Principles for Allocations 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 January26, 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.
  • The FFGA represents a contract between the Federal government and project sponsors to provide a specified amount of financial assistance for a specific project over a specified amount of time, subject to appropriations. Upon its completion, the Federal funding commitment has been fulfilled. Additional project funding will not be recommended.
  • Funding for initial planning efforts such as Major Investment Studies (MIS's) is provided through 5303Planning(Section 8) or 5307 Formula Grants (Section 9) programs; 5309 (Section 3) funds should not be used for this purpose.
  • 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 these requirements, the Department requires project sponsors to undertake a defined project development process.

The steps in the process begin with the development of a long-range 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 long-range 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, cost-effectiveness, 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 January26,1994, 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 FFGA's. LOI's 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.)

Section 5309(e) (Section 3(i)) also provides 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 one-third of the total project cost or less than $25.00 million in funding from 5309 (Section 3). In addition, a number of individual projects were specifically exempt from the criteria under ISTEA. In these cases, FTA may still report ratings for such projects with respect to the 5309(e)(2)-(7) (Section 3(i)) criteria, but has been prohibited from using these ratings as a basis for funding recommendations.

Table2 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 selected planning studies (those in alternatives analysis prior to October1993 and those where Congressional interest has been demonstrated through authorizing and/or appropriations earmarks). It does not list those projects for which FFGA's have already been executed, 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 appropriate).

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 cost-effectiveness) stipulated in 5309(e)(2)-(7) (Section 3(i)). The second column lists the cost-effectiveness 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 completed. 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 local financial commitment for each project in terms of proposed Federal share of project cost, the acceptability of the 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 are ready for funds to be obligated. 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.

Go to Table 2

Revised Project Justification Criteria for New Starts

On December19, 1996, FTA published a Federal Register Notice describing revisions to the criteria used to evaluate candidate projects for discretionary New Starts funding. The purpose of these revisions is to more formally adopt the broader project justification criteria found in 5309(e)(2)-(7) (formerly Section 3(i)), which was expanded by ISTEA. These criteria will be used to evaluate projects for discretionary New Starts funding recommendations for FY 1999.

The Notice incorporates recommendations based on industry comments made in response to the September1994 Policy Paper entitled, "Revised Measures for Assessing Major Investments: A Discussion Draft." The discussion paper was circulated to transit operators, Metropolitan Planning Organizations (MPOs), State Departments of Transportation (DOTs), and other industry interests.

These criteria apply only to FTA for the purposes of making the statutory determination of project justification. The Notice does not represent additional requirements in the project planning process. Timely and accurate project information will be essential for FTA to make an informed determination, however.

Section 5309(e)(2)-(7) (formerly Section 3(i)) requires a project to be "A)based on the results of an alternatives analysis and preliminary engineering; B)justified based on a comprehensive review of its mobility improvements, environmental benefits, cost effectiveness, and operating efficiencies; and C) supported by an acceptable degree of local financial commitment, including evidence of stable and dependable financial sources to construct, maintain, and operate the [project]." The Notice sets forth the approach FTA will use to evaluate candidate projects in terms of their justification and local financial commitment. Beginning next year, these criteria will be used to evaluate projects in order to make recommendations for funding these projects in this report.

Pilot Assessment of Land Use Policies and Conditions

One of the project justification criteria formalized by the Federal Register Notice involves transit supportive land use. While FTA has considered land use factors when making funding recommendations in previous years, there has been no specific rating. The Notice establishes a mechanism for rating transit-supportive land use in a manner similar to that used for the financial ratings.

The measure for transit-supportive existing land use policies and future patterns will assess the degree to which local land use policies are likely to foster transit supportive land use, measured in terms of the kinds of policies in place and the commitment to those policies. Projects will be evaluated according to the following six factors: 1)existing land use; 2)containment of sprawl; 3)transit-supportive corridor policies; 4)supportive zoning regulations near transit stations; 5)tools to implement land use policies; and 6)the performance of land use policies. Ratings of high, medium, and low will be assigned to each of these factors, along with descriptive ratings; this will provide both a "summary" rating for each factor and its definition. The ratings for each factor will then be combined into a single ordinal rating for transit supportive land use.

In anticipation of the revisions to the project justification criteria, in September1996, FTA initiated a pilot assessment of new start projects in terms of transit supportive land use policies and existing conditions. The results of this assessment are shown in this Report, but were not used to determine project justification for FY 1998 funding recommendations. A group of projects in the preliminary engineering (PE) stage of development were selected and offered the opportunity to participate in this voluntary effort. In September1996, the respective transit agencies, metropolitan planning organizations (MPO's), and FTA Regional Offices were informed by letter of the pilot project. Participants received a one-page list of issues on which FTA was interested in obtaining documentation and feedback. FTA, with the assistance of a contractor, examined the materials submitted by participants to assess the projects' policies, intent, commitment, and displayed ability to achieve transit-supportive goals.

Four aspects of land use were considered at the corridor and station level: 1)policies; 2)current and forecast land use and development patterns; 3)development and planning processes; and 4)implementation of policies and programs. This pilot assessment also attempted to identify corridor policies related to transit-oriented development, such as a)mixed-use development; b)pedestrian-friendly design; c)high-density development; d)parking management; and e)joint development.

Ten projects participated in the pilot assessment: Dallas/North Central; KansasCity/Southtown, Miami/East-West, Miami/North 27th Avenue, NewOrleans/Canal Streetcar, Orlando/I-4Central Florida, Portland/South-North, SanDiego/Mid-Coast, SanFrancisco/Bayshore, and Washington,D.C./Metrorail to Largo. Information obtained from these projects is briefly summarized in the "OtherFactors" section of the project profiles in Appendix A. It is important to note that the projects reviewed reflect different stages of development and that more specific policies and implementation strategies will be in place as development progresses. Is it also important to note that some areas have an established history of fixed guideway transit and transit-oriented development while others are just learning and applying such concepts.

FTA is reviewing the pilot effort and developing recommendations for next year's application of the evaluative land use criteria. The 1998 edition of this Report (for FY 1999 funding recommendations) will assign ratings in a manner similar to that used for the financial assessments.

A Word About Full Funding Grant Agreements (FFGA's)

The Full Funding Grant Agreement (FFGA) is the principal means used by FTA to manage the New Starts caseload and provide Federal financial assistance for New Starts projects. FTA also has the discretion to use an FFGA in awarding Federal assistance for other major capital projects.

The FFGA defines the project, including cost and schedule; commits to a maximum level of Federal financial assistance (subject to appropriation); establishes the terms and conditions of Federal financial participation; covers the period of time for completion of the project; and helps to manage the project in accordance with Federal law. The FFGA assures the grantee of predictable Federal financial support for the project (subject to appropriation) while placing a ceiling on the amount of that Federal support.

An FFGA also limits the exposure of FTA and the Federal government to project cost overruns that result from inadequate planning, design and/or engineering at the local level. FTA is primarily a grantmaking agency; it is not directly involved in the design and construction of new starts projects. While FTA is responsible for ensuring that planning projections are based on realistic assumptions and that design and construction follow acceptable industry procedures, it is the responsibility of project sponsors to ensure that proper planning, design and engineering was performed.