Principles for Allocation of Funds

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The funding recommendations contained in this report are the result of an extensive project development and evaluation process. All of the projects recommended for funding have completed this process, have been found by FTA to be worthy of a Federal funding commitment based on a comprehensive review of project justification and local financial commitment, and have either been issued FFGAs already or are strong candidates for FFGAs in the coming year.

To be eligible for new starts funding, proposed projects must complete the appropriate steps in the planning and project development process, as described in §§5303-5306 and §5309, and receive a rating of "recommended" or higher in the most recent FTA evaluation.

Planning and Project Development Process

To be eligible for FTA capital investment funds for a new starts project, the proposed project must emerge from the metropolitan and/or Statewide planning process. Local officials must perform a corridor-level analysis of mode and alignment alternatives. This alternatives analysis will provide information on the benefits, costs, and impacts of alternative strategies, leading to the selection of a locally-preferred solution to the community's mobility needs. (The FTA/FHWA planning and environmental regulations (23 CFR Parts 450 and 771), which required a Major Investment Study (MIS) that fulfilled the requirement for alternatives analysis, are being revised in accordance with TEA-21.)

When the sponsoring agency for a new starts project desires to initiate the preliminary engineering phase of project development, it must submit a request to the appropriate FTA regional office. The request must provide information on the metropolitan and/or Statewide plan that identifies the project, including the adoption of the project into the metropolitan transportation plan and the programming of the preliminary engineering activity in the Transportation Improvement Plan (TIP). The request must also address the project justification and local financial commitment criteria outlined below. (This information is normally developed as part of an alternatives analysis.) FTA will then evaluate the proposed project as required by 49 USC §5309(e)(6) and determine whether or not to advance the project into preliminary engineering. FTA approval to initiate preliminary engineering is not a commitment to fund preliminary engineering, final design, or construction.

During the preliminary engineering phase, local project sponsors refine the design of the proposal, taking into consideration all reasonable design alternatives. The process results in estimates of project costs, benefits and impacts in which there is a higher degree of confidence. In addition, requirements under the National Environmental Policy Act (NEPA) are completed (for new starts, this will normally entail the completion of an environmental impact statement), project management concepts are finalized, and any required local funding sources are put in place. Information on project justification and the degree of local financial commitment will be continually updated and reported as appropriate. As part of their preliminary engineering activities, localities are encouraged to consider policies and actions designed to enhance the benefits of the project and its financial feasibility.

Final design is the last phase of project development, and may include right-of-way acquisition, utility relocation, and the preparation of final construction plans (including construction management plans), detailed specifications, construction cost estimates, and bid documents. The final design stage cannot be initiated until environmental requirements have been satisfied, as evidenced by a Record of Decision (ROD) or a Finding of No Significant Impact (FONSI). Consistent with 49 USC §5309(e)(6), FTA will approve entry into final design based on the results of the project evaluation process.

is the last phase of project development, and may include right-of-way acquisition, utility relocation, and the preparation of final construction plans (including construction management plans), detailed specifications, construction cost estimates, and bid documents. The final design stage cannot be initiated until environmental requirements have been satisfied, as evidenced by a Record of Decision (ROD) or a Finding of No Significant Impact (FONSI). Consistent with 49 USC §5309(e)(6), FTA will approve entry into final design based on the results of the project evaluation process.

The Criteria

As proposed new starts projects proceed through the stages of the planning and project development process, they are evaluated against the full range of criteria for project justification and local financial commitment contained in §5309(e). In both cases, FTA relies on a multiple-measure approach to assign ratings; these ratings are updated throughout the preliminary engineering and final design processes, as information concerning costs, benefits, and impacts is refined. The results of these evaluations are used to make the required approvals for entry into preliminary engineering and final design, to execute an FFGA, and to make annual funding recommendations to Congress.

While TEA-21 made a number of significant changes to the new starts program, as noted earlier in this report, it left the statutory criteria for project justification and local financial commitment largely intact. Aside from the prohibition against establishing dollar values for mobility improvements, most of the changes to the criteria themselves involved additions to the "considerations" that FTA must take into account when evaluating project justification.

