Introduction to New Starts

The Federal Transit Administration’s (FTA) discretionary New Starts program is the federal government’s primary financial resource for supporting locally-planned, implemented, and operated transit "guideway" capital investments. From heavy to light rail, from commuter rail to bus rapid transit systems, the FTA's New Starts program has helped to make possible hundreds of new or extended transit fixed guideway systems across the country. These rail and bus investments, in turn, have improved the mobility of millions of Americans; have helped to reduce congestion and improve air quality in the areas they serve; and have fostered the development of viable, safer, and more livable communities.

The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) has authorized $6.6 billion in New Starts funding through fiscal year 2009.  $600 million of this funding is set-aside for “Small Starts;” that is, major transit capital projects costing less than $250 million, and requiring less than $75 million in Small Starts resources.  While the level of New Starts funding has never been higher, neither has the demand for it. SAFETEA-LU authorizes over 330 projects nationwide to compete for these discretionary federal dollars. Many of these projects are currently in FTA’s New Starts pipeline (that is, projects pursuing New Starts funding which are in the preliminary or final design stages of development, or Small Starts projects approved into the single “project development” phase).

SAFETEA-LU directs FTA to evaluate and rate candidate New Starts projects as an input to federal funding decisions and at specific milestones throughout each project’s planning and development. SAFETEA-LU further supports a comprehensive planning and project development process which New Starts projects must follow, and which is intended to assist local agencies and decisionmakers evaluate alternative strategies for addressing transportation problems in specified corridors and select the most appropriate improvement to advance into engineering, design, and construction. Planning and project development for New Starts projects is a continuum of analytical activities carried out as part of metropolitan systems planning and National Environmental Policy Act of 1969 (NEPA) review processes.

FTA published a Final Rule on Major Capital Investment Projects in 2000 which outlines these New Starts requirements.  FTA has also issued guidance on Advancing Major Transit Investments Through Planning and Project Development which provides additional detail on the project development and evaluation processes for fixed guideway transit projects seeking New Starts funding.

On May 22, 2006, and also on June 4, 2007, FTA issued updated guidance on policies and procedures of the New Starts program.  SAFETEA-LU requires this guidance be updated at least every two years.  FTA intends to issue updated policy guidance in the spring of 2008, which will be preceded by proposed guidance and a public review and comment period.  FTA will also publish a new Rule for Major Capital Investment Projects in response to changes specified in SAFETEA-LU to the methods, criteria, and procedures used to evaluate and rate projects proposed for funding under both the New Starts and Small Starts programs  FTA issued a Notice of Proposed Rulemaking in August 2007, followed by a public comment period.

The following describes the planning, project development, evaluation, and budget recommendation processes for fixed guideway transit projects seeking New Starts funding.  Please contact us if you have any comments or suggestions on how to improve this site.

New Starts Criteria

SAFETEA-LU identifies several specific New Starts criteria which the Federal Transit Administration must consider in its approval to advance transit fixed guideway projects through the project development process and enter into a long term financial commitment to implement the proposed investments. The law categorizes these criteria into three broad areas:

1. Alternatives Analysis and Preliminary Engineering.

Along with Final Design, these activities constitute the planning and project development process for New Starts investments. All projects seeking discretionary New Starts funding must follow this process, and FTA must approve project entrance into all but the alternatives analysis phase of planning and development. The planning and project development process is the forum for the development and refinement of the project justification and local financial commitment New Starts criteria (see below), and for addressing other planning, environmental, engineering, and design issues and requirements.

2. Project Justification.

SAFETEA-LU requires that proposed New Starts projects be justified based on several project justification criteria, including the following:

• Mobility Improvements
• Environmental Benefits;
• Operating Efficiencies;
• Cost Effectiveness; and
• Transit Supportive Land Use Policies and Future Patterns

SAFETEA-LU also continues the TEA-21 requirement of considering “other factors.”

