* FTA's previous measure--percentage of low-income households in the
project corridor--did not measure whether low-income riders actually
used the system;
Comments submitted by the transit community:
* An implementation difficulty would be the inconsistencies in regional
travel demand models--that is, some models are based on income, others
on automobile ownership, and some on both.
Proposed change: Environmental benefits measure: FTA proposes to
continue using the same environmental benefits measure, which uses the
projected change in regional vehicle miles traveled, to estimate the
change in various harmful types of vehicle emissions and energy
consumption;
FTA's rationale for change: No other measures have been identified;
Comments submitted by the transit community: FTA should retain its
current measure of environmental benefits.
Proposed change: Operating efficiency measure: FTA proposes removing
this measure as a separate evaluation criterion, relying instead on an
evaluation of cost-effectiveness to address the statutory criterion.
According to FTA, the impact of the project on operating and
maintenance costs is captured in the calculation of cost-
effectiveness;
FTA's rationale for change: The current measure--projected systemwide
change in operating cost per passenger mile--does not distinguish among
proposed projects, while the projected operating cost of the system is
a key component in calculating cost-effectiveness;
Comments submitted by the transit community: FTA should use the cost-
effectiveness evaluation measure to address the operating efficiency
criterion.
Proposed change: Cost-effectiveness measure: FTA proposes to broaden
the current cost-effectiveness measure to include nontransportation
benefits, such as economic development benefits, land use impacts, and
mobility benefits to transit dependents. FTA also suggests using two
cost-effectiveness measures--one for the forecast year as is done today
and the second calculated for the year the project opens;
FTA's rationale for change: The current measure reflects breakpoints
that anticipate nontransportation benefits, but this is not readily
apparent to the industry or decisionmakers;
Comments submitted by the transit community:
* Broadening the cost-effectiveness measure would increase the time and
cost of project development;
* FTA should use the consumer price index, not the gross domestic
product price index, to adjust the dollar value of the cost-
effectiveness threshold.
Proposed change: Financial capabilities measure: FTA proposes changing
the way the financial rating factors related to uncertainty are
incorporated into the evaluation process. Specifically, FTA suggests
using the project sponsor's ability to absorb funding shortfalls and
cost overruns as an explicit measure of financial risk;
FTA's rationale for change: SAFETEA-LU identifies the following factors
that FTA must use in evaluating financial capability: (1) the
reliability of forecasting methods for costs and ridership, (2)
existing grant commitments, (3) the degree to which funding sources are
dedicated, (4) debt obligations of the project sponsor, and (5) the non-
New Starts funding share;
Comments submitted by the transit community:
* It is unclear from the guidance who is responsible for assessing the
reliability of financial forecasts;
* The emphasis placed on the reliability of the financial forecast
should correlate to the stage of project development.
Proposed change: Reliability of forecasts measures: FTA proposes to
assess the risk and uncertainty inherent in project evaluation.
Specifically, FTA plans to evaluate the uncertainty associated with the
nature and severity of the problem, as well as individual measures of
project merit and cost-effectiveness measures;
FTA's rationale for change: SAFETEA-LU requires that the reliability of
the forecasting methods used to estimate costs be considered in the
evaluation of New Starts projects. The reliability factor is a way of
assessing the likelihood the cost and ridership projections will be
achieved;
Comments submitted by the transit community:
* Proposal is confusing;
* Recent experience with risk assessments suggests that the proposal
would require substantial effort with little reduction in uncertainty;
* FTA should place significant weight on the project sponsor's ability
to enhance the reliability of forecasts through the proven quality
control methods.
Proposed change: Development of project ratings: Currently, FTA
develops separate ratings for project justification and local financial
commitment, and then derives an overall project rating from these
component ratings using decision rules. FTA proposes to use a similar
process for rating projects. However, SAFETEA-LU requires that the
reliability of forecasts be incorporated into the ratings process and
FTA suggests different options for accomplishing this, such as using
probability weightings or using uncertainty indicators to decide the
outcome for ratings at the margins. FTA also seeks input about the
weights that should be assigned to each measure;
FTA's rationale for change: SAFETEA-LU requires that the reliability of
the forecasting methods used to estimate costs be considered in the
evaluation of New Starts projects;
Comments submitted by the transit community: Economic development and
land use should receive the same weight as cost- effectiveness.
