New Starts/Small Starts Workshop

APTA’s Legislative ConferenceAPTA’s Legislative Conference

March 14, 2007March 14, 2007

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Today’s Workshop

• Intro to Program and FY2008 New Starts Annual Report

• New Starts Project Planning• New Starts Evaluation and Funding• Small Starts Interim Guidance and New

Starts/Small Starts Rulemaking• Deloitte Report on New Starts and FTA

Response

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New Starts Program

• Over $1.5 billion annually for “fixed guideway” transit investments

• Current “pipeline:” 26 projects in PE, Final Design, and Small Starts “Project Development”

• Total cost of pipeline: >$24.7 billion, $11.5 billion in New Starts funding

• FTA tracking >100 planning studies considering major transit capital investments

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New Starts/Small Starts Projects PE, Final Design, and Project Development

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FY 2008 Evaluation Approach

• No changes in measures used – consistent with FY 2007 approach– Transparent evaluation/rating process– Continuing focus on project outcomes– Project risk assessments to support evaluation information

• Cost effectiveness breakpoints adjusted for inflation – per May 2006 Reporting Instructions

• Implements some features of SAFETEA-LU:– Changes rating nomenclature and scale

- Pre-SAFETEA-LU: Highly Recommended, Recommended, Not Recommended- SAFETEA-LU: High, Medium, Low

– Limits Secretary’s ability to require a non-Federal financial commitment for a project that is more than 20 percent of the net capital project cost.

• Includes first time evaluation of Small Starts projects

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Summary of Overall Project Ratings

FY 2007 Report

24 Projects

FY 2008 Report

25 Projects

• 1 High • 2 High

• 17 Medium • 18 Medium

• 2 Low

• 4 Exempt

• 5 Exempt

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Summary of FY 2008 New Starts and Small Starts Budget Recommendations

11 existing FFGAs $863.7 M

2 Pending FFGAs $120.0 M

2 Proposed FFGAs $210.0 M

6 Other Projects $ 72.1 M

4 Proposed Small Starts $ 51.8 M

Other Small Starts $ 48.2 M

FTA Oversight/Denali Commission $ 33.9 M

& Ferry Projects (AK/HI)

TOTAL FY08 New / Small Starts $1,399 M

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Pending FFGAs

• Funding recommendations are the proposed levels in the FFGAs as currently drafted.

• Both projects recommended for FFGAs previously, in President’s FY 2007 budget.

Location Project Rating Total New Starts Share

Total Project

Cost

FY 2008 Budget

Denver, CO

West Corridor LRT Medium $290.6 M

(51 %)

$574.2 M

$40 M

Portland, OR

South Corridor

I-205/Portland Mall LRT

Medium $334.4 M

(60 %)

$557.4 M

$80 M

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Proposed FFGAs• FTA recommends $210.0 million for two proposed FFGAs.

Each project:– Is projected to be ready for an FFGA by the end of FY 2008

– Is rated High

– Has a Medium or higher rating for cost-effectiveness

Location Project Rating Total New

Starts Share

Total Project

Cost

FY 2008 Budget

New York, NY

Second Avenue Subway Phase I

High $1,300.0 M

(28%)

$4,655.4 M

$200.0 M

Seattle, WA University Link LRT Extension

High $750.0 M

(46%)

$1,645.9 M

$10.0 M

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Other Projects• FTA recommends $72.1 million for six other projects.

• Each project:

– Rated Medium or higher

– Has a Medium or better cost effectiveness rating, or is exempt by statute

Location Project Rating Total New Starts Share

Total Project Cost

Hartford, CT New Britain-Hartford Busway Medium $275.3 M

(60%)

$458.8 M

Minneapolis-Big Lake, MN

Northstar Corridor Rail Medium $151.8 M

(49%)

$307.3 M

Houston, TX North Corridor BRT Medium $137.4 M

(50%)

$275.3 M

Houston, TX Southeast Corridor BRT Medium $84.8 M

(50%)

$169.8 M

Norfolk, VA Norfolk LRT Medium $128.0 M

(55%)

$232.1 M

Northern Virginia, VA

Dulles Corridor Metrorail Project-Extension to Wiehle Ave.