SAFETEA-LU further requires that FTA consider in its review the economic development effects of New Starts projects.  FTA desires through the rulemaking process to work with the industry on the development of appropriate factors for measuring the economic development effects of candidate projects, and therefore did not consider economic development explicitly in the FY 2008 and FY 2009 evaluation cycles as a specific criteria for evaluation   However, FTA does encourage candidate New Starts project sponsors to submit information which they believe demonstrates the economic development impacts of their proposed transit investments as an “other factor.” 

3. Local Financial Commitment.

SAFETEA-LU requires that New Starts project sponsors demonstrate adequate local support for the project, as measured by:

• The proposed share of total project costs from sources other than from the New Starts program, including federal formula and flexible funds and state and local funding;
• The strength of the proposed project’s capital financing plan; and
• The ability of the sponsoring agency to fund operation and maintenance of the entire system – existing and planned – as planned once the guideway project is built.

Planning and Project Development Process for New Starts Projects

Projects seeking New Starts funding – like all federally-funded transportation investments in metropolitan areas – must emerge from a locally-driven, multimodal corridor planning process, as depicted graphically in this chart.

There are three key phases in the planning and project development process for projects seeking New Starts funding: 1) Alternatives Analysis; 2) Preliminary Engineering; and 3) Final Design. These phases are described below.

1. Alternatives Analysis

   To specifically qualify for New Starts funding (49 USC §5309), candidate projects must have resulted from an alternatives analysis study (also known as major investment study or multimodal corridor analysis) which evaluates appropriate modal and alignment options for addressing mobility needs in a given corridor. Alternatives analysis can be viewed as a bridge between systems planning (which identifies regional travel patterns and transportation corridors in need of improvements) and project development (where a project’s design is refined sufficiently to complete the NEPA environmental process). The alternatives analysis study is intended to provide information to local officials on the benefits, costs, and impacts of alternative transportation investments developed to address the purpose and need for an improvement in the corridor. Potential local funding sources for implementing and operating the alternatives should be identified and studied, and New Starts criteria should be developed. At local discretion, the alternatives analysis may include the undertaking of a Draft Environmental Impact Statement (DEIS). Involvement of a wide range of stakeholders – including the general public – in the alternative analysis study process is strongly encouraged.

   Alternatives analysis is considered complete when a locally preferred alternative (LPA) is selected by local and regional decisionmakers and adopted by the metropolitan planning organization (MPO) into the financially constrained long range metropolitan transportation plan. At this point, the local project sponsor may submit to FTA the LPA’s New Starts project justification and local financial commitment criteria and request FTA’s approval to enter into the preliminary engineering phase of project development.

   FTA's Procedures and Technical Methods for Transit Project Planning provides detailed technical guidance on the alternatives analysis study process.   FTA requests the opportunity to review the alternatives analysis study's scope of work, purpose and need, description of alternatives, and technical methodologies and results as they are developed. FTA desires to become involved in these local studies to assist agencies in addressing technical and procedural issues early in the study process (rather than at the end when it may be too late to efficiently solve them) and to gain sufficient understanding of the resulting project to support FTA's decision to advance it into preliminary engineering and, later, final design.

2. Preliminary Engineering

   During the preliminary engineering phase of project development, local project sponsors refine the design of the proposal, taking into consideration all reasonable design alternatives. Preliminary engineering results in estimates of project costs, benefits, and impacts at a level of detail necessary to complete the NEPA process. The proposed project’s New Starts criteria are similarly refined in the preliminary engineering phase of development, project management plans are updated, and local funding sources are committed to the project (if not previously committed).

   FTA typically assigns Project Management Oversight contractors to projects undergoing PE to ensure that the engineering effort progresses in accordance with FTA requirements, and that the project sponsor is adequately preparing for the final design stage of development. Preliminary engineering for a New Starts project is considered complete when FTA has issued a Record of Decision (ROD) or Finding of No Significant Impact (FONSI), as required by NEPA. Projects which complete preliminary engineering and whose sponsors are determined by FTA to have the technical capability to advance further in the project development process must request FTA approval to enter final design and submit updated New Starts criteria for evaluation.

3. Final Design

   Final design is the last phase of project development, and includes 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 project’s financial plan is finalized, and a plan for the collection and analysis of data needed to undertake a Before and After Study – which is required of all projects seeking an FFGA – is developed.