Proposed change: Project development process: Local endorsement of the
financial plan: FTA proposes to require that project sponsors specify
all proposed sources of funding in the financial plan, and that the
sponsoring agency provide a letter endorsing the proposed financial
strategies and amounts of planned funding by those agencies identified
as funding sources;
FTA's rationale for change:
* SAFETEA-LU requires that FTA ensure that proposed New Starts projects
are supported by an acceptable degree of local financial commitment and
resources;
* FTA has experienced situations in which a project's financial plans
state that local agencies will provide funding, but in reality those
local agencies do not support the project plan;
Comments submitted by the transit community:
* Securing an endorsement will be overly burdensome and delay project
development;
* FTA should not dictate when project sponsors receive financial
commitments;
* It is hard to fully secure funding commitments in preliminary
engineering (PE) and final design (FD).
Proposed change: Project development process: Approval of the baseline
alternative: FTA proposes to maintain the current approval process and
definition of the baseline alternative. However, FTA asks whether the
baseline can be more clearly defined and whether there is a way to
report on the benefits of the project, including the benefits
attributable to the difference between the no-build and the baseline
alternatives;
FTA's rationale for change: There has been significant confusion over
the definition of the baseline alternative;
Comments submitted by the transit community:
* More clarity is needed on how FTA defines baseline alternative;
* Selection of baseline alternative should not be driven by FTA.
Proposed change: Project development process: On-board transit survey:
FTA is considering requiring that a recent survey of transit riders be
used to inform the travel- forecasting procedures used during
alternatives analysis. FTA suggests that "recent" could be defined as
within the 5 years preceding a request to enter PE;
FTA's rationale for change: Data on current ridership patterns are
essential to the development of reliable forecasts;
Comments submitted by the transit community:
* Surveys are expensive and may be unnecessary in some areas;
* FTA should consider other means of collecting data on ridership, such
as electronic fare collection data and small sample surveys.
Proposed change: Project development process: Preliminary engineering
purpose and exit criteria: FTA is considering defining the PE phase as
the process of finalizing the project's scope, cost, and financial plan
such that (1) all environmental impacts are identified and adequate
provisions are made for their mitigation in accordance with the
National Environmental Policy Act, (2) all major or critical project
elements are designed to the level that no significant unknown impacts
relative to their costs will result, and (3) all cost estimating is
complete to a level of confidence necessary for the sponsor to
implement the financing strategy;
FTA's rationale for change: FD is intended to be used to develop
documents for construction. As such, all issues related to significant
scope and cost should be resolved in PE;
Comments submitted by the transit community: * A clearer definition of
the PE phase is needed to help project sponsors target resources; *
Design costs will be frontloaded, thereby increasing the costs of PE.
Proposed change: Project development process: Project reaffirmation by
the metropolitan planning organization (MPO): FTA is considering
requiring that the sponsoring agencies reaffirm their adoption of the
project, in its final configuration and costs, in the MPO's long-range
transportation plan as part of the application to advance the project
to FD;
FTA's rationale for change: Before a project is approved for
advancement into PE, the project must be adopted by the MPO into its
long-range transportation plan. However, a project's scope and costs
may change during the PE phase. Thus, this requirement would ensure
that a revised project still conforms to the MPO's transportation plans
and financial constraint requirements;
Comments submitted by the transit community:
* Creates another step that will increase the time and cost of project
development;
* Duplicates sponsoring agencies' ongoing work with the MPO and
provides no added certainty;
* Will likely have limited impact on local financial endorsement;
* Inconsistent with FHWA regulations.
