[Federal Register: August 3, 2007 (Volume 72, Number 149)]
[Proposed Rules]
[Page 43327-43377]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03au07-27]
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Part II
Department of Transportation
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Federal Transit Administration
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49 CFR Part 611
Major Capital Investment Projects; Proposed Rule
Notice of Availability of Proposed Policy Guidance on Evaluation
Measures for New Starts/Small Starts; Notice
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
49 CFR Part 611
[Docket No. FTA-2006-25737]
RIN 2132-AA81
Major Capital Investment Projects
AGENCY: Federal Transit Administration (FTA), DOT.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This Notice of Proposed Rulemaking (NPRM) provides interested
parties with the opportunity to comment on proposed changes to the
Federal Transit Administration's (FTA's) New Starts program and a new
proposed Small Starts program category. The new Small Starts program
category is a discretionary grant program category for public
transportation capital projects that run along a dedicated corridor or
a fixed guideway, have a total project cost of less than $250 million,
and are seeking less than $75 million in Small Starts program funding.
This NPRM addresses comments on the Advanced Notice of Proposed
Rulemaking (ANPRM) on Small Starts issued on January 30, 2006 and the
draft Guidance on New Starts Policy and Procedures issued on January
19, 2006, and makes proposals for the New Starts and Small Starts
programs which take into account these comments. FTA is concurrently
issuing policy guidance for comment that describes the factors and
measures used in its evaluation process, which are not described in the
NPRM.
DATES: Comments must be received by November 1, 2007.
ADDRESSES: Written Comments: Submit written comments to the Docket
Management System, U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Ave., SE., Washington, DC 20590.
Comments. You may submit comments identified by the docket number
(FTA-2006-25737) by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments.
Web Site: http://dms.dot.gov. Follow the instructions for
submitting comments on the DOT electronic docket site.
Fax: 1-202-493-2251.
Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Ave., SE., Washington, DC 20590.
Hand Delivery: To the Docket Management System; U.S.
Department of Transportation, Docket Operations, M-30, West Building
Ground Floor, Room W12-140, 1200 New Jersey Ave., SE., Washington, DC
20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal
Holidays.
Instructions: All submissions must include the agency name and
docket number or Regulatory Identification Number (RIN) for this
notice. For detailed instructions on submitting comments and additional
information on the rulemaking process, see the Public Participation
heading of the Supplementary Information section of this document. Note
that all comments received will be posted without change to http://dms.dot.gov
including any personal information provided. Please see the
Privacy Act heading under Supplementary Information.
Docket: For access to the docket to read background documents or
comments received, go to http://dms.dot.gov at any time or to the
Docket Management System (see ADDRESSES).
FOR FURTHER INFORMATION CONTACT: Ron Fisher, Office of Planning and
Environment, telephone (202) 366-4033. FTA is located at 1200 New
Jersey Ave., SE., East Building, Washington, DC 20590. Office hours are
from 9 a.m. to 5:30 p.m., Monday through Friday, except Federal
holidays.
SUPPLEMENTARY INFORMATION:
I. Background
On August 10, 2005, President Bush signed the Safe, Accountable,
Flexible, Efficient Transportation Equity Act--A Legacy for Users
(SAFETEA-LU). Section 3011 of SAFETEA-LU made a number of changes to 49
U.S.C. 5309, which authorizes the Federal Transit Administration's
(FTA's) fixed guideway capital investment grant program known as ``New
Starts.'' This Notice of Proposed Rulemaking (NPRM) implements those
changes and proposes a number of other changes that FTA believes will
improve the New Starts program.
In addition to the changes made to the New Starts program, SAFETEA-
LU amended 49 U.S.C. 5309 to add a new capital investment program
category for projects requesting less than $75 million in Section 5309
Capital Investment funds and having a total project cost of less than
$250 million. That new capital investment program, which will be
referred to as the ``Small Starts'' program, is the other subject of
this NPRM. Based on comments received on this NPRM, FTA plans to issue
a final rule in the future that will finalize the proposed changes to
the existing New Starts program, as well as proposed rules for the
Small Starts program.
This NPRM is the culmination of two public involvement initiatives
for the New Starts and Small Starts programs--the Small Starts Advance
Notice of Proposed Rulemaking (ANPRM) (71 FR 4864, Jan. 30, 2006) and
the Guidance on New Starts Policies and Procedures (Notice of
availability and request for comments, 71 FR 3149, Jan. 19, 2006).
These separate pre-rule public involvement processes are being
consolidated into this one rulemaking so that issues of overlap and
coordination between these two aspects of FTA's discretionary capital
investment program may be addressed. This NPRM closes the dockets for
both of these pre-rule activities and creates a new docket for comments
on the NPRM.
FTA provided further opportunity for public involvement by holding
a number of listening sessions throughout the country. Those listening
sessions were held at the following dates and locations:
--San Francisco, CA--February 15-16, 2006, Hyatt Regency San Francisco.
--Ft. Worth, TX--March 1-2, 2006, Radisson Plaza Hotel Fort Worth.
--Washington, DC--March 9-10, 2006, Wardman Park Marriott Hotel.
FTA is planning to conduct similar outreach activities on both this
NPRM and the policy guidance that FTA is issuing concurrently. Details
on these activities will be announced in a Federal Register notice at a
later date and on FTA's Web site.
The Response to Comments section of this notice summarizes and
responds to comments received on each of the questions raised in the
Small Starts ANPRM and the Guidance on New Starts Policies and
Procedures. It begins by restating each question, then summarizes the
comments received on that question, as well as our response to the
comments and concludes with FTA's proposal for addressing those
comments in our proposed regulatory language. The Response to Comments
portion of the Preamble is broken down by the following subjects:
Eligibility, Evaluation and Ratings, and Procedures for Planning and
Project Development, first with respect to the Guidance on New Starts
Policies and Procedures and then with respect to the APRM on Small
Starts and concludes with a section entitled ``Additional Discussion
Items for Comment'' where FTA specifically seeks feedback on several
new issues that it would like to address in the final rule. The
Section-by-Section Analysis in this notice explains our rationale for
the
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language proposed for the regulation, as well as suggesting alternative
proposals to some provisions.
In order to make the regulation more understandable, FTA is
proposing to divide it into four subparts that will cover General
Provisions, ``New Starts,'' ``Small Starts,'' and ``Very Small
Starts.'' Subpart A would include General Provisions that apply to all
projects seeking Section 5309 Capital Investment funds. Subpart B would
include those provisions that apply to New Starts (projects of $250
million or more in total cost or requesting $75 million or more in New
Starts funds). Subpart C would cover Small Starts projects (projects of
less than $250 million in total cost and requesting less than $75
million in Small Starts funds but not qualifying as a Very Small
Start). Subpart D would cover Very Small Starts (a subset of Small
Starts projects which are less than $50 million in total cost and $3
million per mile (excluding vehicles) and which meet other specified
characteristics). FTA has chosen this approach, even though there is a
lot of similarity in the requirements of each subpart, in order to
assist a project sponsor in finding all of the applicable procedures
and evaluation criteria in a single subpart, depending on the size and
nature of the proposed project.
II. Response to Comments
The following is a summary of the comments received in response to
our questions raised in Part 2 of the Guidance on New Starts Policies
and Procedures and in the Small Starts ANPRM, our response to the
comments received and our proposal for addressing the issue raised by
the questions in the proposed NPRM.