Medium $900.0 M

(44%)

$2,065.0 M

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FTA

Senate AuthorizingMajority/Minority

Senate AppropriationsMajority/Minority

House AuthorizingMajority/Minority

House AppropriationsMajority/Minority

Office of the Secretary OMB

White House

The New Starts Environment

Individual Senate and House Members

315 Projects16 FFGAs, 26 FD/PE, 100 AA

InspectorGeneral

Govt Accountability

Office

Press

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FTA New Starts Program Goal

Fund meritorious projects• Develop reliable information on project benefits

and costs • Ensure projects treated equitably nationally• Facilitate communication between FTA, transit

industry and Congress

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How FTA Meets Its Goals

• Sound and rigorous management of the program• Promote - and assist in - the development of

reliable information on costs and benefits• Transparent evaluation process • Local decisions, project ratings, and funding

recommendations are based on the best information available to both the public and decision-makers

New Starts Project Planning

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New Starts Project Development Process

• Project Development: Typically 6-12 Years

Alternatives Analysis 1-2 years

Preliminary Engineering

2-3 years 3-7 years

Operation

FTA Approval Required for

Full Funding Grant Agreement (FFGA)

~ 100 AA Studies

19 PE Projects

7 FD Projects

FTA Approval Required

FTA Approval Required

16 FFGA Projects

ConstructionFinal Design

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Key Decisions for Each Phase of Project Development

• Systems planning: priority corridor• Alternatives analysis: mode and alignment• Preliminary engineering: final scope/cost,

completion of NEPA, financial plan• Final design: construction documents• Full Funding Grant Agreement

– FTA: funding– Project sponsor: delivery of the project

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Why Alternatives Analysis Matters. Sets the context for making informed decisions

. Answers the questions that need answers:

• Local questions:– What do we want to do? – What are the benefits?– How much does it cost?– Where’s the money going to

come from?– How do we make it

happen?

• FTA questions:– What’s the problem and were

all reasonable alternatives considered?

– How solid is the LPA decision?– Were the New Starts criteria

developed correctly?– How does the project rate?– Should FTA fund it?

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Alternatives Happen!

• Political leadership changes• Cost increases• Funding decreases• Opposition to more precise alignments• Opposition to project on basis of costs compared

to benefits

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New Starts Planning: FTA Lessons Learned

• Good planning = good decisionmaking• Pay attention to the early decisions• Don’t plan to deal with planning issues in PE• Acknowledge, manage, and minimize risk• Need for consideration of a wide range of alternatives

with consistent policy assumptions• Need to invest in the time and resources to do it right• FTA should be involved early on and throughout the

process• FTA can add value!

New Starts Evaluation and Funding

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New Starts Rating Criteria

• Mobility improvements• Environmental benefits• Operating efficiencies• Cost effectiveness*• Land Use*• Economic Development* (new!)• Reliability of costs and ridership forecasts*(new!)• Local financial commitment*• Other factors* * = Also Small Starts Criteria

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Summary Rating

Project Justification Rating

Financial Rating

Non-Section5309 Share

Capital Finances

Operating Finances

Other Factors

Low Income Households

User Benefits

Mobility Improvements

Environmental Benefits

Operating Efficiencies

Cost Effectiveness

Land Use

The FTA New Starts Evaluation and Rating Framework

Minimum Project Development Requirements:

Employment

Capital Cost

O&MCost

User Benefits

Metropolitan Planning and Programming Requirements

Project Management Technical Capability

Other Considerations

NEPA Approvals

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New Starts Overall Ratings

High Project rated at least "medium-high" for both

finance and project justification

Medium Project rated at least "medium" for both

finance and project justification

Low Project not rated at least "medium" for both

finance and project justification

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Cost Effectiveness Measure

• Cost per unit of benefit:

– Cost measure: Annualized incremental capital (federal and local) plus annual operating cost

– Benefit measure: hours of transportation system user

benefits

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Source of Transportation Benefits of New Starts Projects

• Highway Users: benefits from less congestion due to travelers changing from driving to riding on the New Start

