2009 Guidance on New Starts/Small Starts Policies and Procedures

[Federal Register Notice for 2009 Final Guidance on New Starts/Small Starts Policies and Procedures]

Note the Federal Register notice contains responses to comments on the proposed guidance as well as the final guidance in full.

July 29, 2009

Prepared by:
Federal Transit Administration
Office of Planning and Environment
US Department of Transportation

Table of Contents

Section
Summary
Organization
Response to Comments
1. New Starts Project Justification Rating
2. Small Starts Project Justification Rating
3. Alternatives with Tunnels
4. Broader Comments on New and Small Starts Program
Final Guidance
1. New Starts Project Justification Rating
2. Small Starts Project Justification Rating
3. Alternatives with Tunnels

Summary

The purpose of this notice is to convey the 2009 final guidance on New Starts/Small Starts policies and procedures. On May 20, 2009, FTA announced in the Federal Register the availability of proposed guidance and requested public comment.  FTA received a total of 29 comments, primarily from transit agencies and metropolitan planning organizations, as well as cities, advocacy groups, state departments of transportation, and other interested parties. After reviewing the public comments, FTA is issuing final guidance, which is included at the end of this notice. Please note that FTA is concurrently publishing a separate notice in today’s Federal Register that includes additional proposed guidance on the New Starts and Small Starts program for public comment.

Organization

The proposed guidance issued on May 20, 2009 was developed to implement the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Technical Corrections Act of 2008 (Pub. L. 110-244), which amends 49 U.S.C. 5309.  The guidance covered three distinct topics:  Proposed weighting of project justification criteria and evaluative methodology for the economic development effects, operating efficiencies, and transit supportive land use criteria for New Starts projects; Proposed weighting of project justification criteria and evaluative methodology for the economic development effects and transit supportive land use criteria for Small Starts projects; and Proposed procedures for considering the benefits of project alternatives that include a tunnel, as well as certain costs when a tunnel is considered but not selected for a project. Responses to comments on each of these topics are presented below. Following the responses, the final guidance is articulated in full.

Response to Comments

1. New Starts Project Justification Rating

The SAFETEA-LU Technical Corrections Act directed that the project justification criteria for New Starts projects be given comparable, but not necessarily equal, weights. In the proposed guidance, FTA suggested the use of the following weights:  mobility improvements (20 percent); environmental benefits (10 percent); cost effectiveness (20 percent); operating efficiencies (10 percent); economic development effects (20 percent); and public transportation supportive land use (“land use”) (20 percent). FTA also proposed methods for evaluating the criteria for economic development effects, land use, and operating efficiencies.

Of the 29 respondents, 19 expressed general support for FTA’s proposed weighting scheme. Of the remaining respondents, four did not directly address the proposal; three proposed minor changes to the weighting scheme and three others proposed significant changes – modifications to both the weighting scheme and the criteria measures (two of these three respondents proposed identical modifications). Each of the six proposals suggesting different weighting schemes is discussed in the comments and responses below.

Comments: One respondent suggested reducing the weight on operating efficiencies to zero, on the premise that the cost effectiveness measure captures this criterion, and suggested increasing the weight on mobility improvements to 30 percent.

Response: FTA formerly used the operating efficiencies criterion in evaluating projects, but found that the measure did not provide meaningful distinctions between projects. Consistent with the direction in the SAFETEA-LU Technical Corrections Act, FTA will evaluate operating efficiencies as a stand-alone criterion, but, in recognition of the limitation of the current measure for this criterion, will give it less weight than some of the other criteria.

Comments: One respondent suggested modifying the distinction between land use and economic development by: 1) removing the evaluation of existing land use; 2) considering the transit supportive plans and policies for present and future development as the core of the land use evaluation; 3) considering the transportation performance and impact of land use policies in the land use evaluation (e.g., parking requirement reductions); and, 4) considering the economic performance and impact of land use policies to economic development (e.g., increase in tax base). The respondent stated that existing land use is already captured by the estimates of ridership generated by the travel forecasting model.

Response: For project evaluation and rating, FTA uses travel forecasts based upon forecast year population and employment projections compiled by regional metropolitan planning organizations, not opening year forecasts which would be more reflective of existing transit supportive land use. FTA considers the existence of existing transit supportive land use in the corridor to be relevant to the understanding of the proposed project and a criterion for which credit should be given in the evaluation of the project.

FTA is working with the transit community to develop a more robust methodology for measuring economic development effects and will consider the alternative proposed by the respondent as it continues that work. The proposed measure for economic development effects in this guidance is intended to be an interim approach, which requires no new data from project sponsors, but which will be useful until a more robust measure can be developed.

