New Starts Roundtable - Pittsburgh, PA
Remarks for Sherry Little, Deputy Administrator, Federal Transit Administration
April 23, 2008
On behalf of President Bush and Transportation Secretary Mary Peters, I’m pleased to welcome y’all to the New Starts Roundtable.
I have just returned from an extraordinary trip to Africa. . . where DOT hosted the first-ever transportation and trade forum, in conjunction with the African Growth and Opportunity Act.
Our government is working closely with several African nations and private partners to help these developing countries finance and build the transportation infrastructure they need to move their people and their economies forward.
The need for transportation solutions in Africa is so great -- they lack the institutional frameworks that we taken for granted here in the U.S.
It’s always a pleasure to bring our grantees together to share information and ideas. We know you’ve worked long and hard to compete successfully for our discretionary New Starts funds.
There is an old African proverb:
“When a mountain is in your path, do not sit down at its foot and cry. Get up and climb it.”
Beginning the New Starts process is very much like arriving at the foot of a good-sized mountain...
Fortunately, none of you has sat down and cried because you have all scaled the mountain...
I congratulate you for your dedication to bringing new and enhanced transit options to your communities... And thanks, also, for your patience... We know this is a long, slow, steady climb.
The New Starts program is such a vital part of FTA’s mission. At headquarters, and in our regional offices, we’re always looking for ways to strengthen, streamline, and improve the program... and to deliver projects on time, on budget, and with the promised benefits.
These are important goals -- both on behalf of our grantees who must live through the many stages of the planning and development process ...and on behalf of American taxpayers, who rely on us to select and fund the most promising capital transit projects around the nation.
I believe we can be proud of our record for the New Starts program, and the confidence the Administration has placed in us.
For FY09, the Administration has proposed more than $1.6 billion for capital investment grants for New Starts – a record-setting amount. Our FY09 budget also proposes $200 million for 9 new Small Starts programs, including bus rapid transit projects... That’s more than double the number funded last year.
You’ll hear more on Small Starts later this morning.
In the coming year, we will continue to fund 12 existing New Starts capitol projects... we hope to sign two additional FFGAs if all the required conditions are met... and we’ll invest in moving selected New Starts projects forward into Final Design.
Now, this is all good news... but we must also be realistic.
As you know, SAFETEA expires at the end of fiscal 2009. The legislation gave us about $11 billion in commitment authority, including a three-year look-ahead.
Here’s the reality check:
Taking into account our outstanding commitments -- including existing FFGAs and those projects promised in our FY09 budget -- we have about $1 billion in available commitment authority...
A number of projects are competing for those remaining funds. It’s going to be tough to invest in all of the worthy projects on the drawing boards, before SAFETEA expires.
Let me assure you, we will do everything in our power to move as many projects forward that meet our stringent New Starts criteria, as we possibly can. . .
And as we do that, we’re working to improve the way we administer the program as a whole. We’ve taken successful steps to improve coordination and oversight between our regional offices, headquarters, and grantees... and to deliver the technical assistance our grantees want and expect from us.
I think you’ll see good results from these efforts.
Now I want to talk about the future.
As some of you may know, before joining FTA I served on the Senate Banking Committee staff, where I authored the transit provisions of SAFETEA.
In fact, I’m honored to have with us today two staffers on Capitol Hill whom you will hear from later on—Joyce Rose and Amy Scarton.
I know personally how tough it can be to get away from a demanding job during the week, when Congress is in session.
I’ve spent more than a year now helping to implement a law that I had a hand in crafting... It’s been fascinating... illuminating... and very challenging.
Looking ahead... in the time we have left at FTA, Jim and I want to concentrate on three areas that we think are key to leaving the agency -- and the New Starts program -- in the best shape possible, before new legislation kicks in.
It’s like borrowing a car -- you want to return it in better shape than when you got it.
First, we want to ensure that we use our limited resources to make smart investments in the nation’s transit and transportation infrastructure. To do that, we’re comparing predictions made throughout the project development process to actual performance, once a project is opened...
Second, we’re actively promoting private sector involvement in financing, building, and operating capital transit projects -- and encouraging private entities to assume a share of the risk...
And third, we’re focusing on keeping our legacy transit systems in a state of good repair. Encouraging grantees to build new capacity, without providing for aging transit infrastructure, is not a winning long-term strategy.
You’ll hear more on all this later...
But I want to emphasize a few things first, beginning with the state-of-good-repair issue.
We issued proposed guidance for comment last week, letting you know that we intend to pay extra attention to how you demonstrate that sufficient local resources are available to preserve the quantity and quality of existing transit service.