TEA-21 retains the following criteria for evaluating project justification:

  • Mobility improvements
  • Environmental benefits
  • Operating efficiencies
  • Cost effectiveness

Based on the emphasis placed on land use issues by both TEA-21 and the earlier Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), FTA has also established criteria for evaluating transit-supportive existing land use policies and future patterns. Consistent with §5309(e)(3)(H), FTA also includes a variety of "other factors" when evaluating project justification, including a) the degree to which the policies and programs (local transportation planning, programming and parking policies, etc.) are in place as assumed in the forecasts, b) project management capability, and c) additional factors relevant to local and national priorities and relevant to the success of the project.

Section 5309(e)(1)(C) requires that proposed projects also be supported by an acceptable degree of local financial commitment, including evidence of stable and dependable financing sources to construct, maintain and operate the system or extension. Again, TEA-21 retains the basic criteria and the statutory considerations. The only significant revision is that consideration of local funding beyond the required minimum, already an FTA consideration when rating projects, has been incorporated into statute. The criteria for evaluation of the local financial commitment to a proposed project are:

  • The proposed share of total project costs from sources other than §5309, including Federal formula and flexible funds, the local match required by Federal law, and any additional capital funding ("overmatch");
  • The strength of the proposed capital financing plan; and
  • The ability of the sponsoring agency to fund operation and maintenance of the entire system as planned, including existing service, once the guideway project is built.

The Evaluations

As noted above, FTA evaluates proposed new starts projects against the full range of criteria for both project justification and local financial commitment, using a multiple-measure method. Project evaluation is an ongoing process; as proposed new starts proceed through the project development process, information concerning costs, benefits, and impacts is refined, and the ratings updated to reflect new information. However, the ratings reported in this document are final for purposes of the Presidentís budget request.

For each of the project justification criteria, the proposed new start is evaluated against both a no-build and a Transportation System Management (TSM) alternative (a package of low to moderate cost improvements designed to make more efficient use of an existing transportation system). For each proposed project, FTA assigns one of five descriptive ratings ("high," "medium-high," "medium," "low-medium," or "low") for each of the five criteria, with "other factors" considered as appropriate. The same is true for the three factors used to evaluate local financial commitment.

Perhaps the most significant change to the project evaluation process brought by TEA-21 is the requirement to establish summary ratings for each proposed project. Consistent with §5309(e)(6), summary ratings of "highly recommended," "recommended," or "not recommended" are assigned to each proposed project, based on the results of the review and evaluation of each of the criteria for project justification and local financial commitment. To assign these summary ratings, the individual ratings for each of the financial rating factors and project justification criteria are combined into overall "finance" and "justification" ratings, which in turn are combined to produce the summary ratings.

In evaluating the project justification criteria, FTA gives primary consideration to the measures for transit supportive land use, cost effectiveness, and mobility improvements to arrive at the combined "justification" rating. For local financial commitment, the measures for the proposed local share of capital costs and the strength of the capital and operating financing plans are the primary factors in determining the combined "finance" rating.

For a proposed project to be rated as "recommended," it must be rated at least "medium" in terms of both finance and justification. To be "highly recommended," a proposed project must be rated higher than "medium" for both finance and justification. Proposed projects not rated at least "medium" in both finance and justification will be rated as "not recommended."

These ratings are used both to approve entry into preliminary engineering and final design, as required under §5309(e)(6), and to recommend proposed projects for Federal funding commitments. A proposed project must receive a rating of at least "recommended" in order to be approved for any of these purposes.

The permanent approach FTA will use to assign these summary ratings will be detailed in the upcoming regulation on project evaluation required by TEA-21 and incorporated into 49 USC §5309(e)(5). In the absence of a Final Rule, however, FTA must still use the principles established by TEA-21 to evaluate proposed new starts, assign project ratings, and recommend funding for FY 2001. Therefore, the project ratings and funding recommendations contained in this report reflect an application of FTAís existing project evaluation process, as published in the Federal Register on December 19, 1996 and amended on November 12, 1997 (61 FR 67093-106 & 62 FR 60756-58). The only significant change is that, due to the TEA-21 provision, the value of travel time savings is no longer reported for mobility improvements; instead, travel time savings is reported in terms of hours.