Guidance on New Starts Policies and Procedures
Eligibility
1. How might FTA determine whether a Bus Rapid Transit (BRT)
project is a ``fixed guideway'' project?
Comment: Nine comments were received in answer to this question.
The range of BRT eligibility requirements suggested in the comments
highlights the inherent difficulty in determining whether a BRT project
is a ``fixed guideway'' project. Some commenters suggested that
eligible BRT projects should operate in an exclusive right-of-way (ROW)
or that certain percentages of project length should be in an exclusive
ROW. Others stated that eligibility should be based on percentage of
length subject to certain features or ``intensity'' of usage, such as
ridership or vehicles per unit of time. Finally, some thought that
eligibility should be determined on a case-by-case basis.
Response: There is no statutory requirement that a fixed guideway
project must operate in its entirety in a separate or exclusive ROW.
The varied responses indicate the difficulty in strictly defining the
parameters that should apply to BRT when it does not include a fixed
guideway for its full length. FTA has previously made eligibility
determinations on a case-by-case basis and has allowed eligibility for
projects that include a significant fixed guideway portion, e.g., a
dedicated busway, but also include some mixed-traffic sections.
Proposal: FTA proposes to define a BRT project as a ``fixed
guideway'' if the project operates on a fixed guideway that is
dedicated to transit or high occupancy vehicle use for at least 50
percent of its length during the peak period, or when congestion
inhibits transit system performance. In making this determination it is
not necessary that the 50 percent of its length be contiguous as long
as the 50 percent that is dedicated is designed to provide significant
travel times savings.
In addition, for the purposes of funding design and construction of
New Starts and Small Starts, FTA proposes to revise the definition of a
``fixed guideway'' to include projects meeting certain other
conditions. FTA is asking for specific comment, under a section
entitled ``Additional Discussion Items for Comment'' on this revised
definition that would include a transportation facility that, by means
of pricing and other enhancements, replicates the benefits of ``free-
flow'' conditions for transit users historically achieved by a
physically separated right-of-way available solely for transit and
high-occupancy vehicles. To make such projects eligible for New Starts
or Small Starts funding, FTA proposes to incorporate into the
regulatory definition of ``fixed guideway system'' a provision that
deems such a facility, subject to certain limitations, to be ``a
separate right-of-way reserved for the exclusive use of public
transportation.'' The operation of the new provision would be limited
strictly to defining eligibility for discretionary funding under New
Starts (49 U.S.C. 5309(d)) and Small Starts (49 U.S.C. 5309(e)), and
would not alter the definition of ``fixed guideway mile'' for purposes
of calculating the distribution of funds under formula programs
administered by FTA.
The practical effect of amending the definition of ``fixed
guideway'' in this way is that it would allow FTA to fund a portion of
the construction of high occupancy toll (HOT) lanes, on which transit
vehicles would run, with money from the Section 5309 Capital Investment
program. This has the advantage of providing more flexibility to
project sponsors with creative ideas for potentially building cost
effective transit projects.
Specifically, FTA proposes to revise the definition of ``fixed
guideway system'' to include the following clause at the end of the
definition:
``Additionally, a transportation facility shall be deemed a
fixed guideway system solely for the purposes of funding eligibility
under New Starts (49 U.S.C. 5309(3) if the project is designed so
that in any given month (i) transit vehicles utilize the
transportation facility on a barrier-separated right-of-way; and
(ii) by means of tolling or other enhancements, 95 percent of the
transit vehicles using the facility will be able to maintain an
average speed of not less than 5 miles per hour below the posted
speed limit for the time they are on the facility.''
In applying this definition FTA intends to limit the amount of New
Starts and Small Starts funds that can be used for constructing the
facility to that portion which benefits transit. FTA could calculate
the ``total project cost'' of a fixed guideway made eligible under this
proviso as follows: (i) The total project cost of the fixed guideway in
its entirety, multiplied by (ii) a ratio, (a) the numerator of which
would be the expected peak transit vehicle-miles traveled on the fixed
guideway and (b) the denominator of which would be the expected total
peak vehicle-miles traveled on the fixed guideway. The product of the
calculation would be deemed the total project cost attributable to a
transit project eligible for funding under New Starts or Small Starts.
Eligible fixed guideway costs, in other words, would be proportionate
to the transit use of the facility. Alternatively, FTA and the
applicant may designate a mutually agreeable amount as the total
project cost. In either case, the Federal share, if any, contributed
toward such project costs would be made available subject to full
compliance with the standard rating criteria for New Starts (or Small
Starts) projects, as provided by applicable statutes, regulations, and
FTA guidance.
2. Should FTA fund HOV projects to the degree that they provide
benefits to public transit riders?
Comment: Sixteen comments were received in answer to this question.
Responses to this issue were equally mixed, with similar numbers of
commenters supporting and opposing the concept. Those who favored
support for HOV projects cited minimum service
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levels and ridership as necessary conditions. Those opposed were
concerned that the already limited FTA funding for New Starts projects
would be further reduced by those funds being diverted to projects
traditionally funded by the FHWA.
Response and Proposal: FTA has not participated in HOV projects
through the New Starts program for the last decade and FTA does not
propose to change that policy. However, as stated in the response
above, FTA is considering revising the definition of a fixed guideway
system, to allow for funding a portion of a new HOT facility that meets
certain conditions.
Project Evaluation and Ratings
3. How might the New Starts evaluation framework be changed to
better support informed decision-making? Is there a preference for
Option 1, Option 2, or something different?
Note: Option 1 was described as an extension of the current
framework with the two new criteria in SAFETEA-LU, economic
development and reliability of the forecast of costs and ridership,
added to the project justification criteria currently used. The
project justification rating would result from weights applied to
the ratings for each of the component criteria. The project
justification rating described in Option 2 relied on ratings of the
problem or opportunity that the New Start was intended to address,
the effectiveness of the project as a response, and the project's
cost effectiveness. The rating for effectiveness would be based on
ratings for mobility for all users, mobility for transit dependents,
environmental benefits, and economic development. The rating for
reliability would be used to raise or lower ratings for project
justification and local financial commitment.
Comment: Seventeen comments were received in answer to this
question. Of those commenters who chose between Options 1 and 2, the
majority favored the Option 2 framework, stating that it allows FTA to
more fully understand and appreciate the merits of a particular
project. However, these commenters suggested some slight modifications
to Option 2, specifically with regard to the treatment of land use. The
commenters stated that the treatment of land use solely as a risk/
uncertainty measure rather than as a benefit measure under project
effectiveness is inconsistent with the intent of SAFETEA-LU.
Those commenters favoring Option 1 stated that it has the benefit
of continuity and keeps the rating process stable for project sponsors.
One of these commenters wrote that because Option 2 involves the
simultaneous introduction of numerous complex factors and includes
subjective appraisals by FTA or its contractors for some of the
proposed measures, it is less desirable than Option 1. Several of the
commenters favoring Option 1 stated that Option 2 overemphasized the
role of reliability in the evaluation of projects relative to what was
intended by SAFETEA-LU.
A number of commenters suggested that neither Option 1 nor Option 2
is preferred, but rather a new framework should be developed in
consultation with the transit industry. However, few commenters
provided specifics on how the framework could be structured. Most
stated that analytical perfection should not be the goal, and that an
overemphasis on quantification of measures misses the need for judgment
about some factors that are important yet inherently subjective. One
commenter suggested a point system be developed, similar to the one
proposed in the Transit Cooperative Research Program Quick Response
Project J-06 on the Small Starts program.