This is written into SAFETEA, y’all.
We’re looking for assurances that your existing transit system is in a state of good repair -- and likely to remain so, whether or not new investments are made.
What’s more, if your capital plan seeks to use formula or mod funds for a New Starts project, then rest assured we’re going to scrutinize the estimated costs of recapitalization to ensure that the plan provides sufficient funds to meet those costs from sources other than FTA formula funds.
Two key thoughts about this:
First, it’s a big deal -- we’ve reached a critical stage where decisions of the past are catching up with us... We can’t keep doing business as usual.
Second, we don’t want you to rob Peter to pay Paul – to pour money into new capital projects without also maintaining legacy systems.
The plain truth is that our transportation and transit infrastructure have reached a tipping point... If we don’t identify sustainable funding sources to preserve our rapidly aging legacy systems and provide for future maintenance of new construction, then we’re doing a real disservice to future generations...
But identifying reliable sources of funding for transit projects is enormously challenging -- especially as commodities and construction costs continue to escalate . . and as traditional sources of revenue, like the Highway Trust Fund, decrease.
That’s why we’re conducting a demonstration project with selected New Starts grantees to encourage public-private partnerships on capital transit projects where additional funding sources are necessary.
This approach has worked well for highway capital construction -- so we’re trying it on the transit side.
The goal is for project sponsors to contract with private partners to design, construct, finance, operate, and maintain transit facilities -- from rail and bus stations to parking garages.
These arrangements offer many potential advantages, by supplementing public funding with private equity and debt... transferring long-term financial risks to the private sector... and speeding up project construction and delivery, which in turn may reduce costs on some transit projects.
We have selected three locations for public-private partnership demonstrations -- Houston, Denver, and Oakland, California.
We’re monitoring these projects closely, and will keep you posted on how they turn out.
Now a heads-up:
For a detailed look at whether public-private partnerships are right for your area, consider attending one of four workshops we’re sponsoring with the National Council for Public-Private Partnerships over the summer.
These sessions will cover everything you want to know, including which states have passed legislation to facilitate these partnerships . . . how to determine which types of projects are a good fit . . . and financing options.
According to Ernst & Young, public-private partnerships are here to stay and may well be the only viable way for governments to reach their infrastructure development goals.
So sign up! And be among the first to participate in the benefits of successful public-private partnerships!
The last area I want to touch on is how we’re getting a better handle on cost and ridership information for New Starts.
We simply have to admit that historically, y’all tend to over-estimate ridership forecasts, and under-estimate project costs.
This happens systematically -- not just once in awhile.
Until recently, we simply hadn’t done enough of a detailed analysis to determine the reasons for this gap.
This is an issue I’m very familiar with -- going back to my days on the Banking Committee.
As we drafted SAFETEA, we knew that this was an area that had to be addressed. After all, you can’t manage what you can’t measure...
And if FTA is not sure whether grantees are making accurate forecasts, then it’s difficult to know whether the right investment decisions are being made.
So we wrote several provisions into SAFETEA to improve New Starts cost and ridership estimates, collect more cost data, study contractor performance, and develop before-and-after studies of New Starts projects.
Now we’ve finally got some good predicted-vs-actual data from 2003 and 2007...
The bottom line is, we still have a ways to go, to make these forecasts more accurate... but we’re getting better, and using more real-time information.
The industry’s ability to accurately predict ridership is almost twice as good now as it was in 1990...
However, forecast accuracy didn’t improve much between the 2003 and 2007 studies.
Clearly, we must keep working at this... We can’t afford to fly blind -- and neither can you...
Investing -- and most importantly, re-investing -- in our nation’s transportation infrastructure is one of the most difficult challenges facing the United States today...
It’s costly... it’s time-consuming... and it takes enormous political will and commitment at the federal, state, and local levels...
There are a lot of “unknowns” involved...
For instance, it’s not clear where all the money will come from to rebuild and enhance our national transit assets -- as well as our highways, roads, bridges, tunnels, and other infrastructure.
But one thing is very clear:
The time and energy y’all are putting into the New Starts process is enormously valuable...
You’re making a lasting contribution to your communities, and to the mobility and economic health of your regions.
On behalf of all of us at FTA, I cannot thank you enough for all your hard work...
I promise you that Jim and I will continue to work hard with you as well, as you make your way through the New Starts process.
I’ll be here at the New Starts Roundtable through the rest of today….so please seek me out... I’d like an opportunity to visit with you.