Appendix A

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Background

The project profiles presented in this Appendix provide background information supporting the Department of Transportation's New Starts Program funding recommendations for FY 2004. The Department's funding recommendations are being provided to the Congress pursuant to 49 U.S.C. 5309(o)(1). The funding recommendations are based on the decision criteria defined in 49 U.S.C. 5309(e).

Under 49 U.S.C. 5309(e), discretionary capital grants and loans for the construction of a new fixed guideway system or the extension of an existing system may be made only if the Secretary determines that the proposed project is:

  1. based on the results of an alternatives analysis and Preliminary Engineering;
  2. justified based on a comprehensive review of its mobility improvements, environmental benefits, cost effectiveness, and operating efficiencies; and
  3. supported by an acceptable degree of local financial commitment, including evidence of stable and dependable funding sources to construct, maintain, and operate the system or extension.

The 49 U.S.C. 5309(e) criteria provide a basis for selecting, from among the eligible projects, those which are the most worthy of Federal funds. To this end, the New Starts project profiles describe the fixed guideway projects that are most advanced, and evaluate them in terms of the 5309(e) criteria.

This Annual Report on New Starts includes profiles for each proposed project or study undergoing Final Design and Preliminary Engineering. In addition to providing information to Congress, the document serves as guidance to project sponsors, so that improvements can be made. Since projects can be expected to continue to change as they progress through the development process, the ratings for projects that are not yet recommended for full funding grant agreements should not be construed as a statement about the ultimate merits of the project, but, rather, an assessment of the project’s current strengths and weaknesses.

Profiles for projects that are under construction have also been included in this report if additional funds are needed in FY 2004 to fulfill Full Funding Grant Agreements.

In general, the profiles for projects in Final Design and Preliminary Engineering include five sections. These are:

  • Description: This section briefly describes a project's physical characteristics and transportation benefits, and presents the latest estimates of cost and ridership. Unless otherwise noted, cost estimates are expressed in escalated (year of construction) dollars. This section includes a summary description of key project elements. This section also includes the summary rating of “Highly Recommended,” “Recommended,” or “Not Recommended” assigned to the proposed project, as well as the overall ratings for project justification and local financial commitment.
  • Status: This section identifies where the project is in the major investment planning and project development process. It indicates, for example, whether alternatives analysis (or a major investment study) and Preliminary Engineering have been completed. If also indicates when current studies are expected to be completed. Relevant statutory requirements are also noted here.
  • Evaluation: This section presents an evaluation of the project's merit based on the criteria cited in 49 U.S.C. 5309(e) and FTA’s Final Rule on New Starts project evaluation and rating, which became effective April 6, 2001. Ratings and data are reported for the following criteria: mobility improvements, environmental benefits, operating efficiencies, and cost effectiveness. This section also includes FTA's rating of the project in terms of transit-supportive existing land use and future patterns.
  • Local Financial Commitment: This section reports FTA's ratings of the proposed non-Section 5309 share of total project capital costs, the stability and reliability of the capital financing plan, and the stability and reliability of the operating financing plan.
  • Other Factors (Optional): Other rating factors which may be relevant to evaluating the merit of the project are described in this section.

The profiles for projects covered by Full Funding Grant Agreements include only the description and status sections, because projects are not re-evaluated once a funding agreement is in place.

How the Ratings were Developed

As part of the normal system planning and project development process, local agencies develop the information that FTA uses to assess projects in terms of project evaluation and local financial commitment. The specific information used for these evaluations is outlined below.

Project Evaluation and Ratings

The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) greatly broadened the criteria to evaluate New Starts projects. The Section 5309 New Starts criteria were updated in Federal Register Notices on December 19, 1996 and November 12, 1997. TEA-21 left prior Federal law and policy largely intact, including the New Starts criteria and the multiple-measure method of project evaluation. This year's evaluations and ratings address the full range of project evaluation criteria, including: mobility improvements, environmental benefits, operating efficiencies, cost effectiveness, transit-supportive existing land use and future patterns, local financial commitment, and other factors.

In September 1997, the Federal Transit Administration's Office of Planning and the Office of Budget and Policy released the Technical Guidance on Section 5309 New Starts Criteria. In October 1998, July 1999, and July 2000, FTA issued revised documentation of the Technical Guidance on Section 5309 New Starts Criteria to reflect lessons learned. In June 2002, FTA issued updated guidance entitled Reporting Instructions for the Section 5309 New Starts Criteria. In addition, since 1998 FTA has offered several national workshops annually to offer technical assistance.

On December 7, 2000, FTA published its Final Rule on New Starts project evaluation and rating in the Federal Register at 65 FR 76864. This regulation is required by Section 3009 of TEA-21, and governs how FTA will evaluate and rate new fixed-guideway transit systems and extensions that are proposed for section 5309 New Starts funding. It replaces the procedures set forth in the December 19, 1996 policy statement [61 FR 67093], as amended on November 12, 1997 [62 FR 60756]. The regulation became effective on April 6, 2001.