Response: FTA has striven to make its evaluations understandable,
consistent, and fair, and has emphasized that quantifiable measures
best achieve these goals. Nevertheless, qualitative measures have been
used when sufficient quantitative measures cannot be identified. Each
option relies on a combination of quantitative and qualitative
measures.
Given the myriad of benefits associated with New Starts projects,
it is difficult to create a New Starts evaluation process to
effectively capture all of them. Further, it is not necessary to
evaluate all the benefits in order to distinguish the merits of
projects. Option 2 allows for a more complete organization of the key
project evaluation factors that address different perspectives of a
project's merits. These include the nature of the problem/opportunity
in the area where the project has been proposed, the project's
effectiveness as a response, the degree to which the project generates
benefits commensurate with its costs (cost effectiveness), the strength
of the local financial commitment, and the uncertainty in the
evaluation measures. This organization facilitates a more coherent
description of the worthiness of a project for New Starts funding in
language that is more understandable to decision makers. In addition,
SAFETEA-LU emphasizes the need for more reliable ridership and cost
information, adding ``the reliability of forecasting methods'' as a new
evaluation consideration, codifying the ``before and after'' study
requirement, and requiring FTA to produce an annual report on
contractor performance in the development of ridership forecasts and
cost estimates. Option 2 responds to SAFETEA-LU by directly
incorporating an evaluation of the reliability of the forecasts when
FTA evaluates and rates proposed projects.
Proposal: FTA proposes to advance the framework described in Option
2 into the NPRM with one exception that is discussed more fully in the
next set of questions. Instead of the nature of the problem or
opportunity being evaluated as one of the primary factors of project
justification, along with effectiveness and cost effectiveness, FTA
proposes that it will be rated and evaluated under ``other factors''.
The effect of this change is that the ``nature of the problem/
opportunity'' rather than being included as a separate factor, will be
considered as an ``other'' factor that can either raise or lower the
overall rating for project justification.
4. In what ways could FTA improve the evaluation process to
highlight the ``case'' for a proposed New Starts project rather than
focus on numerical ratings?
5. Are there any other measures that might indicate and
characterize the nature and extent of the problem or opportunity
addressed by a proposed New Starts project?
6. How should FTA evaluate or rate projects that address
significant transportation problems compared to projects that take
advantage of opportunities to improve service?
Comment: Question 4 received 4 comments, question 5 received 7
comments, and question 6 received 6 comments. Questions 4, 5, and 6
addressed FTA's proposal to include in the evaluation of project merit
an examination of the nature or extent of the problem or opportunity in
a corridor. FTA suggested some measures that might be used to quantify
the problem or opportunity in the corridor, including current bus
travel speeds, current highway speeds, vacancy rates, value of land,
and others.
The majority of commenters wrote that each project may have unique
strengths or may be structured to meet specific local objectives.
Rather than FTA dictating standard measures that might indicate and
characterize the nature and extent of the problem or opportunity, these
commenters felt that each sponsoring agency should be left to define
the specific measures appropriate to their project. A few commenters
provided specific suggestions for measures that might be included in
defining the problem or opportunity such as congestion/crowding relief
and maintenance of existing mode share.
The majority of commenters were opposed to giving more weight to
projects that seek to address
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demonstrated transportation problems than those projects that take
advantage of opportunities.
Response: At the heart of any planning, environmental, or
transportation study is an adequate description of the nature and
magnitude of the needs that are driving consideration of projects that
could require significant funding and/or have significant impacts on
the communities in which they are built. Because of the diversity of
regional conditions in which New Starts projects are implemented, local
areas are in the best position to describe the nature of the needs that
a project is intended to address. It is undeniable that projects that
address problems that are already severe have more benefits over the
long term than those that address problems that are less severe now,
but which are forecast to be worse over time. However, the New Starts
process, which measures project benefits for forecast periods that are
20 to 25 years into the future, based on annualized costs and benefits,
does not account for the year in which the benefits occur. The
conventional approach that properly accounts for costs and benefits
over time would be to determine them for each year into the future and
perform a net present worth computation to today. However, to account
for each year of project costs and benefits would pose a significant
burden on project sponsors due to the considerable effort required for
interim year forecasts of travel and transit system capital and
operating and maintenance costs. Therefore, projects designed to take
advantage of an opportunity to improve transportation and economic
development, while serving areas that have less severe transportation
problems compared to what is predicted in the future, are currently
advantaged in the New Starts evaluation process compared to areas with
current severe problems. Consideration of higher ratings for projects
with severe problems currently can reduce this unfair advantage.
Proposal: FTA proposes to use the current ``make the case''
document under ``other factors'' as the basis for evaluating the
severity of the transportation or economic development problem that the
New Starts project is to address. This document is currently part of
the evaluative information that FTA requests of sponsors of New Starts
projects. While FTA will not dictate specific measures to describe the
nature and extent of the problem or opportunity addressed by the
proposed New Start project, it will consider the nature of the problem
and opportunity in the overall project justification rating. While
actual rating measures will be described in policy guidance, one way to
do this is to use a three-tiered rating with the highest rating given
to projects with severe transportation or economic problems; the next
highest rating to projects with less severe transportation or economic
problems; and the lowest rating for projects which are opportunities to
improve transportation or economic development. Projects in areas with
demonstrable existing problems will be rated more highly than projects
in areas where problems are only predicted to develop over the next 20
to 25 years, all else being equal. As congestion is one of the Nation's
most daunting transportation challenges, one measure that FTA intends
to consider under ``other factors'' is the degree to which a project is
a part of an effective congestion reduction strategy. FTA will evaluate
projects that are a principal element of an effective congestion
reduction strategy, in general and a pricing strategy, in particular,
more highly. FTA seeks comment on how it might better measure
congestion in the future.
FTA will also consider as an ``other factor'' any benefit of the
project not covered under the project justification criteria or other
factors that the Secretary determines to be appropriate to carry out
the evaluation. The rating for ``other factors'' will be compared to
the combined rating for effectiveness and cost effectiveness and can be
used to raise or lower the overall project justification rating.
7. Is there a preference for analyzing regional economic benefits
or station area economic development benefits? Could FTA utilize both
perspectives in evaluating expected economic development impacts?
8. How might FTA evaluate economic development and land use as
distinct and separate measures?
9. Are there any additional methods available to predict economic
development impacts? If so, how might these other measures be used to
evaluate proposed New Starts projects?
Comment: Question 7 received 7 comments, question 8 received 11
comments, and question 9 received 16 comments. Four commenters
expressed a preference for analyzing station area economic development
benefits rather than regional economic development benefits. Reasons
given for the preference included agreement with FTA's stated opinion
that projections of regional benefits would be time-consuming and
expensive and that a project's influence on a regional basis would be
greatly diluted by other regional economic factors.
Three commenters supported an evaluation of both regional and
station area economic impacts. One of these commenters stated that
regional forecast models tend to be more reliable than those for
smaller station areas.
Commenters generally supported the evaluation of both land use and
economic development as distinct and separate measures, though few
comments articulated a clear difference between these two measures.
Many comments characterized economic development and land use factors
interchangeably or stated that land use factors were a component or
indicator of economic development potential. One industry association
supported characterizing land use impacts as ``buildings and density''
while economic development would be characterized as ``jobs and
sales.''
As a means of predicting economic development impacts, several
commenters suggested that FTA focus on existing developer agreements
and partnerships and the existence of local development incentives.