Comments: One respondent suggested weights of at least 30 percent for cost effectiveness and land use and no more than 10 percent for each of the other criteria. The respondent stated that the cost effectiveness criterion clearly demonstrates the impact of a project on customer travel time and that existing land use is a very reliable indicator of ridership potential.

Response: FTA agrees that cost effectiveness and existing land use are useful measures in assessing projects. FTA is, however, assigning less disparate weights to all of the project justification criteria than the respondent suggests, consistent with the direction in the SAFETEA-LU Technical Correction Act calling for the assignment of comparable, but not necessarily equal, weights.

Comments: Two respondents proposed changing the criteria weights as well as modifying numerous criteria measures. Highlights of these responses included recommendations to: 1) increase focus on land use, noting that the weights proposed by FTA reduce the weight of the previously-used land use criterion from 50 to 40 percent (combining land use and economic development effects); 2) gather more information and place greater emphasis on comprehensive land use and transportation strategies that enhance the effectiveness of transit projects, avoid urban sprawl, and reduce local infrastructure costs and produce other benefits of compact development including reductions in vehicle travel and greenhouse gas emissions; 3) simplify the mobility improvements (20 percent weight) measure to consider only ridership and benefits to transit dependents; 4) consider quantifiable reductions in emissions and vehicle miles traveled (VMT) in the environmental benefits criterion (15 percent); 5) use cost per rider for cost effectiveness (10 percent) rather than incremental cost per incremental “user benefit;” and, 6) use incremental system cost per rider for operating efficiencies (5 percent).

Another respondent also suggested changes to the criteria weights as well as to numerous criteria measures. Highlights of the response included recommendations to: 1) reduce the mobility improvements weight (10 percent weight); 2) consider reductions in VMT and greenhouse gas (GHG) emissions in the environmental benefits criterion (15 percent); 3) compute cost effectiveness by comparing the project to the “no build” alternative rather than the “baseline” alternative (25 percent); 4) include fare box and other revenue recovery considerations in the measurement of operating efficiencies (10 percent); 5) modify the land use evaluation to be more reflective of actual land use policies and decisions that support transit, including steps local governments could take to ensure planning and zoning matched the proposed transit investment (20 percent); and, 6) modify the economic development effects criterion to consider a higher rating for projects that include government action to provide incentives to encourage economic development (20 percent).

Response: It is not clear from the respondents’ comments if their proposals for changing the weights are independent of the proposals for changes in the criteria measures. As such, it is difficult to comment on the respondent’s proposed changes to the weights, other than to note the suggestions are relatively minor in comparison to those proposed by FTA. The respondents’ suggested modifications to the criteria measures, on the other hand, are not minor. FTA’s proposal focused primarily on criteria weights. FTA’s proposal also distinguished the measures formerly used for land use, separating them into measures for economic development effects and land use because of the statutory direction to treat these two criteria separately. FTA’s proposal also intended to meet the requirements of the Technical Corrections Act while limiting the amount of new data and information required from project sponsors at this point in time. FTA will continue to consider the suggestions provided as it develops future performance measures for the project justification criteria and future policy guidance documents.

Comments: Eighteen respondents noted that the proposed guidance omits discussion of whether the funding recommendation practice generally requiring a “medium” cost-effectiveness rating announced in a 2005 “Dear Colleague” letter will continue. These respondents questioned what impact giving comparable weight to each project justification criterion will have if a single criterion continues to be used in general as a go/no-go decision rule in funding recommendations. Fourteen of these respondents explicitly requested that FTA rescind the “Dear Colleague” letter.

Response: This final guidance describes FTA’s process of evaluating and rating proposed projects. It does not address the practice generally requiring a “medium” cost-effectiveness rating for a project funding recommendation, announced in the 2005 “Dear Colleague” letter. The evaluation and rating of the statutory criteria determine the eligibility of a project for consideration for a funding recommendation. The Administration is continuing to review the appropriateness, efficacy, and impact of the “Dear Colleague” letter practice.

Comments: Seven respondents inquired as to whether FTA will continue to consider “other factors” in the project justification rating, specifically the “case for the project” document and whether the proposed New Starts project is a principle element of a congestion management strategy in general, and an auto pricing strategy, in particular. Four respondents recommended that FTA remove the provision of improving the rating of projects that are part of an auto pricing strategy. 

Response: Based on comments received and FTA’s own views on the use of “other factors”, FTA has proposed in a concurrent notice published in this issue of the Federal Register changes to its review of “other factors”. After considering comments received on that notice, FTA will publish 2009 Supplemental Final Policy Guidance.

