Executive Summary

This report provides the U.S. Department of Transportation's recommendations to Congress for allocation of funds to be made available under 49 U.S.C. 5309 (formerly Section 3 of the Federal Transit Act [FT Act]) for construction of new fixed guideway systems and extensions (New Starts) for Fiscal Year 1997. The report is required by 49 U.S.C. 5309(m)(3) (formerly Section 3(j) of the FT Act).

The Intermodal Surface Transportation Efficiency Act of 1991, as amended (ISTEA) identified over $6 billion in funding authorizations or earmarks for specific projects through FY 1997, the life of the authorization. However, it authorized a total of only $5 billion in 5309 (Section 3) funding for these projects. This means that during each year of the ISTEA authorization, some prioritization of the authorized projects has been and will continue to be necessary. However, at the end of FY 1997, an additional $2 billion in contingent commitment authority is calculated to be available from one-half of the uncommitted cash balance in the Mass Transit Account of the Highway Trust Fund, as provided for in ISTEA.

The President's budget for FY 1997 proposes that $800.00 million be made available for the 5309 (Section 3) New Starts program. After setting aside a percentage of these funds for oversight activities as specified in 5327 (Section 23), $794.06 million is available for project grants. This report recommends 17 projects for funding in FY 1997, all of which have existing Federal funding commitments in the form of Full Funding Grant Agreements (FFGA) or Letters of Intent (LOI) as of July 1996, or are expected to have such commitments during the course of calendar year 1996.

The Department historically has recommended that these funds be allocated to New Starts projects in accordance with these principles:

Any project recommended for new funding commitments should meet the project justification, finance, and process criteria established by 5309(e)(2)-(7) (Section 3 (i)) and be consistent with Executive Order 12893, "Principles for Federal Infrastructure Investments," issued January 26, 1994.

Existing or pending FFGA commitments should be honored before any additional commitments are made, to the extent that these projects are likely to be capable of obligating funds in the coming fiscal year.

Statutory authorizations contained in ISTEA should be honored to the extent that projects are ready for funding. However, funds should not be made available by FTA before obligations are required to permit project development to proceed, nor should initial planning be funded by 5309 (Section 3). Instead, 5303 Planning (Section 8) or 5307 Formula Grants (Section 9) funds should be used.

Firm funding commitments, embodied in FFGAs, should not be made until preliminary engineering is substantially complete since costs, benefits, and impacts are not accurately known until this level of engineering approaches completion.

Letters of Intent (LOI) (ultimately anticipating FFGAs) authorized by 5309(g) (Section 3(a)(4)) should be issued only to worthy projects which have progressed to the point (generally through a Major Investment Study (MIS), at a minimum) that their justification and level of local financial commitment can be established with some certainty.

LOIs should be awarded to the best projects, in terms of financial commitment and other project justification criteria, in an order which is based on the degree to which each project meets these criteria.

Funding should be provided to the most worthy projects to allow them to proceed through the process on a reasonable schedule, to the extent such projects are likely to be capable of obligating funds in the upcoming fiscal year.

Based on the principles above, the following projects with existing or pending FFGA's should be funded within the $794.06 million in Capital Discretionary/Formula Program funds for New Starts recommended for FY 1997:

In addition, we intend to fund the following four projects which are expected to have Federal funding commitments in place during calendar year 1996, and which will be ready for construction in 1997, as follows (future funds are estimated until FFGA negotiations are complete):

Three additional projects with FFGA's are not included in these recommendations, either because the Federal commitment has been fulfilled (Dallas/South Oak Cliff and Pittsburgh/Airport Busway Phase 1) or the project has been terminated at the local level (Chicago/Central Area Circulator).

The following table summarizes the recommendations for projects to receive funding in FY 1997 (in millions of dollars):

Project FY 1997
Atlanta/North Line $66.82 Construction
Baltimore/LRT Extensions $10.26 Construction
Boston/Piers Phase 1 (MOS-2) $53.72 Construction
Denver/SW Corridor $8.00 Construction
Houston/Regional Bus $40.59 Construction
Los Angeles/MOS-3 $158.86 Construction
Maryland/MARC Ext. to Frederick $50.00 Construction
New Jersey/Hudson-Bergen LRT $10.00 Construction
New Jersey/Secaucus $105.53 Construction
New York/Queens $35.02 Construction
Portland/Westside $121.19 Construction
Sacramento/LRT Extension $8.00 Construction
St. Louis/St. Clair Extension $20.00 Construction
Salt Lake City/South LRT $35.00 Construction
San Francisco Area/Tasman $10.00 Construction
SF Area/BART Airport Extension $51.07 Construction
San Juan/Tren Urbano $10.00 Construction

These recommendations are intended to bring greater focus to and improve the management of the New Starts program. As the program becomes increasingly oversubscribed, the cost of completing all projects in the development process at any one time far exceeds the amount of Federal funds likely to be available. The New Starts caseload consists of 74 proposed projects seeking Federal discretionary funds.

The funding allocations recommended in this report provide, within the constraints imposed by the budget caps, for the timely and efficient completion of those projects that have progressed the furthest in the development process. A failure to focus funds in the recommended manner risks creating additional expectations that may be difficult to meet in the current budget environment.

Section 5309(g)(4) (Section 3(a)(4)(E)) limits the total amount of LOIs, FFGAs and contingent commitments which can be issued at any time to the remaining balance of the authorization, or one-half of the uncommitted cash balance in the Mass Transit Account of the Highway Trust Fund, whichever is greater. The maximum amount of New Starts funding authorized by ISTEA is about $4.968 billion for FY 1992 through 1997, of which $1.729 billion remains. At the end of 1997, when the ISTEA authorization expires, an additional $1.975 billion is calculated to be available for New Starts commitments from one-half of the uncommitted balance of the Mass Transit Account. In addition, Section 3032 (g)(2) of ISTEA specifies that commitments to the San Francisco Bay Area rail extension program be made from the entire unobligated balance of the Mass Transit Account. This effectively provides an additional $775.00 million in New Starts funding authority, bringing the total remaining authority to $4.479 billion. The sum of the commitments which are proposed in this report ($4.337 billion), is within this amount. FTA intends to manage the New Starts caseload so that as individual projects in this group meet the necessary requirements in the development process, negotiations for FFGAs can proceed while keeping the total Federal commitments within both the available funding authority and the program level that can be accommodated within the budget caps.

Table 1 summarizes the recommendations for FY 1997 funding and overall funding commitments, and compares them to the funding authorizations contained in ISTEA. For each project in the New Starts process, the first column indicates the amount of funds which were provided to the project prior to ISTEA. The second column indicates the amount of funds provided since the enactment of ISTEA that have been obligated to each project, and the third column shows the amount of FY 1995 and prior year earmarked funds provided since the enactment of ISTEA which have not yet been obligated. The fourth column shows the amount of funds available as a result of the FY 1996 DOT Appropriations Act (adjusted to account for oversight activities). The fifth column summarizes the recommendations for funding in FY 1997, and the sixth column shows the maximum amount of 5309 (Section 3) outyear funding recommended to be committed to these projects. The seventh column in Table 1 sums the first six columns and shows the total amount which would be made available for each project from 5309 (Section 3) over the life of that project, and the final column shows the total discretionary program amount authorized in ISTEA for each project over the authorization period.

Table 1: FY 1997 Funding for New Start Projects