Response: FTA agrees that both station area economic development
and regional economic impacts are useful and valid measures of project
benefits. At the current time, however, the analytical tools used to
develop regional economic analyses appear to be overly costly and
burdensome to impose on every project sponsor. FTA intends to continue
research efforts and case studies of both the station area impacts and
regional economic impacts to develop tools that can be applied to
measure the economic development impacts of New Starts projects. The
regulation is structured to allow new measures to be added through
policy guidance, following public review and comment.
Whether for land use or economic development, a common theme of the
majority of respondent suggestions was to use indicators of the
likelihood of increased development in areas near projects. Past
research confirms that this increased development is not added to the
region but that the effect of transit investments is to attract
development around stations that would locate elsewhere if not for the
project, in effect redistributing development within a region. Existing
land use conditions, existing and planned transit-oriented plans and
policies, and projections of increases in employment and revenues are
all factors that help to determine whether or not a transit project is
likely to have an impact on development. Indeed, it is not possible to
ascertain the
[[Page 43332]]
likelihood of a project's effect on surrounding development unless a
number of factors relating to both land use and economic development
are considered in combination. Land use considerations provide
information about the potential for development or redevelopment and
whether that development can occur in a transit-oriented way. Although
these are necessary conditions, they are not in themselves sufficient
to ensure that the proposed project spurs development, as the local
development climate must be robust enough to provide the engine needed
for development; the project must be perceived as permanent to entice
developer interest; and the project must increase accessibility to the
area. Because all these factors must be viewed in combination, it is
critical that land use and economic evaluation criteria be combined
into a single criterion.
Proposal: Until additional research is completed, FTA proposes to
implement an evaluation measure for land use and economic development
impacts that focuses on the potential for station-area development
impacts of the proposed projects. The best available measures of likely
land use and economic development benefits can be derived from the
circumstances in which the projects would be implemented rather than
from actual forecasts of development. This approach is necessary
because forecasts of additional development due to New Starts projects
require considerable resources and contain considerable uncertainty.
FTA proposes to use a single criterion to ascertain the likelihood
of increased transit-oriented development resulting from a New Starts
project. Given the important role that land use plays in increasing
development, in developing specific measures for this criterion, FTA
will draw upon many of the same factors used in its current evaluation
of land use. These will be augmented with indicators that provide
further incentives to development. A survey of available research on
the development impacts of transit suggests two primary transit-related
drivers of development (1) increased accessibility and (2) permanence
of the transit investment. While the actual FTA proposes to evaluate
whether or not the conditions necessary to support economic development
exist in the project corridor by using the following specific measures:
(1) Current land-use conditions, (2) development and land-use plans and
policies, (3) the economic development climate in the corridor and
region, (4) the project-related change in transit accessibility for
developable areas in the corridor; and (5) the economic lifespan of new
transit facilities proximate to those developable areas. FTA seeks
comment on how it might better measure land use/economic development in
the future.
10. Are there any other measures of mobility benefits that could be
used to evaluate New Starts projects?
Comment: Ten comments were received in answer to this question.
Commenters suggested that FTA should examine ways to better capture the
following in the mobility benefits measure: benefits to highway users;
benefits resulting from special events trips; benefits resulting from
non-home-based trips; and benefits generated by automobile trips not
taken due to enhanced pedestrian activity in the corridor.
Response: FTA is committed to incorporating highway benefits into
its mobility and cost effectiveness rating in every way feasible. In
fact, the ``SUMMIT'' software used by FTA to calculate user benefits
already has the ability to capture benefits to all transportation
system users (including highway users). Further, the definition of user
benefits included in the current regulation includes benefits to
highway users. However, this function of the SUMMIT software cannot
currently be used because FTA has found that most travel models around
the country do not accurately predict changes in highway speeds
resulting from transit improvements. This is a problem with travel
models nationally. FTA does not have the resources on its own to
correct the deficiencies but is working with the Federal Highway
Administration to address this issue. The rule is structured in a way
that once reliable forecasts of such benefits can be produced, they can
easily be incorporated into the measures of mobility and cost
effectiveness through the policy guidance. In addition, FTA proposes to
adopt other measures on a temporary basis that would provide an
indication of the congestion relief benefits to highway users. Such
measures would be based on measures of current congestion in the
project corridor. FTA seeks comment on how it might better measure
congestion in the future.
Likewise, the SUMMIT software used by FTA already captures the
benefits resulting from non-home based trips to the extent they are
accurately estimated in the local travel model. Typically, few areas of
the country have good data on the non-home-based trip market, which
affects the ability of the local model to develop accurate forecasts.
If a local area is willing to put resources into a data collection
effort to improve the forecasts for this market, the Summit software
used by FTA to calculate user benefits will automatically capture any
additional benefits that may accrue.
FTA has always worked individually with various project sponsors to
better capture the benefits resulting from special events markets.
Local travel models are not generally structured to capture ridership/
benefits for this market. Consequently, FTA has helped project sponsors
in the past to include ``off-model'' calculations to capture these
benefits and will continue to do so in the future.
FTA acknowledges the value of the trip not taken in terms of
reducing congestion but has not yet been able to develop methodologies
capable of making reliable estimates of this benefit.
Proposal: FTA is proposing to adopt a definition of user benefits
that explicitly includes congestion relief benefits to highway users
and pedestrians. FTA is supporting the Office of the Secretary of
Transportation and the Federal Highway Administration to improve travel
forecasts so that the transportation system user benefits to highway
users can be calculated reliably and be included in the cost
effectiveness calculation. The Department of Transportation expects to
release a Request for Proposals/Work Statement for model improvements
in Fall 2007. In the interim, as discussed below under item 4 of
``Additional Discussion Items for Comment,'' FTA will explore the use
of surrogate measures which can assess the degree to which a proposed
New Start results in congestion relief. These measures could include
the current level of service, delay compared to free flow speed, or the
average daily VMT on any highway facility in the project corridor.
Absent any specific suggestions for other measures of mobility
benefits, FTA will use its policy guidance to set specific measures for
mobility. Two measures that FTA considers to have merit are user
benefits per passenger mile for those using the New Starts project, and
the absolute number of passengers using the project. The first would
measure the magnitude of the user benefits for each traveler and
whether the savings are significant, while the second would measure the
number of travelers affected.
11. Does the proposed (low-income mobility) measure entail
implementation difficulties for measurement, reporting, or comparison
between projects?
12. Are there any other measures that FTA should consider when
evaluating
[[Page 43333]]
the benefits that accrue to transit dependent populations?
Comment: Question 11 received 3 comments and question 12 received 6
comments. In the Guidance on New Starts Policies and Procedures, FTA
proposed using a new measure for determining mobility for transit
dependents--the share of user benefits accruing to passengers in the
lowest income stratum or to the lowest auto ownership stratum
(depending on which is used in the local travel model) compared to the
regional share of the lowest income stratum or lowest auto ownership
stratum. All commenters to Question 11 noted that the proposed measure
may result in some inconsistencies among projects because of this
difference in how local models stratify trip takers. An additional
comment noted that in densely developed urban areas, transit dependency
does not correlate with either income or car ownership.
The comments included the following suggested alternative
populations to include when calculating the benefits to transit
dependent populations, but did not identify a specific way to measure
the benefits to these populations: Elderly persons, persons with
disabilities, and university students. One commenter suggested that FTA
should include in the measure how well the overall transit system
serves job centers, but there was no specific discussion of how this
might be measured.