• Current transit users: benefits from faster travel times for New Starts project compared to their previous transit mode

• New transit users: benefits from faster travel times for New Starts project

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Calculation of Transportation Benefits of New Starts Projects

• Highway Users: not determined because of serious travel model difficulties in quantifying degree of congestion relief

• Transit users: benefits from faster travel times for New Starts project for all travelers in the region – In-vehicle time– Walk and wait time– Number of transfers– Capacity constraints– Reliability, comfort, security, branding

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Painting a Picture with User Benefits

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Cost-Effectiveness

• Rating Values:– Low >$29 per hour– Medium-low $23 - $28.99 per hour– Medium $15 - $22.99 per hour– Medium-high $11.50 - $14.99 per hour– High < $11.49 per hour

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Current Land Use Rating Criteria

• Existing Land Use• Transit-supportive Plans and Policies

– Growth Management– Transit-supportive Corridor Policies– Supportive Zoning Regulations Near Transit Stations– Tools to Implement Land Use Policies

• Performance and Impacts of Policies – Performance of Land Use Policies– Potential Impact of Transit Investment on Regional Land Use

• Other Land Use Considerations

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Local Financial Commitment

• Stability and reliability of capital plan

• Stability and reliability of operating plan

• Non-Section 5309 New Starts share (overmatch)

Key Considerations:

– Demonstrated non-New Starts funding commitments

– Demonstrated financial capacity

– Reasonable cost, revenue, and other assumptions

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Financial Ratings In Project Development

• PE Approval – Reasonable financial plan; Funding sources identified; Good non-federal funding history

• Annual New Starts Evaluation (PE) – Proposed funding sources established; Funds are planned and budgeted; Refined cost estimates

• FD Approval – At least 50 percent of non-5309 New Starts funding committed; Firm cost estimates; Address funding shortfalls

• FFGA – 100% non-New Starts funding committed; Funding shortfalls covered

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What is a Full Funding Grant Agreement (FFGA) ?

• Formal Agreement signed by FTA and Grantee following detailed review by DOT, OMB and Congress

• Agreement on Project Scope, Budget, and Schedule

• Terms and Conditions of Federal Participation• Multi-year Funding Commitment (subject to

Congressional Appropriations)• Caps Federal Section 5309 New Starts funds

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Full Funding Grant Agreement

• To receive an FFGA a project must:– Be Authorized in Law– Complete the Planning, Project Development, and

NEPA Processes– Meet Project Readiness Requirements (techinical

capacity, firm and final cost estimate and funding)– Receive a “Medium” or higher overall rating– Receive a “Medium” or higher cost effectiveness rating– Meet all other Federal Requirements

Small Starts Interim Guidance andNew Starts/Small Starts Rulemaking

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Key SAFETEA-LU Provisions

Separate Funding Category beginning FY 07 ($200 million authorized annually)

Rulemaking Required

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Small Starts

Simplified Process Planning and Alternatives Analysis Project Development Construction

Simplified “Project Construction Grant Agreement”

Scope Cost Schedule Federal Funding Maximum Amount and Schedule Local Funding Sources

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Eligibility - Costs

• Total cost ≤ $250 million• New Starts share ≤ $75 million• Exempt projects (≤ $25 million New

Starts share) may:– Remain exempt until Final Rule – then

be evaluated and rated– Be evaluated and rated now

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Eligibility - Project Definition

• Fixed guideways, or• Corridor bus project including at least:

– Substantial transit stations– Traffic signal priority or pre-emption– Low floor buses or level boarding– Branding of the proposed service– 10 min peak/15 min off-peak headways or better while

operating at least 14 hours a day

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Eligibility – Very Small Starts

• Simple, low-cost projects that qualify for streamlined process

• Very Small Starts eligibility criteria:– Existing daily riders over 3,000/weekday– Total cost under $50 million– Under $3 million per mile, excluding rolling stock

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Alternatives Analysis for Small Starts

• Refer to existing alternatives analysis guidance for New Starts

• Narrower range of alternatives

• Potentially less complex analytical methods

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Alternatives Analysis for Very Small Starts