2. Small Starts Project Justification Rating

The SAFETEA-LU Technical Corrections Act directed that the project justification criteria for Small Starts projects be given comparable, but not necessarily equal, weights.  In the proposed guidance, FTA suggested using a weight of 33.3 percent to each of the Small Starts project justification criteria: cost effectiveness, public transportation supportive land use policies (“land use”), and economic development effects. FTA also proposed methods for evaluating the economic development effects and land use criteria.

Comments: Of the 29 comments received, 16 expressed general support for the proposed weighting scheme. Of the remaining respondents, ten did not directly address the proposal; one proposed a minor change to the weighting scheme and two others proposed identical, significant changes. Each of the three proposals for different criteria weights is discussed in the comments and responses below.

Comments: One respondent suggested increasing the weight of the cost effectiveness criteria from 33.3 percent to 50 percent and reducing the weight of the land use and economic development effects criteria to 25 percent each.

Response: FTA considers its proposed weighting of the criteria for Small Starts to be more consistent with the Technical Corrections Act’s direction than the respondent’s proposal. 

Comments: One respondent agreed with the weights proposed by FTA provided the criteria measures change as follows: 1) land use should require more information and place greater emphasis on comprehensive land use and transportation strategies that enhance the effectiveness of transit projects, avoid urban sprawl, and reduce local infrastructure costs and produce other benefits of compact development including reductions in vehicle travel and greenhouse gas emissions; 2) cost per rider should be the measure for the cost effectiveness criteria; and, 3) meaningful measures of economic development effects should ultimately developed.

Comments: One respondent suggested a variety of improvements to the New Starts measures and for Small Starts notes that the same changes should be applied, though with an emphasis on methods that are easier to report and a consideration of only those criteria required by statute.

Response: FTA’s proposal intends to meet the requirements of the Technical Corrections Act while limiting the amount of new data and information required from project sponsors.  FTA currently attempts to use measures for Small Starts that are easier to report compared to New Starts.  FTA will continue to consider the suggestions provided as it develops future performance measures for the Small Starts project justification criteria and on future policy guidance documents.

3. Alternatives with Tunnels

The SAFETEA-LU Technical Corrections Act calls for the analysis, evaluation, and consideration of the congestion relief, improved mobility, and other benefits of transit tunnels in projects that include a tunnel, and the ancillary and mitigation costs to relieve congestion, improve mobility, and decrease air and noise pollution in projects that do not include a tunnel, but where a tunnel was considered. In the proposed guidance, FTA suggested it would require that alternatives analysis studies address these impacts of transit tunnels when a tunnel is part of a project or was considered during the alternatives analysis. FTA proposed to ensure that such information was addressed during alternatives analysis as part of the FTA review of project applications for entry into preliminary engineering.

Comments: One respondent requested that FTA define “tunnel” to clarify when additional analysis is needed, and others noted that a complimentary, realistic surface option is not always available (e.g., commuter rail under Manhattan or light rail beneath an airport runway).

Response: Additional analyses are required when different vertical alignments (i.e., at-grade versus underground) of a proposed reasonable alternative result in disparate impacts to automobile congestion, mobility, air and noise pollution, and/or any other relevant consideration.

Comments: Eight respondents noted that the Technical Corrections Act directs FTA to analyze, evaluate, and consider the benefits of tunnels, but the proposed guidance does not explain how FTA will consider the results of the analysis in their ratings. Three respondents suggested, in the absence of more detailed guidance, that FTA not change how tunnels are currently considered in the evaluation criteria and continue to invite sponsors to use the “case for the project” document and “other factors” section of the New Starts submissions to highlight the benefits of tunnels not captured by the other criteria. One respondent suggested modifying the cost effectiveness measure and project justification rating to better account for tunnel options compared to non-tunnel options, including local traffic and land use issues.

Response: As reflected in the final guidance, FTA concurs with the suggestion of not changing the current evaluation methods.  The mobility improvements, operating efficiencies, land use, economic development effects, and cost effectiveness project justification criteria capture much of the benefits provided by tunnels. Additionally, FTA’s consideration of “other factors”, offers project sponsors the opportunity to present evidence not considered by the aforementioned criteria, including mitigation costs necessary due to the selection of an above-ground alignment. 

Comments: Three respondents requested that FTA describe the specific analyses FTA expects project sponsors to perform to meet this requirement. One respondent suggested that the screening of alternatives should be a local process and that FTA should not mandate specific analytical methods.