Project Justification

SAFETEA-LU’s project justification criteria are intended to reflect the broad range of benefits and impacts which may be realized by the implementation of the proposed New Starts transit investment. Project justification criteria are initially developed as part of alternatives analysis and are refined throughout the preliminary engineering and final design phases of project development. FTA periodically issues guidance on the calculation of project justification measures. FTA’s New Starts project justification criteria – and the current measures which make up each criteria – are summarized below:

Local Financial Commitment

The local financial commitment criterion is intended to reflect the level of local funding proposed for the project, and the extent to which this local funding is dedicated to, and in place for, the proposed investment. This criterion also addresses the reasonableness of project cost estimates and revenue forecasts; the adequacy of provisions to address unanticipated costs and funding shortfalls; the financial condition of the New Start project sponsor; and how the sponsor will ensure the operation and maintenance of its entire transit system after implementation of the proposed fixed guideway system.

Like the project justification criteria, information which supports the local financial commitment criteria is refined throughout the planning and project development process. Guidance on the development of transit financial plans is available from FTA.

The three measures for local financial commitment include:

New Starts Evaluation and Rating

FTA evaluates and rates New Starts projects for several specific reasons:

1. To approve project entrance into preliminary engineering;
2. To approve project entrance into final design;
3. As an input to development of the US Department of Transportation’s annual New Starts budget request. FTA’s ratings are included in the Annual Report on Funding Recommendations, which is submitted to Congress each spring;
4. To execute a full funding grant agreement (FFGA).

In undertaking its evaluation, SAFETEA-LU requires that FTA rate each candidate New Starts project (in preliminary engineering or final design) as either high, medium-high, medium, medium-low, or low. These overall project ratings are based on ratings assigned by FTA to each of the project justification and local financial commitment criteria and their measures described above.

It is very important to emphasize that project evaluation is an on-going process.  FTA evaluation and rating occurs annually in support of budget recommendations presented in the Annual Report on Funding Recommendations and when projects request FTA approval to enter into preliminary engineering or final design. Consequently, as proposed New Starts projects proceed through the project development process, information concerning costs, benefits, and impacts is refined and the ratings updated to reflect new information.

FTA Budget Recommendations

FTA’s ratings are intended to reflect overall project merit; proposed projects that are rated as either high, medium-high, medium have demonstrated significant potential benefits and are therefore eligible for New Starts funding. However, these project ratings do not translate directly into a funding recommendation or commitment in any given year. Rather, FTA must also consider the amount of New Starts funding available on an annual basis and the phase of project development of candidate New Starts projects. To be included in FTA’s annual budget request, proposed New Starts must also be sufficiently developed for consideration of a federal full funding grant agreement (FFGA) – FTA’s funding mechanism for supporting the multi-year capital needs of project construction.

The following general principles are applied when determining annual funding allocations among proposed New Starts projects:

• Any project recommended for new funding commitments should meet the project justification, local financial commitment, and process criteria established by Sections 5309(d) and 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 and Project Construction Grant Agreement (PCGA) define the terms of the Federal commitment to a specific project, including funding.  Upon completion of an FFGA or PCGA, 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, although FTA works closely with grantees to identify and implement strategies for containing capital costs at the level included in the FFGA or PCGA at the time it was executed.
• Funding for initial planning efforts such as alternatives analysis is no longer eligible for Section 5309 funding under SAFETEA-LU, but may be provided through grants under the Section 5303 Metropolitan Planning or Section 5307 Urbanized Area Formula programs; from Title 23 “flexible funding” sources; or from the newly created Section 5339 Alternatives Analysis program.
• Firm funding commitments, embodied in FFGAs or PCGAs, will not be made until projects demonstrate that they are ready for such an agreement, i.e. the project’s development and design has progressed to the point where its scope, costs, benefits, and impacts are considered firm and final.
• Funding should be provided to the most worthy investments 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.  Funding decisions will be based on the results of the project evaluation process and resulting project justification, local financial commitment, and overall project ratings.