• Identification of corridor problems or opportunities• Definition of the project• Analysis of costs, benefits, and impacts of the

project compared to existing conditions• Determination of financial viability• Explanation of choice of preferred alternative• Implementation Plan

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Evaluation of Small Starts

• Use Existing New Starts Criteria for Small Starts– Project Justification

- Land-use- Cost-effectiveness- Other factors, including economic development, congestion and

pricing strategies

– Local Financial Commitment

• Simplifications to New Starts Framework– Fewer criteria– Opening year forecasts– Simpler travel forecasting procedures possible

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Evaluation of Small Starts

Cost Effectiveness Rating

• Use current breakpoints for ratings

• Increase opening year user benefits to reflect average national 20-year growth rate

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Evaluation of Small or Very Small Starts – Local Financial Commitment

• Small or Very Small Starts projects receive “medium” for local financial commitment if:– Reasonable plan to secure local share (all non-New Starts

funding committed for PCGA)– Project O&M under 5 percent of agency operating budget– Agency in solid financial condition

• Projects that cannot meet the conditions above submit a financial plan– According to FTA guidance– Covering period up to and including opening year– Evaluated based on criteria used for New Starts

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FTA Funding Recommendations

• Small or Very Small Starts eligible for funding if:– In project development– “Ready” to implement project– Summary rating of “Medium” or better

• Like all New Starts - No funding guarantee

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New and Small Starts Program Changes Proposed beginning April/May, 2007

• No submission of information on operating efficiencies or environmental benefits

• Resubmission of information on transit-supportive land use optional

• No submission of information for the Annual Report for projects not eligible for a funding recommendation

• Timely FTA comment on documents describing alternatives

• For PE approval, travel models validated on ridership surveys no older than 5 years (beginning April 2009)

• Constants allowed for sponsors of new modes to a region

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New and Small Starts Program Changes Proposed beginning April/May, 2007 (con’t)

• Overall project rating on 5 levels from high to low• High financial rating for SS/VSS with 50% or more non-

New Starts funding • New mobility measure• Reduced set of subfactors for finance rating• Consideration of opportunity of private contracting in

operation plan rating• Conditions for rating information in DEISs and AAs• Project justification overall rating effected by project part

of congestion management strategy and rating of “make the case” document as “other factors”

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Planned Schedule for Rulemaking

• April 2007: Publication of the Notice of Propose Rulemaking for New and Small Starts

• April 2007: Publication of Weights and Measures document for NPRM

• April 2008: Publication of the Final Rule for New and Small Starts

• April 2008: Publication of Weights and Measures document for Final Rule

Deloitte Report on New Starts and FTA Response

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Deloitte Report

• Wide ranging assessment of New Starts program• Goal was to examine opportunities for

– Improving FTA’s management of the program– Improve communications w/in FTA and between FTA

and industry– Accelerating/simplifying the process for implementing

New Starts

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Improving Management of the Program

• Ensuring funding of the most meritorious investments– Capture more benefits in project evaluation process

- Incorporating Other Factors in Evaluation Process, as proposed in Feb 2007 draft policy guidance

- Add “modal constants” to calculation of benefits, per 07 policy guidance

- Additional strategies in NPRM

– Enhance FTA’s understanding of projects and program- Examine staffing, oversight, budget resources and re-align

where necessary

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Improving Management of the Program

• Optimize program resources– Develop internal HQ-Regional Office “Team” operating

procedures– Enhance New Starts staff training– Use technology to achieve efficiencies

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Improve communications

• More program outreach, training – More Listening Sessions to be held this

Spring/Summer– Training in AA, Travel Forecasting, other topics– Re-energize Roundtables, consider Small Starts

conference?

• Clarify program requirements– Project Development Milestone Checklists– More program guidance

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Accelerating/simplifying the process for implementing New Starts

• Minimize reporting requirements– Proposed reductions in annual reporting in 07 policy guidance

• Improve FTA review times– Implement “case management system”– Use of project development agreements to solidify project

schedule, FTA response and oversight commitments

• Encourage alternative project delivery approaches– Streamlining for public-private partnerships