Response: FTA acknowledges that examining the benefits that accrue
to the lowest income stratum or the lowest auto ownership stratum from
the local travel forecasting models is only a surrogate for determining
the benefits to transit dependents. But this information is already
available from all local travel models and does not require development
of additional data by project sponsors. Furthermore, since the
measurement relies on the change in service for that stratum in a given
city, it is not necessary for every city to use the same stratum in
order for the measure to allow for comparisons between cities.
FTA believes that whatever measure is used, it should have a way of
identifying how the project serves transit dependents rather than
simply characterizing the project corridor demographics. Unfortunately,
local travel models do not usually stratify trips by some of the
suggested categories--elderly persons, persons with disabilities, and
university students. Consequently, the benefits accruing to these
populations cannot be calculated.
Proposal: The regulation simply states that FTA will measure
Mobility Benefits. The actual measures will be listed in policy
guidance. One approach that FTA is considering is to utilize the share
of user benefits accruing to passengers in the lowest income stratum or
to the lowest auto ownership stratum (depending on which is used in the
local travel model) compared to the regional share of the lowest income
stratum or lowest auto ownership stratum for the region for evaluating
mobility for transit dependents.
13. How could FTA improve the current method of evaluating
environmental benefits to produce a more useful measure?
Comment: Three comments were received in answer to this question.
FTA currently measures environmental benefits from proposed New Starts
projects by examining the projected change in regional vehicle miles
traveled (VMT), various types of vehicle emissions, and energy
consumption. All comments received indicated support for continuing the
current measures given that other replacement measures are not readily
available. One commenter expressed concern that the current measures
are biased in favor of projects that help reduce highway congestion and
against those projects that help relieve transit congestion. Since a
project that is meant to reduce existing congestion on a transit system
does not reduce VMT, no environmental benefits would be shown under the
current method. The commenter stated that the rating process should
make accommodations for this situation, but acknowledged that no other
measures of environmental benefits are readily available to address
this problem.
Response: The current measure is limited to capturing reduced
emissions, projecting the change in VMT and energy consumption as a
result of automobiles being taken off the road when travelers use
transit instead of driving. However, even in that case, the change is
usually very small compared to emissions region wide, limiting the
usefulness of the measure.
Proposal: FTA proposes to continue to evaluate environmental
impacts, with the actual measures identified in policy guidance. FTA is
currently conducting research to try to develop other measures that
better distinguish the environmental merits of projects.
14. Should FTA rely on the cost effectiveness evaluation to address
the operating efficiency criterion?
15. If not, in what way could agency operating cost information be
used to compare New Starts projects to each other?
Comment: Question 14 received 6 comments and question 15 received
11 comments. Four comments received were in favor of eliminating the
operating efficiency criterion because of the inability of the measure
to distinguish in a meaningful way between projects. However, two
commenters disagreed with the proposal, stating that operating
efficiency can be a significant factor in comparing a single new rail
line with the transit system as a whole.
Response: In the past, FTA has used the projected system-wide
change in operating cost per passenger mile to measure the impact of
proposed New Starts projects on operating efficiency. However, this
measure has not proven to be a meaningful way of distinguishing among
proposed projects. On the other hand, FTA's evaluation of cost
effectiveness has always included the annual system-wide operating and
maintenance expense as a component of annualized cost. Therefore, the
impact of the project on operating and maintenance costs is already
captured in the calculation of cost effectiveness.
Proposal: FTA proposes to remove the operating efficiency factor as
a separate evaluation criterion, relying instead on the evaluation of
cost effectiveness to address this statutory criterion. Project
sponsors may still calculate operating efficiency if they find it
useful for their own comparisons.
16. Is it desirable for FTA to attempt to incorporate other
measures of effectiveness besides mobility when evaluating cost
effectiveness?
17. If so, what measures might be incorporated and how?
18. How could FTA combine transportation system user benefits
measures with economic development measures into a valid measure of
cost effectiveness?
Comment: Question 16 received 2 comments, question 17 received 1
comment, and question 18 received 8 comments. For all three of the
questions, comments received were opposed to incorporating other
measures of effectiveness in the evaluation of cost effectiveness.
Reasons for the opposition included the potential for ``double-
counting'' benefits and the increased complexity that would result from
adding other measures.
Response: FTA sees value in acknowledging additional benefits of
transit projects when comparing benefits to costs. There are two major
components of these additional benefits that are distinct from those
currently calculated: Travel time saved by users of the highway system
who experience less
[[Page 43334]]
congestion as a result of fewer vehicles on the highway; and
transportation benefits from more compact development patterns. For the
first, FTA has discovered that current highway assignment models do not
reliably predict the reductions in travel time for highway users.
Research and development of improved travel models are needed to ensure
that highway travel time benefits are reliable. For the second,
additional development would have to be forecast with and without the
New Starts project and travel models employed to ascertain the user
benefits that result. The analytical analysis required to accomplish
this is beyond the capabilities of the current demand forecasting
models in virtually every urban area in the nation. As a result, at
this time there is no analytical approach that can be implemented to
determine the additional economic development benefits that should be
added to those currently predicted for travel time savings. However,
FTA has identified a surrogate for including economic benefits to the
travel time savings calculation. The breakpoint for cost effectiveness
already includes an assumption that the non-transportation benefits,
including economic development, are approximately equal to the value of
the travel time savings for a project. Therefore every city is given
the same credit for other benefits.
Proposal: Because of the difficulty of incorporating additional
measures into its evaluation of project cost effectiveness, FTA is
proposing to maintain its current cost effectiveness measure of
annualized cost per hour of user benefits at this time.
19. Are there any ways that FTA could improve the evaluation of
financial capability?
Comment: Five comments were received in response to this question.
Two comments were received with specific suggestions for improvements
or changes to the financial evaluation process. The first comment
stated FTA should consider the degree to which private sector resources
are leveraged to assist with project financing (public-private
initiatives) as well as the degree to which synergies between Federal
funding sources are leveraged to build and operate the project. The
second comment stated that FTA should consider a broader set of
indicators to rate the current capital condition of an agency rather
than just the average age of the fleet and the agency's bond ratings.
The commenter stated that capital condition should be evaluated in the
context of the project sponsor's full fleet management plan, including
replacement cycles, miles between breakdowns, and budgeted purchases.
Three additional comments concerned with the current evaluation
methodology were received, but the commenters did not suggest ways to
improve the evaluation methodology. Other points noted in the five
comments indicated the policy guidance was not clear with regards to
who will assess financial capability. One commenter stated that the
current process examines the reliability of capital, operating, and
maintenance cost estimates under both the project justification
evaluation and the financial capability evaluation and requested more
detail from FTA on exactly how financial capability is currently
evaluated. Lastly, one commenter stated that the requirements for
operating and maintenance plans are more detailed than necessary for
systems with a long history of consistent performance.
Response: Although not specifically accounted for in the financial
capability evaluation process, FTA does consider the degree to which
private sector resources are utilized to assist with project financing
when making funding recommendations. In addition, FTA has recently
initiated the Public Private Partnership Pilot Program outlined in
SAFETEA-LU as a means to distinguish projects that are supported by
private sector resources.
Section 3011(c) of SAFETEA-LU authorizes the Secretary of
Transportation to establish and implement the Pilot Program to
demonstrate the advantages and disadvantages of public-private
partnerships (PPPs) for certain new fixed guideway capital projects. In
particular, the Pilot Program is intended to study whether, in
comparison to conventional procurements, innovative contracting
arrangements, known as PPPs, better reduce and allocate risks
associated with new construction of such projects, accelerate their
delivery, enhance their operating performance once they are constructed
and improve the reliability of projections of project costs and
benefits. This Pilot Program will evaluate this view as applied to the
procurement and operation of eligible projects, which may include
projects funded under the Section 5309 Capital Investment program.