This regulation retains the familiar “multiple-measure method” of project evaluation used by FTA to evaluate proposed New Starts projects since 1994. It describes how each of the statutory project evaluation criteria will be evaluated; defines the overall project ratings of “Highly Recommended,” ”Recommended,” and “Not Recommended”; and, defines how these ratings will be used to approve entry into the Preliminary Engineering and Final Design stages of project development. It is important to note that the purpose of this Rule is to regulate how FTA will evaluate and rate proposed projects for purposes of the Section 5309 New Starts program; it does not regulate the transit industry or other sponsors of New Starts projects, though it may affect the type of information FTA requests for evaluation purposes. As in the past, FTA will continue to issue guidance and work with project sponsors as we implement this rule.

For each of the project justification criteria (mobility improvements, environmental benefits, operating efficiencies, cost effectiveness), the proposed project is evaluated against a New Starts baseline, which represents low cost improvements that are cost effective compared to the New Starts project. Such a comparison results in a more accurate portrayal of the benefits of the New Starts project. For each proposed project, FTA assigns a rating of “high,” “medium-high,” “medium,” “low-medium,” or “low” for each of the five criteria (the four above plus land use), with “other factors” considered as appropriate. Similar ratings are assigned for the three factors used to evaluate local financial commitment, including the non-Section 5309 share, the capital financing plan, and the operating financing plan. Consistent with Section 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 project justification criteria and financial rating factors are combined into overall “project justification” and “finance” ratings, which in turn are combined to produce the summary rating for the project.

In evaluating the project justification criteria, FTA gives primary consideration to the measures of transit supportive land use, cost effectiveness, and mobility to arrive at the combined “project justification” rating. In rating local financial commitment, the proposed non-Section 5309 share of capital costs, and the strength of the capital and operating financing plans are the primary factors in determining the combined “finance” rating. Projects must also receive at least a “medium” rating for both capital and operating finance in order to receive a “medium” rating for the overall local financial commitment rating.

For a proposed project to be rated as “Recommended,” it must be rated at least “medium” in terms of both project justification and finance. To be “Highly Recommended,” a proposed project must be rated higher than “medium” for both project justification and finance. Proposed projects not rated at least “medium” in both project justification and finance are rated as “Not Recommended.”

As in previous reports, FTA has identified several projects as “Not Rated.” This year, “Not Rated” indicates that FTA has serious concerns about the information submitted for mobility improvements and cost effectiveness because the underlying assumptions used by the project sponsor may have produced an inaccurate representation of the benefits of the project. The principal source of inconsistencies has been in the definitions of the baseline alternative and the proposed New Starts project. These inconsistencies have made it impossible to isolate the impacts of the proposed project in terms of ridership, transportation benefits, operating and maintenance costs, capital costs, and cost-effectiveness. FTA will continue to work with project sponsors to validate assumptions, information, and projections. A rating for these projects will be made available to Congress and other interested parties when the issues are resolved.

In addition, in a few cases, project information has not yet been submitted by the project sponsor for FTA evaluation. In some cases, this is because the project has recently moved into preliminary engineering or become non-exempt. In others, the project sponsor, for a variety of reasons, has not submitted updated information for evaluation. The rating for all of these projects is noted as “Not Yet Available.” Like projects identified as “Not Rated,” ratings for these projects will be made available to Congress and other interested parties when information is submitted and the project evaluation is complete.

It is important to note that project evaluation is an ongoing process. The project ratings contained in this report are based on project information available through November 2002. As proposed New Starts projects proceed through the project development process, the estimates of costs, benefits, and impacts are refined. The FTA ratings and recommendations will be updated annually to reflect new information, changing conditions, and refined financing plans.

The U.S. Department of Transportation’s Major Capital Investment Projects Final Rule, published on December 7, 2000, specifies FTA’s approach to project evaluation and assignment of summary ratings that are effective April 6, 2001. The project ratings contained in this report incorporate changes introduced in the Final Rule, most significantly the change that ratings for many of the criteria are based on a comparison of the proposed New Starts project to a single baseline (as opposed to the previous comparison to both the no-build and the transportation systems management alternatives), and the use of transportation system user benefits for cost effectiveness and mobility improvements ratings.

Section 5309 New Starts Criteria

A brief description of the Section 5309 New Starts criteria applied in project evaluation follows. For the first four criteria, the values are derived from comparing the New Starts project to the baseline alternative. This year, FTA has changed its measure used for two of the project justification factors: mobility improvements and cost effectiveness. The new measure, transportation system user benefits, quantifies travel-related benefits in terms of hours of travel-time saved for all users of the transit system (both existing riders and new riders). For mobility improvements, this measure replaces hours of travel-time savings for transit trips. For cost effectiveness, it replaces the number of new transit trips. Transportation system user benefits represents a broader set of benefits to transit riders – including reductions in walk times, wait times, ride times, number of transfers, and any other attribute employed in local ridership-forecasting procedures – in terms of travel-time savings.

