New Starts Program re: Transportation System User Benefit (USUB) Measure

Number C-10-03
7/7/2003
Dear Colleague:

The past year has been an eventful one for the New Starts program, as we implemented the new Transportation System User Benefit (TSUB) measure and tackled the critical goal of bringing more transparency and rigor to our New Starts evaluation and rating process. I know that many of you found this year of change to be challenging, as well, but I am pleased that there is widespread agreement that TSUB captures more of the benefits of transit and represents a significant improvement in the New Starts project evaluation process.

Our experience over the past year has also demonstrated how important it is that transit leadership – particularly our general managers – be aware of the New Starts requirements, filing deadlines, and potential issues affecting your projects as early as possible. So, as we begin the data collection and evaluation process for the Fiscal Year 2005 Annual Report on New Starts, I wanted to take this opportunity to share with you some of my thinking about the process, and to briefly highlight several of FTA’s ongoing efforts to improve the New Starts program for FY 2005 and beyond.

Please note that, other than the optional economic benefit information described below, there will be no changes to the New Starts submission requirements or rating process this year. We have, however, extended the deadline for this year’s submissions to August 29, 2003, giving you approximately two additional weeks to compile the necessary updated information. As you know, FTA closely reviews each submission and works with project sponsors to resolve problems and inconsistencies prior to the finalization of each project summary and assessment in November. I would urge you, therefore, to contact your regional administrator or our planning staff in Washington for assistance if you are having problems – and to submit your materials early, if that is possible.

FTA’s most basic New Starts guidance is the Final Rule on Major Capital Investment Projects, which was issued in December 2000, following a period of extensive public comment. The Final Rule established the measures and process FTA follows for evaluating potential New Starts investments. We remain fully committed to the principles embodied in that document. However, we also realize that the Final Rule does not provide the level of detail that project sponsors would like in order to fully understand the evaluation process and to be able to "self-assess" how their proposed investments might rate. We know that a more transparent evaluation and rating process is needed, and we are working diligently toward that goal.

Those of you who were among the 210 people who attended one of the New Starts workshops held in Chicago, Portland, and San Jose over the last two months are already aware of the basic requirements for this year. As I mentioned, we will use the same measures and "break points" for the FY 2005 New Starts ratings that were used in FY 2004, including the provision that a proposed Federal New Starts share of over 60 percent will result in a "low" rating for the local financial commitment measure. As you may know, a "low" rating for this measure will result in an overall rating of "Not Recommended."

Although we are not changing the basic measures and rating process used last year, we would like to begin to explore ways in which the New Starts evaluation process can better capture the economic benefits of the proposed projects. Therefore, we are giving project sponsors the option of recalculating transit user benefits under alternative growth scenarios. We would like to work with you to determine whether the use of such projections might benefit the program as a whole and better distinguish among the variety of proposed projects in the New Starts pipeline.

We understand that undertaking the development of a major capital investment project is challenging, particularly for transit agencies and communities that have not previously done so. Information about the planning and development of major transit capital investments, including information about technical assistance and training, is available on FTA’s website. If you have not already had the opportunity to do so, you may wish to sign up for one of our upcoming New Starts workshops. In addition, please note that a number of new resources are now available on the website, including procedural guidance on Advancing Major Transit Investments through Planning and Project Development [PDF] and several updated chapters of FTA’s guidance on Procedures and Technical Methods for Transit Project Planning.

Over the next several months, FTA will be posting additional guidance on how to utilize the Summit software to generate and analyze information on transportation system user benefits. We are also developing a number of new outreach and training opportunities, including workshops on a variety of technical planning topics and, in conjunction with the Federal Highway Administration and the National Transit Institute, two new courses on how to link planning with the environmental review required under the National Environmental Policy Act of 1969 (NEPA). Information about these workshops and courses will be posted on FTA’s website as it becomes available.

An open, objective, and technically sound transportation planning process provides an important foundation for effective local transportation decisionmaking. It also helps create a "level playing field" among projects, as FTA and Congress consider the merits of proposed major capital transit investment projects in different communities. We are eager to work closely with you, even in the early alternatives analysis and planning stages, to ensure that issues are addressed in a timely, fair, and consistent manner.

As you may be aware, the Administration’s reauthorization proposal includes several prospective changes to the New Starts program, which we believe will enhance your ability to design cost-effective projects that meet the needs of your community and speed up the delivery of those projects. The Safe, Accountable, Flexible, and Efficient Transportation Equity Act of 2003 (SAFTEA) includes a 55 percent increase in New Starts funding compared to the guaranteed levels in the Transportation Equity Act for the 21st Century (TEA-21). Along with this substantial increase in funding, we propose to give communities the opportunity to choose non-fixed guideway major capital investment solutions to locally-identified corridor transportation problems. In order to ensure that the competition for New Starts funds is equitable, we would eliminate the exemption from the New Starts evaluation and rating process for projects of $25 million or less. At the same time, we will establish a streamlined project development process for projects seeking less than $75 million in Federal New Starts funds, to speed delivery of projects that are less complicated. SAFETEA also proposes to streamline the environmental review process to accelerate the delivery of transit projects and help protect the human and natural environment. If you would like additional information on SAFETEA, I invite you to visit the website (http://www.fhwa.dot.gov/reauthorization/safetea.htm).

Finally, I want to briefly mention the issue of Federal New Starts share. As you are aware, Congress has directed that FTA not execute full funding grant agreements after September 2003 that include a Federal New Start share exceeding 60 percent of the total project cost. In addition, the Administration has proposed to lower the maximum Federal New Starts share to 50 percent. We realize that the vast majority of projects under development already meet the 60 percent requirement, because you long ago recognized that New Starts funds are not unlimited and that, historically, an over-match has made your project more competitive. However, if you are just beginning to undertake the development of a New Starts project, or if you want to reexamine your project plans and finances, please know that FTA would be happy to provide technical assistance or direct you to appropriate training and other resources.

Thank you for your commitment to sound planning and effective delivery of our joint transportation investments. I hope that you will continue to view FTA as a partner in your effort to plan and implement the transit systems and services that your community needs to meet tomorrow’s transportation challenges.

Sincerely,

Jennifer L. Dorn