The results of the project evaluation process for the FY 2001 recommendations are reported in Table 1. Ratings are established for proposed projects that are in preliminary engineering and final design only; projects undergoing alternatives analysis typically have not developed sufficient information for meaningful evaluation. Also not listed are projects for which FFGAs have already been issued, as the decision to commit to a project represents the final determination of project justification.

Appendix A provides a more detailed profile for each project for which an FFGA has been issued, as well as for projects in final design and preliminary engineering. Profiles for projects with FFGAs include a description, status, list of funding sources and map. Profiles for projects in final design and preliminary engineering include a description, status, list of funding sources, map, and a presentation of the project evaluation criteria and ratings. Each of these profiles includes a summary description which highlights the overall project ratings and presents key descriptive, cost and ridership data for each proposed new starts project compared to the no-build alternative.

Appendix B provides a brief description and status for other planning studies and projects which were authorized in Section 3030 of TEA-21, but which have not yet entered preliminary engineering.

It is important to note that a rating of "recommended" does not translate directly into a funding recommendation in any given fiscal year. Rather, the overall project ratings are intended to reflect overall project merit. Proposed projects that are rated "recommended" or "highly recommended," and have been sufficiently developed for consideration of a Federal funding commitment, will be eligible for funding recommendations in the Administration's proposed budget.

Table 1: Summary of New Start Project Ratings for FY 2000 Budget

In determining which projects can be expected to be ready for FFGAs and thus be recommended for funding in the Administrationís budget proposal, FTA applied more strict readiness and technical capacity tests for FY 2001 than have been used in the past. To ensure that the recommended projects are fully developed, FTA took additional steps to assure that no outstanding project scope or cost issues remained (e.g., rail right of way acquisition issues), and that there were no local financial commitment issues outstanding. In addition, FTA considered: 1) the degree to which the agency has a satisfactory plan to manage the existing bus fleet, to ensure no degradation of service for users of the current system; 2) compliance with the Americans with Disabilities Act of 1990 (ADA), including financial commitments necessary to maintain accessible service, make necessary improvements, and comply with key station requirements; and 3) satisfactory Air Quality Conformity status of the region.

As noted above, project evaluation is an ongoing process. The ratings contained in this report are based on project information available through November 1999. As proposed new starts proceed through the project development process, the estimates of costs, benefits, and impacts are refined. The FTA ratings and recommendations will be updated annually for purposes of this report, as well as at the time a request is made to enter preliminary engineering or final design, or to enter into an FFGA. It must be stressed, however, that the ratings reported in this document are final for purposes of the Presidentís budget request to Congress. Updated project information and ratings will be reviewed as part of the budget development process for the next fiscal year.

Principles for Funding Recommendations

As noted above, the project ratings established by TEA-21 are intended to reflect overall project merit; proposed projects that are rated as "recommended" or higher are eligible for Federal funding. Thus, a rating of "recommended" does not translate directly into a funding recommendation or commitment in any given year. To be recommended for funding in this report, proposed projects rated as "recommended" or "highly recommended" must also be sufficiently developed for consideration of an FFGA.

The following general principles are also applied when determining annual funding allocations among proposed new starts:

  • Any project recommended for new funding commitments should meet the project justification, finance, and process criteria established by §5309(e) and be consistent with Executive Order 12893, "Principles for Federal Infrastructure Investments," issued January 26, 1994.
  • Existing FFGA commitments should be honored before any additional funding recommendations are made, to the extent that funds can be obligated for these projects in the coming fiscal year.
  • The FFGA defines the terms of the Federal commitment to a specific project, including funding. Upon completion of an FFGA, the Federal funding commitment has been fulfilled. Additional project funding will not be recommended. Any additional costs beyond the scope of the Federal commitment are the responsibility of the grantee.
  • Funding for initial planning efforts such as alternatives analysis is provided through the §5303 Metropolitan Planning or §5307 Urbanized Area Formula Grants programs; §5309 funds should not be used for this purpose.
  • Firm funding commitments, embodied in FFGAs, should not be made until the final design process has progressed to the point where costs, benefits, and impacts are accurately known.
  • Funding should be provided to the most worthy projects to allow them to proceed through the process on a reasonable schedule, to the extent that funds can be obligated to such projects in the upcoming fiscal year. The results of the project evaluation process and resulting finance, justification, and overall ratings determine whether particular projects are "worthy."