Principles for Allocation of Funds

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This report recommends the allocation of these funds among the various New Starts projects that have been proposed. The recommendations are based on the following principles:

Any project recommended for new funding commitments should meet the project justification, finance, and process criteria established by §5309(e)(2)­(7) (Section 3(i)) and be consistent with Executive Order 12893, "Principles for Federal Infrastructure Investments," issued January 26, 1994.

Existing or pending FFGA commitments should be honored before any additional commitments are made, to the extent that these projects are likely to be capable of obligating funds in the coming fiscal year.

Statutory authorizations contained in ISTEA should be honored to the extent that projects are ready for funding. However, funds should not be made available by FTA before obligations are required to permit project development to proceed, nor should initial planning be funded by §5309 (Section 3). Instead, §5303 Planning (Section 8) or §5307 Formula Grants (Section 9) funds should be used.

Firm funding commitments, embodied in FFGAs, should not be made until preliminary engineering is substantially complete since costs, benefits, and impacts are not accurately known until this level of engineering approaches completion.

Letters of Intent (LOI) (ultimately anticipating FFGAs) authorized by §5309(g) (Section 3(a)(4)) should be issued only to worthy projects which have progressed to the point (generally through an MIS, at a minimum) that their justification and level of local financial commitment can be established with some certainty.

LOIs should be awarded to the best projects, in terms of financial commitment and other project justification criteria, in an order which is based on the degree to which each project meets these criteria.

Funding should be provided to the most worthy projects to allow them to proceed through the process on a reasonable schedule, to the extent such projects are likely to be capable of obligating funds in the upcoming fiscal year.

Proposed projects become candidates for discretionary New Starts funding by virtue of having successfully completed the appropriate steps in the project development process. To assure that projects proposed for discretionary New Starts funding meet the requirements of ISTEA, the Department requires project sponsors to undertake a defined project development process.

The steps in the process begin with the development of a long­range transportation plan, during which future needs and strategies for addressing those needs are identified. Where the need for a major transportation investment is identified as part of a region's long­range planning process, a major investment study is undertaken to evaluate the merits of alternative technologies and alignments. These planning studies and subsequent preliminary engineering develop information on the justification for the projects and the financial plans which demonstrate the sponsor's ability to meet the local matching share and to build and operate the projects. Finally, projects undergo final design, during which detailed engineering takes place.

As projects proceed through the stages of the planning and development process, they are evaluated against the full range of project justification criteria contained in §5309(e)(2)­(7) (Section 3(i)) to determine whether consideration of a Federal funding commitment is warranted. Section 5309(e)(2)­(7) (Section 3(i)) requires that projects be justified based on a comprehensive review of mobility improvements, environmental benefits, cost­effectiveness, operating efficiencies, and other factors such as land use and economic development. In addition, stable and dependable local funding must be sufficient to assure that the project will be completed in a timely manner, that the project will be operated as planned, and that local financial resources are available to operate the proposed system. Consistent with Executive Order 12893, "Principles for Federal Infrastructure Investment," issued January 26, 1994, this analysis includes both quantifiable measures of benefits and costs as well as qualitative measures reflecting values that are not readily quantified.

The Section 5309(e)(2)­(7) (Section 3(i)) justification criteria apply to projects at all stages of development. As a project progresses through these stages and becomes increasingly refined, a higher degree of accuracy and certainty is expected. Comparisons among the projects, based on the evaluation of these criteria for each, are used to determine the best candidates for consideration of Federal discretionary funding. Projects that are (or are expected to be) under construction or in final design by the upcoming fiscal year, and are capable of obligating Federal discretionary funds, are considered to be candidates for FFGAs. LOIs are recommended when a project is ready to proceed and is justified based on the criteria contained in §5309(e)(2)­(7) (Section 3(i)), but outstanding issues remain. In such cases, FTA may acknowledge its commitment to a worthy project but require that outstanding issues be resolved before an FFGA is negotiated. (In certain cases, a project may require only minimal funding to complete the Federal commitment. When such funds can reasonably be provided in a single fiscal year, an FFGA is generally not considered to be necessary. A single grant would be issued instead.)

ISTEA provided for exemptions from the project justification criteria under certain circumstances. Specifically, a project is exempt from the criteria if it is located in an extreme or severe nonattainment area for air quality standards and is part of a transportation control measure required under a State Implementation Plan, or requires less than one­third of the total project cost or less than $25,000,000 in funding from §5309 (Section 3). In addition, ISTEA contained specific exemptions for a number of individual projects. In these cases, FTA may still report ratings for such projects with respect to the §5309(e)(2)­(7) (Section 3(i)) criteria, but cannot use these ratings as a basis for funding recommendations.

Table 2 provides a summary of the projects now in the New Starts "pipeline" and a summary evaluation of the projects in terms of project justification and local financial commitment. This table lists potential projects which are in final design, projects in preliminary engineering, and delected planning studies (those in alternatives analysis prior to October 1993 and those where Congressional interest has been demonstrated through ISTEA and/or appropriations earmarks). It does not list those projects for which FFGA's have already been negotiated, as the statutory determination of project justification has already been made. Appendix A provides a more detailed profile for each project, including the basis for the evaluation of the project (where available).

For each project, the total capital cost is shown in the first column, followed by four columns which rate projects in terms of project justification. These columns correspond to the wider range of project justification factors (including cost­effectiveness) stipulated in §5309(e)(2)­(7) (Section 3(i)). The second column lists the cost­effectiveness of each project in terms of the expected cost to attract each incremental transit trip; an "incremental transit trip" is defined as the difference between total transit ridership in the region with the proposed major investment, and total transit ridership with only low capital transit improvements in place (the "Transportation Systems Management" or TSM alternative). Mobility improvements are rated in the third column on the basis of hours of travel time per day projected to be saved when the project is constructed. The fourth column lists the Environmental Protection Agency (EPA) classifications for each city for ozone and carbon monoxide; information on emissions reductions attributable to each project can be found in Appendix A. Operating efficiencies are rated in the fifth column, based on the potential of each project to reduce systemwide operating cost per passenger.

The remaining three columns in the table show an assessment of each project's local financial commitment in terms of proposed Federal share of project cost, the acceptability of the project's capital financial commitment, and the stability and reliability of operating funding. Appendix A describes the criteria for rating local financial commitments for capital and operating costs.

Candidate projects for FFGAs or LOIs are chosen according to the relative merits of each as measured by the criteria shown in Table 2. Projects are considered to be candidates for FFGAs when their ratings in these categories justify a Federal commitment and they have reached a sufficient state of readiness to obligate funds. When outstanding issues are known to exist that affect the rating of an otherwise meritorious project against one or more of these criteria, that project will be considered for an LOI instead.

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