Project Evaluation and Rating Process
Section 5309(e) requires FTA to evaluate each proposed New Starts project according to a series of criteria for project justification and local financial commitment. As proposed projects proceed through the stages of the planning and project development process, they are evaluated against the full range of statutory criteria. Based on the results of this evaluation and consistent with Section 5309(e)(6), summary ratings of "Highly Recommended," "Recommended," or "Not Recommended" are assigned to each proposed project. The results of these evaluations are used as the basis for decisions regarding approval for entry into Preliminary Engineering and Final Design, to execute an FFGA, and to make annual funding recommendations to Congress. FTA relies on a multiple-measure approach to assign these ratings, which are updated throughout the Preliminary Engineering and Final Design processes as information concerning costs, benefits, and impacts is refined. The data used to evaluate and rate proposed projects are developed during the project development process, and are collected annually for the production of this report, as well as when individual project sponsors request approval to enter Preliminary Engineering or Final Design, and to receive an FFGA. The New Starts project evaluation criteria are in addition to the general grant eligibility requirements that apply to all FTA funding programs.
The criteria under which proposed New Starts projects must be evaluated are established by statute, required under 49 CFR Part 611; and contained in Section 5309(e), which specifies that the Secretary of Transportation may approve a grant or loan under the Section 5309 New Starts program only for projects that are:
- based on the results of Alternatives Analysis and Preliminary Engineering;
- justified based on a comprehensive review of mobility improvements, environmental benefits, cost effectiveness, and operating efficiencies; and
- 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.
As required by 49 CFR Part 611, the criteria for assessing project justification are evaluated according to the following:
- Mobility improvements
- Environmental benefits
- Cost effectiveness
- Operating efficiencies
- Transit-supportive existing land use, policies and future patterns
- Other factors
The first four criteria above are taken directly from statute. Although land use factors are not specifically included among the project justification criteria established by Section 5309(e)(1)(B), they are referenced repeatedly among the "considerations" that Section 5309(e)(3) directs FTA to take into account when evaluating project justification. Because of this emphasis, found in both the Transportation Equity Act for the 21st Century (TEA-21) and the earlier Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), FTA has established criteria for evaluating the extent to which existing land use, policies and future patterns are transit-supportive. Consistent with Section 5309(e)(3)(H), FTA also includes a variety of other factors when evaluating project justification, to account for project benefits not covered by the five criteria explicit in the law.
Section 5309(e)(1)(C) requires that proposed projects 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. 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 the New Starts section of Section 5309, including Federal formula and flexible funds, the local match required by Federal law, and any additional capital funding;
- The stability and reliability of the proposed capital financing plan; and
- The ability of the sponsoring agency to fund operation and maintenance of the entire transit system, including existing service, as planned, once the guideway project is built.
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 projects proceed through the project development process, information concerning costs, benefits, and impacts is refined, and the ratings are updated to reflect new information. The ratings reported in this document were used as part of the development of the Presidentís FY 2004 Budget Request, and, like all information contained in this report, are current for that purpose.
For each of the project justification criteria, the proposed New Starts project is evaluated against a "baseline alternative." The baseline alternative is best described as improvements to the transit system that are relatively low in cost and the "best that can be done" to improve transit service in the corridor without major capital investment for new infrastructure. Use of a "baseline alternative" results in a more realistic depiction of the benefits of a significant capital investment. For purposes of project evaluation and rating, project sponsors and FTA must agree on the definition of the baseline alternative for each proposed New Starts project.
In evaluating the project justification criteria, FTA gives primary consideration to the measures for cost effectiveness, transit supportive land use, and mobility improvements, though all criteria are an integral part of the evaluation process. FTA attempts to reflect the unique characteristics and objectives of each New Starts project as it applies the project justification criteria and other factors.
In evaluating 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 considered. The evaluations are based upon the status of the non-New Starts funding proposed in the projectís financial plans, the completeness of the financial plan, and the financial capacity of the project sponsor to undertake the major capital investment and operate and maintain the planned transit system over a 20-year period. FTA designates the funds proposed in each financial plan as existing, committed, budgeted, planned, uncertain or unspecified for the proposed major capital investment and ongoing operations and maintenance costs of the planned transit system.
The rating process also accounts for a proposed projectís stage of development. Recognizing that it is not possible to achieve the same level of detail or degree of certainty for projects in the early stages of Preliminary Engineering as those nearing the end of Final Design and contemplating an FFGA, FTA applies different rating standards at different stages of project development. Thus, a project in Final Design is expected to have all local funds committed and available to fund the project in order to achieve a "high" rating for its capital financing plan. In contrast, a project in Preliminary Engineering could be rated "high" if all funds have been identified and committed, but some of those funds are not yet available to the project. As projects move through the development process, FTA expects increasing certainty with regard to all project evaluation criteria, and the degree of difficulty in obtaining a "high" rating increases.
For each of the project justification criteria, a proposed New Starts project is evaluated against the baseline alternative. FTA assigns the proposed project 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 rating scale is used for the three factors considered to evaluate local financial commitment. The individual criterion ratings are then combined into overall finance and project justification ratings, which in turn are combined to produce summary ratings of "Highly Recommended," "Recommended," or "Not Recommended."
For a proposed project to be rated as "Recommended," it must be rated at least "medium" in terms of both finance and project 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 project justification receive an overall rating of "Not Recommended."
If a proposed project is rated as "Not Recommended," FTA indicates the area or areas that must be improved in order to improve the rating: "J" for justification, "O" for the operating funding plan, or "C" for the capital funding plan. Thus, if a proposed project that is found in need of improvement to its capital plan, it would be rated "Not Recommended (C)." A project requiring attention in all three areas would be rated "Not Recommended (JOC)." This provides project sponsors, local, State, and Federal decision-makers, and the public at large with a simple means to identify the basis for the rating.
These ratings are used both to approve entry into Preliminary Engineering and Final Design, as required under Section 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.
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 at a given point in time. Proposed projects that are rated "Recommended" or "Highly Recommended," will be eligible for multiyear funding recommendations in the Administration's proposed budget only if other project readiness requirements have been met and sufficient funds are available.