AASHTO Rail Resource CenterWorkshop & Webinar February 23, 2012

Up to our ____ in TIGERs:How to Compete Successfully

Kevin KellerVice President, HDR Engineering, Inc.President, American Railway Development Association

Transportation Investment Generating Economic Recovery (TIGER) Grants

Investments in road, rail, transit and port projects that promise to achieve critical national objectives.

TIGER I - $1.5 billion (51 awards) TIGER II - $600 million (42 capital awards, 33

planning awards) TIGER 2011 - $527 million (46 awards) TIGER 2012 - $600 million

Keys to Competitive Applications

Eligibility Address Criteria and Outcomes Clarity Leveraging Investment Project Segmentation Benefit-Cost Analysis Project Readiness/NEPA

Exercise #1

You have been approached by over 20 potential applicants in your State, but you can only be the lead applicant on 3 of them.– How do you pick the 3?– What are priorities?– Political considerations?– Ramifications?

Eligibility Eligible ≠ Competitive

Surface transportation capital projects only Open to state, tribal, and local entities, and other

subdivisions Private entities, including non-profits, must partner

with a public lead Rural grants: $1 million minimum (no match

required) Urbanized area grants: $10 million minimum (20%

match)

Two-Tiered Process

Pre-Application– Project Description of 50 words or less– Identification of Applicant– NEPA Status– Funds Requested– Matching Funds

Application

Address Criteria and Outcomes

Application outline in the NOFA Describe how project addresses challenge Detail how federal funds will be used Address the selection criteria

Primary Criteria

State of Good Repair Economic Competitiveness Livability Environmental Sustainability Safety Job Creation/Near-Term Economic

State of Good Repair Improving the condition of existing transportation

facilities and systems, with particular emphasis on projects that minimize life-cycle costs.

DOT focused its investments on bridges that not only exhibited acute need, but also demonstrated substantial State and local support for repair and incorporated broad multimodal goals in their design and reconstruction.

Benefits –State of Good Repair

State of Good Repair benefits can include:– Reducing long-term maintenance and repair costs (life-

cycle costs)– Travel time savings (from preventing closures of facilities,

lack of speed and weight restrictions)– Other user benefits from better pavement, improved

safety Need to consider benefits and costs of alternatives

– Replacement vs. rehabilitation Risk analysis

Economic Competitiveness

Contributing to the economic competitiveness of the United States over the medium- to long-term.

Benefits –Economic Competitiveness

Benefits in this category typically include:– Lower operating costs– Travel time savings– Savings to passengers, carriers, and shippers– Improvements in reliability

Take care in estimating:– Job creation benefits (focus on productivity increases)– Omit multiplier effects– Can include increases in labor and land productivity - But

avoid double-counting

Livability Fostering livable communities through place-based

policies and investments that increase transportation choices and access to transportation services.

TIGER’s broad, multimodal scope enables DOT to fund projects that strengthen local and regional economies, support communities by expanding transportation choices and foster connections to places people work, play and live.

Providing new or better transportation connections for residents and commuters is critical to livability.

Benefits –Livability

Livability benefits are often associated with:– Accessibility for Improved access to jobs, amenities– Accessibility for disadvantaged communities

Land use changes linked to transportation Transit and bicycle-pedestrian improvements Affordability (transportation, housing)

– At least show ridership/usership– Try to estimate value per user– Increases in property values may indicate value

Environmental Sustainability

Improving energy efficiency, reducing dependence on oil, reducing greenhouse gas emissions and benefitting the environment.

As national policy in the United States continues to encourage energy efficiency and security, and reduced reliance on motor fuels, DOT is focused on maintaining a strong, sustainable transportation system.

Benefits –Sustainability

Environmental sustainability benefits are typically from reduced emissions– Greenhouse gases (e.g., CO2)– SOx– NOx– Particulate matter (PM)– Volatile organic compounds (VOC)

Recommended values are available in NOFA

Safety

Improving the safety of U.S. transportation facilities and systems.

Through the TIGER programs, DOT focuses investments on projects with broad safety benefits.

Benefits –Safety

Safety benefits are typically associated with reducing fatalities, injuries, crash costs, and hazmat releases

Benefits should be based on good crash data and valid analysis of cause

Recommended input values for injuries, property damage, and other data are available in USDOT TIGER NOFA

Jobs Creation & Economic Stimulus

While the TIGER Discretionary Grant program is not a Recovery Act program, job creation and economic stimulus remain a top priority.

DOT will give priority to projects that are expected to quickly create and preserve jobs and stimulate rapid increases in economic activity, particularly jobs and activity that benefit economically distressed areas.

Secondary Criteria

• Innovation• DOT will give priority to projects that use innovative

strategies to pursue the long-term outcomes outlined earlier.

• Partnership• DOT will give priority to projects that demonstrate

strong collaboration among a broad range of participants and/or integration of transportation with other public service efforts.