Response: FTA is not prescribing analysis and evaluation techniques for assessing tunnels.  Project sponsors are free to use methods deemed most appropriate for local conditions when evaluating the impacts of a tunnel option to address the transportation problems described in the alternatives analysis. FTA’s role is to ensure consistency with the direction in the Technical Corrections Act and to facilitate informed decision making by the public and local officials by ensuring that the analysis is reasonable.

Comments: One respondent suggested extending the consideration of tunnels (or no tunnel) to both the preliminary engineering stage of project development and/or through the final environmental impact statement.

Response: FTA does not wish to mandate that a vertical alignment (be it tunnel or no tunnel) other than the locally-preferred alternative always be considered beyond alternatives analysis.  The purpose of the alternatives analysis is for local decision makers to select a mode and general alignment – including vertical alignment. This decision should remain a local one.

4. Broader Comments on New and Small Starts Program

FTA received numerous comments regarding aspects of the New and Small Starts programs not explicitly discussed in the proposed guidance, including some comments that require regulatory or legislative changes. For some time FTA has been considering many of these and other ideas. Consequently, as an initial step, FTA is issuing additional proposed guidance in this issue of the Federal Register aimed at streamlining and simplifying the New and Small Starts programs. FTA’s efforts to streamline will continue in the future and the comments summarized below will be given consideration moving forward.

Comments: Eight respondents suggested that FTA issue a comprehensive set of guidance so that project sponsors can be fully and accurately informed regarding current FTA requirements. Such guidance could respond to recent actions taken by Congress and be open to public comment.

Comments: Four respondents suggested changes to the Very Small Starts streamlined evaluation requirements, specifically: 1) removing the total project cost and cost per mile requirements; 2) removing the requirements on daily operations and number of riders; 3) allowing low-floor buses to be purchased as part of an agency-wide purchase, rather than as part of the project; and, 4) defining “substantial long-term corridor investment” (in a non-fixed guideway corridor) per the statute.

Comments: Three respondents suggested that FTA implement the reliability rating change through notice and comment rulemaking.

Comments: Three respondents urged FTA to streamline the planning and project development process. Another asked FTA to completely revamp the program.

Comments: Two respondents suggested that FTA change how local financial commitment is recognized and how local funds can be used. One suggested recognizing all of the local contributions made in the fiscally-constrained long-range plan towards a new fixed-guideway system when considering the financial rating of a New Starts project. Another suggested allowing for so-called “deferred local match,” as well as allowing project sponsors that invest more than 20 percent of total project cost to follow local procedures for aspects of the project funded with local funds.

Comments: Besides the previously discussed suggestion to change the existing practice requiring a “medium” cost-effectiveness rating for a project funding recommendation, suggestions on FTA’s cost effectiveness index included:  1) basing cost effectiveness on the amount of the Federal investment rather than the total project cost; 2) replacing the current cost effectiveness measure of cost per hour of transportation system user benefit with cost per new rider; 3) tying the New Starts share to the cost effectiveness measure (i.e., the higher the measure, the higher the allowable New Starts share); and, 4) updating the measure to account for inflation.

Comments: One commenter criticized the current measure of environmental benefits for being biased against areas that are currently less dense but growing. Another commenter suggested that any environmental benefits measure be presented as relative, rather than absolute, to avoid biases against large cities.

Comments: Suggestions regarding land use issues not mentioned previously included: 1) considering the land acquisition to build transit-oriented developments differently when calculating project cost; and 2) modifying the rating to reward communities that demonstrate implementation of affordable, mixed-income housing preservation and expansion policies and community planning activities. Criticisms of the evaluation of land use included: 1) the practice of fixing land use in the analysis of the transportation benefits associated with the project ignores the effect of the project in promoting higher density; and, 2) the focus on existing land use ignores the inability of density to increase without the project in place.

Comments: Comments on FTA’s emphasis on the state of good repair included: 1) one respondent requested that rebuilding and maintaining aging infrastructure be a high priority in the next transportation bill; and 2) two respondents questioned why FTA rates a financial plan for a New Starts project that relies on section 5307 formula funds or section 5309 fixed guideway modernization funds less favorably than financial plans that do not rely on these sources.

Comments: Suggestions regarding broad program changes included: 1) considering benefits to increasing corridor capacity in the project justification criteria; 2) splitting the program into two categories, new and expansion, to allow for a more level playing field and balanced funding allocation; 3) providing a bonus to metropolitan areas that exceed ridership expectations; 4) reducing the expectations of capital cost and ridership estimates at early stages of project development; 5) allowing flexibility in the timing of when the New Starts share is finalized; 6) keeping the New Starts process distinct from the process required by the National Environmental Policy Act; 7) working with the Federal Highway Administration to develop a uniform project development process for multi-modal projects; and, 8) expanding “warrants”, such as those used for Very Small Starts, to larger projects.