Proposed change: Project development process: New Starts funding share
incentives: FTA asks how it should implement the provision in SAFETEA-
LU that would give FTA discretion to provide a higher percentage of New
Starts funding than that requested by the project sponsor as an
incentive to produce reliable ridership and cost estimates;
FTA's rationale for change: SAFETEA-LU allows the Secretary to provide
a higher grant percentage than requested by the project sponsor if (1)
the net cost of the project is not more than 10 percent higher than the
net cost estimated at the time the project was approved for advancement
into PE, and (2) the ridership estimated for the project is not less
than 90 percent of the ridership estimated for the project at the time
the project was approved for advancement into PE;
Comments submitted by the transit community:
* Incentive money should be invested back into the New Starts program;
* Incentive should focus on the project's outcomes like project
impacts.
Source: GAO analysis of FTA guidance and public comments posted on
FTA's docket.
[End of table]
(542086):
FOOTNOTES
[1] Fixed guideway systems use and occupy a separate right-of-way for
the exclusive use of public transportation services. These systems
include fixed rail, exclusive lanes for buses and other high-occupancy
vehicles, and other systems.
[2] This is the amount appropriated through fiscal year 2006, according
to FTA.
[3] Commitment authority is the amount of funding Congress has
authorized FTA to commit to New Starts projects for a given period of
time.
[4] The fiscal year 2007 evaluation cycle began in May 2005 with the
issuance of the New Starts reporting instructions. Applications were
due in August 2005, and FTA evaluated the applications in the fall of
2005. The annual report was published in February 2006 and included
funding recommendations for fiscal year 2007.
[5] The New Starts Working Group is an organization of New Starts
project sponsors, metropolitan planning organizations, and private
industry transit firms that advocate on behalf of the New Starts
program and specific projects.
[6] Projects with pending FFGAs have been previously recommended for
FFGAs by FTA; however, the FFGAs have not been executed. FTA expects to
execute both pending FFGAs by the end of fiscal year 2006.
[7] In July 2006, FTA issued final interim guidance that will govern
the Small Starts evaluation and rating process until the final rule is
issued in early 2008.
[8] GAO, Highway and Transit Investments, Options for Improving
Information on Projects' Benefits and Costs and Increasing
Accountability for Results, GAO-05-172 (Washington, D.C.: Jan. 24,
2005).
[9] During the preliminary engineering phase, project sponsors refine
the design of the proposal, taking into consideration all reasonable
design alternatives and estimating their costs, benefits, and impact
(e.g., financial or environmental). According to FTA officials, to gain
approval for entry into preliminary engineering, a project must (1) be
identified through the alternatives analysis process, (2) be included
in the region's 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. Some federal New Starts
funding is available to projects for preliminary engineering
activities, if so appropriated by Congress.
[10] Final design is the last phase of project development before
construction and may include right-of-way acquisition, utility
relocation, and the preparation of final construction plans and cost
estimates.
[11] As will be discussed later in this report, SAFETEA-LU identified
additional criteria for FTA to use in its evaluation and rating
process. However, according to FTA's January 2006 proposed guidance,
FTA does not plan to change the current framework and methodology for
evaluating and rating New Starts projects before publishing the new
final rule for its New Starts program, which is expected in January
2008. However, FTA did incorporate several SAFETEA-LU changes in the
fiscal year 2007 evaluation and rating process, including using a
revised rating scale and downgrading the emphasis placed on the federal
share. These changes will be discussed later in this report.
[12] The administration's funding recommendations are made in the
President's budget and are included in FTA's annual New Starts report
to Congress, which is released each February in conjunction with the
President's budget.
[13] FTA does not evaluate and rate projects that already have FFGAs or
that are in alternatives analysis.
[14] Projects with requests for less than $25 million in New Starts
funding were not evaluated and rated during the fiscal year 2007 cycle;
however, these projects will be evaluated and rated as "Small Starts"
once the final rule for the Small Starts program is in place, as
specified in section 5309(e)(B) of SAFETEA-LU.