On March 22, 2006, FTA issued a notice in the Federal Register (71
FR 14568), soliciting comments and requesting preliminary expressions
of interest in sponsoring a project under the Pilot Program. Five
potential project sponsors submitted expressions of interest. On
January 19, 2007, FTA issued a notice in the Federal Register (72 FR
2583) establishing the Pilot Program's operating criteria and
soliciting formal applications.
FTA believes that the process of establishing Public-Private
Partnerships, which include innovative arrangements for operating New
Starts projects, can result in contractual arrangements that can reduce
and/or improve the reliability of forecasts of operating costs on New
Starts systems. Arrangements under which private sector interests take
responsibility for the design, construction, operations, finance, and
maintenance of projects can result in transferring much of the long
term risk of project capital and operating costs to the private
partner. Alternatively, the process of procuring such arrangements can
identify changes that can produce significant improvements in the
efficiency of publicly provided services through innovative contractual
arrangements. As a result, projects which utilize such approaches are
likely to be rated better, because operating costs will be lower
(producing better ratings of cost effectiveness), and the reliability
of the estimates of such costs will be higher (producing higher ratings
of reliability). FTA asks for specific comments on this approach under
question 5 under the section ``Additional Discussion Items for
Comment.''
FTA has tried whenever possible to base the financial ratings on
readily available information that all project sponsors consistently
calculate and report. Of the additional items mentioned by one
commenter for inclusion in the capital condition subfactor rating, FTA
believes that two--replacement cycles and budgeted purchases--are
already captured in the average fleet age calculation. Clearly the
average fleet age will change from year to year as replacement vehicles
are purchased and older vehicles retired. This is true for all
grantees. The other item mentioned by the commenter--miles between
breakdowns--is not always routinely prepared by all transit agencies or
prepared with a consistent methodology. For example, different
operators may classify breakdowns in a different way. Therefore, FTA
feels this would not be a good measure to use. FTA believes the
existing measures for capital condition are fair, easily reported, and
consistently applied to all grantees.
In response to the comment that more detail is needed from FTA on
exactly how financial capability is evaluated, FTA would like to point
out that each year as part of the New Starts Reporting Instructions and
again as an appendix to the Annual Report on New Starts, FTA
[[Page 43335]]
includes a detailed description of the entire rating process, including
a discussion of the financial capability evaluation and rating process.
Included in this appendix are two matrices that outline specifically
what is required in the financial plan to receive each level of rating
(from low to high) for each and every financial subfactor used in the
evaluation. In addition, FTA has posted on its Web site the guidance
that it provides to its financial contractors who help develop the
financial capability ratings. This provides the industry with
additional insight into exactly how the ratings are determined for
those areas of the evaluation that are more subjective than
quantitative. FTA feels the process is very well described,
standardized, and completely transparent.
Proposal: FTA proposes to keep the current financial capability
evaluation and rating process since the requirements were not changed
by SAFETEA-LU, the current process has proven to be useful for
distinguishing among projects, and the process is thoroughly documented
and transparent. However, FTA will continue to issue the specific
measures for each factor for review and comment in its policy guidance.
In addition, the proposed regulation would provide for an assessment of
the degree to which project proposals include innovative contractual
arrangements which produce significant reductions in operating
expenses, or which improve the reliability of forecasts of operating
costs.
20. Should the existing weighting factors used to develop the
financial ratings be changed?
Comment: Seven comments were received in answer to this question.
Of the comments received, approximately half were in favor of
maintaining the existing weights used to develop the financial ratings,
and half were opposed, stating that the current weights are awkward,
provide little insight, and should be changed. Of those opposed to the
existing weighting scheme, one commenter proposed a simple pass/fail
approach for evaluating the capital financial plan as well as a much
less rigorous review of the operating financial plan. Other comments
received concerned retaining the credit given on the New Starts share
rating when higher local shares are proposed.
Response: Not only does SAFETEA-LU require FTA to rate projects on
both project justification and local financial commitment on a five
tier scale from low to high, but also FTA sees merit in showing
gradations in financial plan ratings versus employing a simple pass/
fail approach, particularly with regard to making tough funding
recommendation decisions. A less rigorous evaluation of the operating
and maintenance financial plan, as suggested by one commenter, is
inconsistent with the requirement added by SAFETEA-LU that FTA must
ensure local funding is available to operate, maintain, and re-
capitalize the proposed project as well as the rest of the transit
system without a reduction in existing services or levels of service.
The change in SAFETEA-LU to this criterion was clearly intended to
strengthen, not weaken, FTA's review of the operating and maintenance
financial plan. FTA believes the current financial capability
evaluation methodology meets the requirements of the law.
FTA agrees that project sponsors should be given credit when higher
local shares are proposed. FTA proposes to maintain the non-New Starts
funding share as one of the financial capability evaluation criterion.
FTA proposes to continue the practice of giving project sponsors a
higher rating based on a higher non-New Starts share and will set the
measures for this in its policy guidance. In addition, FTA may consider
the non-New Starts share during the decision to recommend a project for
a Full Funding Grant Agreement (FFGA). However, consistent with
SAFETEA-LU, FTA will also consider the project sponsor ability to
provide only a 20 percent match and will not rate the project's local
financial commitment at less than Medium, solely on the basis of a 20
percent match, so long as the project sponsor can demonstrate that the
20 percent match is based on the limited fiscal capacity of State and
local governments. In this way, FTA can address the SAFETEA-LU
requirement that FTA consider State and local fiscal capacity at the
same time that it addresses the SAFETEA-LU requirement that it gives
priority to financing projects with a higher-than-required non-New
Starts/Small Starts share.
Proposal: The NPRM proposes that the local financial commitment
rating consist of equally weighting the ratings of the capital and the
operating financial plan.
21. How might the FTA incorporate measures of reliability into
project evaluation?
Comment: Four comments were received in answer to this question.
All comments received were opposed to incorporating measures of
reliability into project evaluation, stating that the New Starts
process already includes a number of mechanisms to evaluate the
reliability of forecasts so that additional reviews are unnecessary. In
addition, one commenter stated that peer projects are difficult, if not
impossible, to identify.
Response: Although the New Starts process certainly includes
mechanisms intended to improve the quality of forecasts, reliability
can vary considerably for a variety of reasons that relate to (1)
transit-orientation of existing and future land uses and land-use plans
and policies, based on the degree to which project effectiveness
depends upon projected changes in future land use patterns and the
likelihood of those changes occurring;
(2) Project sponsor experience with implementing previous projects;
(3) Industry experience with the proposed project type; (4) The
reliability of forecasting methods used to prepare those estimates, as
well as the reliability of the information provided to FTA for its
evaluation of the project; (5) How the opening year project ridership
compares to that estimated for the 20 to 25 year planning horizon; (6)
Enhanced reliability of operating cost forecasts due to use of
innovative contractual arrangements; and (7) Mitigation actions the
project sponsor takes to help improve the reliability of the
information submitted in support of a proposed project. For example,
travel forecasts made for downtown circulator projects are by their
very nature less reliable than those for projects intended to attract a
predominately commuter-oriented travel market. This is because travel
models have traditionally been better able to predict the travel
behavior of commuters, and historically have been poor predictors of
travel involving the type of discretionary trips that a downtown
circulator is intended to attract. Other travel markets that can be
problematic to predict include suburban-to-suburban travel and park-
and-ride travel in areas with few existing park-and-ride lots. In
addition, capital cost estimates historically have been problematic for
tunnels and elevated structures. Moreover, recent construction
experience has shown that commodity prices can be volatile and that the
bidding environment plays a much larger role in cost estimates compared
to the past.