Final Guidance

1. New Starts Project Justification Rating

The project justification rating of a project seeking New Starts funding will be based on ratings for the following criteria with the weights shown in parentheses: mobility improvements (20%), environmental benefits (10%), cost effectiveness (20%), operating efficiencies (10%), economic development effects (20%), and public transportation supportive land use (20%).

FTA’s approach to the measures and ratings is to base them on existing procedures and information produced by project sponsors to the extent possible. This allows for their immediate implementation because new information, along with the additional time required for project sponsors to develop it, is not required. More significant changes have been postponed until FTA completes development of more robust measures, particularly for environmental benefits and economic development effects. The measures for the mobility improvements, environmental benefits, and cost effectiveness criteria do not change at this time under this guidance. The operating efficiencies criterion will be evaluated and rated as it was in fiscal year 2008 and earlier using the incremental difference in system-wide operating cost per passenger mile between the build and the baseline alternatives. To avoid requiring new information from project sponsors until such time as FTA develops more robust measures, the economic development effects rating will be based on two of the three subfactors previously used to rate public transportation supportive land use – transit supportive plans and policies, and performance and impact of policies. The remaining land use subfactor previously used – existing land use – will be the basis for the public transportation supportive land use rating. Each of these three subfactors, although separated into two separate measures, will be evaluated and rated as they were previously.

The rating for each criterion will be expressed descriptively as “low,” “medium-low,” “medium,” “medium-high,” or “high,” with a corresponding numerical rating of one to five used in aggregation calculations.

A simple approach was used to determine the magnitude of the weights of all the project justification criteria, but not the simplest. The simplest would be to make all weights equal, meaning between 16 and 17 percent. The lower weights for the environmental benefits and operating efficiencies criteria acknowledge the transit community’s lack of consensus about useful, easily reported measures for these criteria that can be used to meaningfully distinguish between projects.

FTA is conducting research to identify useful measures for the environmental benefits criterion. Likewise, in a Federal Register notice published on January 26, 2009, FTA issued and sought comments on a discussion paper on new, alternative ways of evaluating economic development effects. FTA is now reviewing comments on that paper.

2. Small Starts Project Justification Rating

The project justification rating of a project seeking Small Starts funding will be based on ratings for the following criteria with the proposed weights shown in parentheses: cost effectiveness (one third), economic development effects (one third), and public transportation supportive land use policies (one third).

FTA’s approach to the project justification measures for Small Starts is identical to that described above for New Starts, meaning that they are based on existing procedures and information produced by project sponsors to the extent possible. The measure and rating for the cost effectiveness criterion does not change under this guidance. The measures and ratings for the economic development effects and public transportation supportive land use criteria are identical to those proposed for New Starts. The economic development effects rating will be based on two of the three subfactors previously used to rate land use (following the data reporting simplifications already in place for Small Starts projects) – transit supportive plans and policies and performance and impact of policies. The remaining land use subfactor previously used – existing land use – will be the basis for the public transportation supportive land use rating.

The simplest approach was used to determine the magnitude of the weights, with all of them weighted equally.

Projects that qualify for the Very Small Starts streamlined evaluation will continue to receive an automatic “medium” rating for project justification.

3. Alternatives With Tunnels

As a condition of advancement into preliminary engineering, FTA requires that alternatives analysis studies specifically analyze, evaluate, and consider the congestion relief, improved mobility, and other benefits of transit tunnels in those projects that include a transit tunnel and the associated ancillary and mitigation costs necessary to relieve congestion, improve mobility, and decrease air and noise pollution in those projects that do not include a tunnel, but where a transit tunnel was one of the alternatives analyzed. Additional analyses are required when different vertical alignments (i.e., at-grade versus underground) of a proposed reasonable alternative result in disparate impacts to automobile congestion, mobility, air and noise pollution, and/or any other relevant consideration. FTA will ensure that such information has been addressed during the alternative analysis of projects that considered a tunnel as part of the FTA review of project applications for entry into preliminary engineering.

The mobility improvements, operating efficiencies, land use, economic development effects, and cost effectiveness project justification criteria capture much of the benefits provided by tunnels. Additionally, FTA’s consideration of “other factors,” including the “case for the project” document, offers project sponsors the opportunity to present evidence not considered by the aforementioned criteria, including mitigation costs necessary due to the selection of an above-ground alignment. In evaluating the consequences of a tunnel option compared to a surface option, project sponsors are encouraged to use the full range of FTA project justification criteria to support local decision making during project planning.