[15] These projects include Boston, Silver Line Phase III; El Paso,
Starter Line; Ft. Collins, Mason Transportation Corridor; Kansas City,
Southtown BRT; Las Vegas, Resort Corridor Downtown Monorail; Los
Angeles, Exposition Corridor; New Orleans, Desire Streetcar; Orange
County, CenterLine LRT; San Diego, Mid-Coast LRT; San Jose, Silicon
Valley Rapid Transit Corridor; South Wasilla, Track Realignment; and
Tampa Bay, Regional Rail System.
[16] SAFETEA-LU exempted four projects from a requirement to have a
medium cost-effectiveness rating.
[17] SAFETEA-LU, section 3043(a) (31) and 3043(j).
[18] GAO, Public Transportation: Opportunities Exist to Improve the
Communication and Transparency of Changes Made to the New Starts
Program, GAO-05-674 (Washington, D.C.: June 28, 2005). SAFETEA-LU
requires that FTA publish, for comment and response, policy guidance on
the new fixed guideway capital project review and evaluation process
and criteria at the following times: (1) 120 days after the enactment
of SAFETEA-LU, (2) each time significant changes are made to the
process and criteria, and (3) at least every 2 years.
[19] GAO-05-674.
[20] FTA requires that the benefits and costs of the proposed New
Starts project be assessed in comparison with a baseline alternative
defined as the best that can be done without building a new fixed
guideway. The purpose of the baseline alternative is to distill the
benefits (and costs) of the proposed New Starts project from the
benefits that could be achieved through low-cost improvements, such as
route realignments and increases in service frequency, that would not
entail the significant cost of a New Starts project's infrastructure.
FTA defines the no-build alternative in two ways: (1) an alternative
that incorporates "planned" improvements that are included in the
fiscally constrained long-range plan for which need, commitment,
financing, and public and political support are identified and are
reasonably expected to be implemented or (2) an alternative that adds
only "committed" improvements together with minor transit service
expansions or adjustments that reflect a continuation of existing
service policies in newly developed areas.
[21] Prior to the issuance of the final interim guidance, FTA issued
proposed interim guidance on the Small Starts program in June 2006 for
review and comment. FTA received comments from members of the transit
community. A concern expressed in the comments was that Very Small
Starts projects unfairly favored bus projects, due to the exclusion of
fixed guideway as a criterion for eligibility. Based on the comments
received, FTA made several changes to the final interim guidance,
including eliminating the requirement that Very Small Starts projects
do not include the construction of a new fixed guideway.
[22] FTA's emphasis on congestion relief reflects DOT's ongoing efforts
to reduce the nation's congestion. Specifically, in May 2006, DOT
issued the National Strategy to Reduce Congestion on America's
Transportation Network, which outlines a six-point plan for reducing
congestion. To implement this plan, DOT states that it will use
discretionary resources, potentially including Small Starts funds, to
the maximum extent possible.
[23] This feature is not required for commuter rail or ferries.
[24] Direct benefits of transportation investments, such as lowered
transportation costs and improved access to goods and services, result
in individuals, households, and firms acting to take advantage of those
benefits. These actions can then lead to several types of indirect
benefits, such as increased property values and new development.
[25] SAFETEA-LU added economic development to the list of evaluation
criteria; it also identified land use as a specific evaluation
criterion. Under TEA-21, land use was not identified as an evaluation
criterion, but rather as a "consideration" in the evaluation process,
and FTA incorporated it into the evaluation process.
[26] Indirect benefits, such as economic development, may represent
transfers of economic activity from one area to another; and, while
such a transfer may represent real benefits for the jurisdiction making
the transportation investment, it is not a real economic benefit from a
national perspective because the economic activity is simply occurring
in a different location.
[27] GAO-05-172.
[28] For our January 2005 report on the costs and benefits of highway
and transit investments, we contracted with the National Academy of
Sciences to convene a balanced, diverse panel of experts to discuss the
use of benefit-cost analysis in highway and transit decision making and
gather views about options to improve the information available to
decision makers. The experts selected for the panel were knowledgeable
about benefit-cost analysis, transportation policy and planning,
highway and transit use and transportation decision making. For more
information about our expert panel, see GAO-05-172.
[29] All written comments are available at http://dms.dot.gov.
[30] GAO-05-674.
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