Project sponsors of new transit projects commonly ask for peer
reviews to help them assess the quality of their cost and ridership
forecasts. While FTA acknowledges that no two projects are identical,
drawing on past experience from a similar type of project has proven
invaluable to improving the cost and ridership forecasts of the newer
project because these projects often have enough features in common to
gain
[[Page 43336]]
insights that result in improved forecasts.
Proposal: SAFETEA-LU specifically requires FTA to evaluate projects
based on the reliability of their forecasts. Furthermore, FTA's
experience over the past three decades indicates that there is a
considerable range of reliability in forecasts based on the factors
discussed above. FTA proposes to consider reliability of the costs and
ridership forecasts in its evaluation and to adjust, either upward or
downward, the ratings of the individual criteria that rely on these
forecasts. The measures for reliability will be identified in policy
guidance but are likely to be designed to address the issues addressed
above, such as transit-orientation of existing and future land use
plans and policies; project sponsor experience with implementing
previous projects; industry experience with the proposed project type;
the reliability of the forecasting methods; a comparison of the opening
year ridership to that estimated for the planning horizon covering no
less than 20 years; use of innovative contractual arrangements which
improve the reliability of cost estimates; and mitigation actions taken
by the project sponsor.
22. How should information on the reliability of forecasts be
modified or updated as a proposed project advances through project
development?
Comment: Six comments were received in answer to this question. One
comment was received stating that FTA and the project sponsor should
work to improve reliability of forecasts as projects advance through
project development. The remaining respondents addressed the unrelated
topic of how and when to solidify funding sources.
Response: FTA agrees that with more detailed information generated
as the project progresses through project development the reliability
of forecasts should improve over time. However, FTA's experience also
shows that even with this updated information, forecasts are by their
very nature predictive and that it is only through actual completion of
the project that true costs and ridership are known.
Proposal: FTA acknowledges that it is impossible to totally remove
uncertainty from any stage of the process. However, the measures
prescribed by FTA are written broadly enough to allow FTA to tailor its
assessment of reliability to reflect the stage that the project is in.
Therefore, FTA will use these measures to assess the reliability of
forecasts as a proposed project advances through project development
and use the most recent information available in making its assessment
of reliability.
23. How should FTA help to ensure that contingencies adequately
reflect the uncertainties in project design, prices, and quantities at
each stage of project development?
Comment: Three comments were received in response to this question.
Four themes or suggestions emerged from the comments that relate to the
treatment of uncertainties, project costs, and project contingencies.
In the first theme, dealing with project uncertainties, many commenters
stated that FTA's project management oversight (PMO) program and risk
assessment processes constitute a worthwhile and sufficient approach.
In addition, one commenter stressed the value of peer review for cost
estimates. Many commenters suggested that uncertainties could be
reduced through simplification of FTA's process, specifically through
implementation of policies to screen out unworthy projects earlier
(i.e., at entry to preliminary engineering (PE)) and to execute FFGAs
within six months of final design entry.
A second theme, calling for greater collaboration between project
sponsors and FTA, was seen throughout the comments. Collaborative
relationships and ``shirt-sleeve'' working sessions were suggested as a
way of establishing appropriate contingency amounts after risk
assessment, improving project reviews ``through a series of intense
partnering sessions,'' achieving greater accountability for project
success, and assisting new project sponsors or sponsors with previous
difficulties.
The third suggestion was that FTA should use an index other than
the GDP deflator to adjust cost effectiveness breakpoints given that
supporting studies show that construction costs over the past five
years have risen at rates up to17 percent faster than costs reflected
in the GDP deflator.
The fourth theme is a corollary to the third and pertains to cost
management procedures. Rather than requiring project sponsors to carry
extraordinarily large contingencies that may jeopardize a cost
effectiveness rating, many commenters suggested an incentive approach
to cost control, specifically allowing sponsors to retain remaining
funds at construction completion. In addition, commenters stated that
project sponsors should be allowed to incur costs, even if they exceed
the FFGA amount by more than 5 percent, as long as the project sponsor
is responsible for paying for the cost increases out of its own funds.
The commenters did feel, however, that FTA should provide New Starts
funding flexibility when a project experiences cost increases due to
sudden market shifts beyond the project sponsor's control.
Response: Although SAFETEA-LU calls for projects to include
adequate contingency funds ``to cover unanticipated cost increases,''
the amount of contingency required depends on the amount and nature of
uncertainties. FTA agrees that reducing uncertainties earlier in the
process benefits everyone. FTA intends to pursue this through earlier
use of its risk assessment and project management oversight programs,
as well as peer reviews of cost estimates. The amount of contingency at
various points can be guided by industry standard percentages but
should be established for a specific project through collaboration
between FTA and the project sponsor after reviews have been conducted.
FTA will further study the commenters' suggestions regarding early
screening of projects, rapid execution of the FFGA, institution of more
collaborative processes, the makeup of the cost effectiveness
breakpoints, and cost management. Nothing in the proposed regulation
would preclude FTA from making changes in these areas through its
policy guidance.
Proposal: FTA proposes to add a requirement, taken directly from
SAFETEA-LU, as part of the criterion on the stability of capital
funding plan that takes into account the availability of contingency
amounts that the Secretary determines to be reasonable to cover
unanticipated cost increases. FTA will collaborate with project
sponsors to ensure that project contingencies are appropriate to the
specific uncertainties related to the proposed project and to the level
of design. For the purpose of rating a project to address the
reliability of the cost estimate, FTA will rely in large part on
evaluations by its project management oversight contractors.
24. What weights should FTA apply to each measure?
Comment: Six comments were received in answer to this question. FTA
proposed to continue the equal weighting of the local financial
commitment and project justification ratings when determining the
overall project rating. Of the comments received on this question,
there was no clear majority of opinion. One commenter agreed with FTA's
equal weighting of local financial commitment and project
justification. One commenter stated that local financial commitment and
project justification should not be combined to arrive at an overall
project rating. This commenter stated that the local financial
commitment rating should merely be pass/fail, and that the project
[[Page 43337]]
justification rating would prevail for the overall project rating if
local financial commitment were found to be worthy of a passing grade.
Another commenter suggested an entirely new weighting scheme: 20
percent weight each to mobility improvements, cost effectiveness, and
financial capability; 15 percent weight each to land use and economic
development; and, 10 percent weight to the remaining measures. The
remainder of the comments focused solely on how the project
justification rating is derived, stating that cost effectiveness should
not be weighted greater than one third of project justification and
should not be used as a project veto if it does not meet FTA's
specified threshold.
Response: SAFETEA-LU places equal emphasis on project justification
(referred to as ``project merit'' in the January 19, 2006 Guidance on
News Starts Policies and Procedures) and local financial commitment
(referred to as ``financial capability'' in the January 19, 2006
proposed Guidance on New Starts Policies and Procedures). As stated
previously, FTA feels there is merit in showing gradations in financial
plan ratings (low to high) versus employing a simple pass/fail
approach, particularly with regard to making tough funding
recommendation decisions. Furthermore, FTA believes that moving to a
pass/fail rating approach for financial commitment as suggested by one
commenter would diminish its importance relative to project
justification, going against the apparent intention of SAFETEA-LU.