Mobility Improvements

Mobility improvements are based on two measures. The first is the transportation system user benefits per project passenger mile. It is derived by dividing the user benefits for all users of the transit system by passenger miles traveled on the New Starts project. The second measure has not changed from last year. It reflects the number of low-income households and total employment within one-half mile of a station or stop of the New Starts project. Low income is defined as the number of households below the poverty level. This measure is reported for stations or stops directly related to the proposed fixed guideway project or system.

Environmental Benefits

The first measure is the Change in Criteria Pollutant Emissions and Greenhouse Gas Emissions in the Forecast Year, comparing the New Starts project to the baseline. The measure is expressed as the change in the number of tons of emissions for carbon monoxide (CO), nitrogen oxides (NOx), volatile organic compounds (VOC) or hydrocarbons (HC), particulate matter (PM10), and carbon dioxide (CO2).

Energy consumption is measured as the Net Change in the Forecast Year in the Regional Consumption of British Thermal Units (BTU), comparing the New Starts project to the baseline.

The third measure includes the Current Regional Designation by the Environmental Protection Agency (EPA) for National Ambient Air Quality Standards.

Operating Efficiencies

The measure for this criterion reports the Change in Operating Cost per Passenger-Mile in the Forecast Year, comparing the New Starts project to the baseline. This measure, expressed in terms of absolute dollar value, is to address the impact on operating efficiencies for the entire regional transit system.

Cost-Effectiveness

The measure of cost effectiveness is the incremental cost of the project divided by its hours of transportation system user benefits compared to the baseline. It is reported in units of dollars per hour. Cost is defined as the annualized capital cost plus annual operating and maintenance costs. Transportation system user benefit is defined as all annual travel-related benefits in terms of hours for all users of the transit system (both existing riders and new riders). For informational purposes, FTA has included the measure used for cost effectiveness last year, cost per new transit trip, in the profile of each project. FTA has considered only the cost per hour measure in the development of project ratings.

Transit Supportive Existing Land Use and Future Patterns

Assessment of land use was introduced in the spirit of ISTEA, continued in TEA-21, and is consistent with FTA initiatives to encourage transit supportive land use and development. The measure, expressed in terms of a combined rating of “high,” “medium-high,” “medium,” “low-medium,” or “low,” addresses the degree to which existing development patterns and local land use policies are likely to foster transit supportive land use. The combined rating considers each of the following factors: existing land use; growth management policies; transit-supportive corridor policies; supportive zoning regulations; tools to implement land use policies; and, performance of land use policies.

Local Financial Commitment

FTA's evaluation of the local financial commitment to a proposed project focuses on the proposed non-Section 5309 share of project costs, the strength of the proposed capital financing plan, and the stability and reliability of the operating financing plan.

Non-Section 5309 share refers to the percentage of capital costs to be met with non-Federal funding, particularly non-Section 5309 New Starts funding, and includes both the local match required by Federal law and any additional capital matching funds. Local or other non-New Starts matching funds above the level required are accounted for in the rating process because they reduce the required Federal New Starts commitment and because they indicates a stronger local commitment to the project. Previous non-Federal funding support for other significant fixed guideway systems implemented in the area is also considered, though not counted toward the calculation of share. The use of flexible funds and innovative financing techniques is noted, where appropriate. Non-Section 5309 share is rated “high,” “medium-high,” “medium,” “low-medium,” or “low.”

FTA continues to encourage project sponsors to request a Federal New Starts funding share that is as low as possible. The Conference Report that accompanied the FY 2002 Department of Transportation Appropriations Act instructs “FTA not to sign any new full funding grant agreements after September 30, 2002 that have a maximum Federal share of higher than 60 percent.” Consistent with this Congressional direction, projects seeking a Federal New Starts share over 60 percent have been given a “low” rating for local financial commitment, which results in a “Not Recommended” rating. In addition, the Administration is seeking legislation that would limit the Federal New Starts share to no more than 50 percent beginning in FY 2004. None of the four new projects recommended for funding in the President’s FY 2004 budget and this report has a proposed Federal New Starts share greater than 50 percent.

The evaluation of each project's proposed capital financing plan takes two principal forms. First, the plan is reviewed to determine the stability and reliability of each proposed source of local match. This includes a review of inter-governmental grants, tax sources, and debt obligations. Each revenue source is reviewed for availability within the project timetable. Second, the financing plan is evaluated to determine if adequate provisions have been made to cover unanticipated cost overruns. The strength of the capital finance plan is rated “high,” “medium-high,” “medium,” “low-medium,” or “low.” The indicators used to assign these ratings are further explained in Table A-1.

The third component of the financial rating is an assessment of the ability of the local transit agency to fund operation of the entire transit system as planned once the guideway project is built. This rating focuses on the operating revenue base and its ability to expand to meet the incremental operating costs associated with a new fixed guideway investment and any other new services and facilities. The strength of the operating finance plan is rated “high,” “medium-high,” “medium,” “low-medium,” or “low.” The indicators used to assign these ratings are further explained in Table A-2.

Other Factors (Optional)

This criterion has traditionally been included as an option to provide an opportunity to identify any additional factors that may be relevant to local and national priorities and relevant to the success of the project.