Clarity

Ensure project descriptions are clear and concise

Pictures and maps are helpful Focus on why project is compelling DOT Staff and experts may review 100-200

applications within a short period of time

Leveraging Investment

Matching state and local funds with private funds helps demonstrate commitment = more competitive– Average match for urban projects = 67% (20%

required)– Average match for rural projects = 47% (0%

required) Public-private projects must demonstrate

significant public benefits

“Ideal” Match

$40 million total project cost– $10 million State – $10 million Private– $5 million local– $15 million TIGER

Project Segmentation

Clearly identify multiple project elements if the project is “segmentable”

Segments must have “independent utility”– No more bridges to Nowhere!

Provides transportation benefits Will be ready for use when complete

Phases must complete operable segment

Benefit-Cost Analysis

Demonstrate demand for the project include good ridership/usership estimates

Document benefit-cost calculations and references for monetized values

Show the net societal benefits of the project not just local benefits

Why Require a BCA? President’s commitment to data-driven decision-

making Requirement from TIGER I and II

– No funding for projects for which C > B Value of BCA in project selection

– BCA quality matters more than size of the B/C ratio Focus your analysis on how it demonstrates need for

your project

So What is a BCA?

BCA is distinct from:– Financial analysis– Economic impact analysis

Costs and benefits refer to changes in welfare– Are people made better off by the proposal

“...an analysis which quantifies in monetary terms as many of the costs and benefits of a proposal as feasible, including items for which the market does not provide a satisfactory measure of economic value.”

UK Treasury (2003), Appraisal and Evaluation in Central Government

Benefit-Cost Analysis Basics

What is the purpose of the BCA?– Benefit Cost Analysis measures the creation or

erosion of real economic value– “Value” denotes welfare or quality of life

TIGER III project selection & BCA– BCA quality matters more than size of the B/C ratio– Focus your analysis on how it demonstrates need

for your project

Basic Requirements Project Summary

– Base case (“no-build”) Project description Justification and impact on long-term outcomes Affected population(s) Expected economic benefits Alternatives Monetized estimates of benefits & costs

– Year-by-year stream of benefits and costs Discounted to present value (3% & 7%) Replicable methodology Demonstrate Independent Utility

CORE BCA Principles

i. Costs & benefits estimated on incremental basis against realistic baseline (generally not status quo)

ii. Reasonable alternatives considered and evaluated

– e.g., smaller scale and more focused projects

iii. Costs & benefits expressed in monetary terms (constant dollars) and estimated over project’s useful life

iv. Discounting

– i.e., OMB Guidance for TIGER

v. Summation of benefits & costs, and estimation of NPV

CBA Project Rating

CBAs are reviewed and rated by US DOT Review team– Very Useful– Useful– Marginally Useful– Not Useful

BCA - Lessons Learned ALWAYS document and provide reliable sources for data and

calculations Be realistic in assumptions and estimates Qualitative discussion helps supplement understanding for

difficult-to-measure benefits & costs Consider the viewpoint of objective reviewers

– Are estimates plausible and reasonable? Focus on overall evaluative process, not just the B/C ratio

Benefit-Cost Analysis (cont.)

Be cautious in estimating job-related benefits Be cautious in estimating real estate

investment benefits Consider costs and benefits of more land

development Estimate safety benefits based on good crash

data and valid analysis of cause

Project Readiness/NEPA

Projects that are ready to move to construction quickly are given priority

Document where the project is in the NEPA process

Initiate NEPA in advance of the application process, if possible

If the project expects a CE determination, demonstrate why this is justified

Exercise #2

There is a new round of TIGER funding coming out – total funding is $1 billion.– What project type is the best to select for a

potential TIGER Grant application?– What is target ask?– What is the ultimate matching fund mix?– What is NEPA Status?– How does project fit the USDOT criteria?

TIFIA Challenge

Up to $150 million available for TIGER TIFIA Payments

Also required to submit a TIFIA letter of interest

Must demonstrate that the loan is ready to close on or before September 30, 2013

Rural Applicants

Rural Areas -any area not in an Urbanized Area (pop. 50,000), as defined by the Census Bureau

$1 million minimum grant No match requirement

– Competitive applications often feature a match

Highly Competitive Projects Multimodal projects, coordinated investment from

other sources and programs Demonstrate project benefits across selection criteria New partnerships, multi-jurisdictional cooperation Public-private partnerships Support key national priorities Non-traditional or hard to fund projects Average award in recent rounds has been $10-15 million Average match has been 67% for urban and 47% in rural

Application Pitfalls Ineligibility: applicants and projects Priorities/outcomes not aligned with selection

criteria Project readiness Insufficient matching funds, lack of demonstration Non-construction requests: O/M assistance, ROW Grouping unrelated projects Performance Measures

Lessons Learned

Focus on best project(s) –those that align well with the program’s selection criteria

Develop an application that your neighbor could read and understand

Big League Politics State DOTS have to be engaged Introduce DOT TIGER Team to project early Take advantage of debriefs

Exercise #3

The Governor’s Office is insisting that your agency support the TIGER Grant App for a certain project that doesn’t fit the TIGER program criteria.– What do you do?

Parting Words…

TIGER is NOT a highway program– MULTIMODAL

Not all projects fit the TIGER criteria Remember – the TIGER Team does not know

your project – be clear and concise Be realistic in your assumptions and estimates Have a Plan B