Regarding the new weighting scheme proposed by another commenter,
FTA has stated previously the general difficultly in measuring economic
development benefits and the concern of ``double-counting'' when rating
and evaluating economic development versus land use. Consequently,
until such time as better measures are developed for these areas, the
proposed weighting scheme would be very difficult to implement. With
regards to not using a cost effectiveness to veto a project, in the
past there has been considerable support by the Administration to
establish a minimum standard for a project's cost effectiveness in
order for the project to advance through project development.
Proposal: FTA proposes to give equal weight to both project
justification and local financial commitment in calculating the
project's overall rating. Within the Project Justification rating, cost
effectiveness and effectiveness are proposed to be weighted equally at
50 percent. Further, the NPRM proposes that the effectiveness rating be
comprised of the following criteria and weights: 40 percent to land
use, 40 percent to mobility for the general population, 10 percent to
environmental benefits, and 10 percent to transit dependent mobility.
Finally, under the proposed regulatory text, a project would not be
eligible for a funding recommendation unless it achieves a medium or
better rating on cost effectiveness.
25. How can the reliability of forecast measures be used to adjust
New Starts project ratings?
Comment: Four comments were received in answer to this question.
Three of these comments stated opposition to FTA's proposal to add
uncertainty and risk of the forecasts as evaluation criteria or stated
that additional guidance and clarification is needed before
implementation. The primary reason given for opposing the proposal was
that determining the uncertainties in the forecasts would require
lengthy reviews that would ultimately add cost to the project. The
commenters also stated that the additional analyses would not eliminate
risk and uncertainty in the forecasts.
The one commenter supportive of the proposal agreed with FTA's
simple strategy for incorporating the uncertainty measures into the
ratings process. That is, the uncertainty ratings should be used to
decide the outcome for ratings at breakpoint between two ratings.
Response: FTA is not proposing to eliminate risk and uncertainty
from forecasts, which is impossible, but for project sponsors to report
the nature of the uncertainty as a result of their analysis. This will
allow both the project sponsor and FTA to use that information as they
make decisions on whether to advance the project.
More explicit representation of uncertainties is required by
SAFETEA-LU because reliability of forecasts is now one of the listed
criterions for project justification. An explicit representation of
uncertainties is also essential if the project sponsor and FTA are to
meet other requirements in SAFETEA-LU. For instance, an early
discussion of uncertainties is essential if the project sponsor is to
understand and explain the reasons that forecasts may change between
entry into PE, entry into final design, and after opening the project
to revenue operations as required for before/after studies, as well as
for FTA to accurately assess contractor performance. An understanding
of uncertainties also provides information to FTA as it implements
SAFTETEA-LU's cost incentive provision, which allows FTA to provide
more New Starts funding if project costs are no more than 110 percent,
and ridership no less than 90 percent, of the estimates made when the
project was admitted into PE.
Current FTA guidance on capital cost estimation and travel
forecasting discusses the role of uncertainty in forecasts and
describes how these uncertainties could be reported. However, to ensure
that uncertainties are being reported consistently by all grantees, FTA
intends to issue more explicit guidance of what factors should be
included in this discussion.
Proposal: FTA believes a requirement to adjust ratings based on the
reliability of the data should be included to satisfy several SAFETEA-
LU requirements. Understanding uncertainty will allow FTA to better
recommend funding among projects with similar costs and benefits, but
with significant differences in uncertainties. A better understanding
of uncertainties will facilitate a better understanding of why costs
and ridership vary from predictions so that better approaches to
forecasts can be developed for future projects. Additionally, because a
major purpose of planning and project development studies is to
disclose information for decision-making, a more explicit
representation of uncertainties better informs decision-makers by
providing richer information about the likelihood of achieving the
project benefits and costs. FTA will consider the reliability of
operating costs certainties by looking at whether there are any
innovative contractual arrangements which produce significant
reductions in operating expenses, or which improve the reliability of
forecasts of operating costs.
Project Development Procedures
26. Does the proposed requirement to have local endorsement of the
financial plan address FTA's desire to enhance the degree of confidence
in the likelihood of proposed funding sources to materialize?
27. Do project sponsors foresee any potential problems securing
these local endorsements?
Comment: Question 26 received 3 comments and question 27 received 7
comments. FTA proposed a requirement that all proposed sources of
funding be specified in the financial plan and that each sponsoring
agency provide a letter endorsing the proposed financial strategies and
funding amounts. The proposal was meant to increase FTA's confidence
level earlier in the project development process (prior to entry into
PE) that the project has the support of the proposed funding partners.
Almost
[[Page 43338]]
all commenters misunderstood the proposal to mean that letters of
commitment of local funding would be required earlier in the project
development process. As a result, of the 3 comments received in
response to this question, only one (an MPO) thought the proposed
requirement had merit and would enhance the degree of confidence in the
likelihood of funding sources materializing. The MPO also stated that
the inability of a project sponsor to get the required endorsement
would be most telling. All other commenters stated that requiring
letters of endorsement (which they interpreted as letters of
commitment) from local agencies on the financial plan early in the
project development process was premature. They indicated it would be
difficult to get financial commitments from local governments without a
corresponding commitment at the same time from FTA. Others stated that
FHWA does not require a similar endorsement from State and local
governments for highway projects.
Response: The requirement to obtain a letter of endorsement of a
financial plan is not intended to be as stringent as having to obtain a
firm letter of commitment of funding. FTA believes that this
requirement, so clarified, should not be that difficult to address, so
long as the project sponsor has worked closely with the proposed
funding partners, and these partners have actually developed an
understanding of their proposed roles. FTA acknowledges that, as with
many of the New Starts requirements, there is not a similar requirement
for highway projects. However, the great majority of Federal aid
highway projects are funded through FHWA formula grants, and the
selection of projects is the prerogative of the States, in cooperation
with the metropolitan planning organization designated for the area per
23 U.S.C. 134 (j)(5) and (k)(4), and 49 U.S.C. 5303 (j)(5) and (k)(4);
conversely, major transit capital investments are funded through the
Section 5309 Capital Investment discretionary program, and projects are
selected for funding on a competitive, nationwide basis.
Proposal: FTA is proposing to require letters of endorsement for
any non-grantee controlled or non-committed source of funding specified
in the financial plan prior to entry into PE and with each annual New
Starts submission. In the letter of endorsement, each sponsoring agency
would need to give their support to pursuing whatever steps are
necessary for them to ultimately commit the proposed financial
strategies and funding amounts.
28. Are there any other policies or requirements that could enhance
FTA's confidence in the funding plans for proposed New Starts projects?
Comment: Four comments were received in answer to this question.
Three comments were received that suggested other policies or
requirements FTA might use. Two transit agencies discussed including a
timeline for obtaining funding commitments in a project development
agreement (PDA). The fourth comment suggested that FTA consider the
degree to which the project sponsor has expended funds on the project
at its own risk as an indication of the agency's commitment to the
project.
Response: FTA agrees that a PDA could be used to lay out timelines
for receipt of funding commitments, but this would not provide FTA with
any added confidence that the funding would actually materialize. FTA
also agrees that the degree to which a project sponsor has expended
funds on a project is an indication of the project sponsor's commitment
to the project. However, FTA does not agree that this in and of itself
reflects local political support from other potential funding partners.
Too often, project sponsors have been unable to obtain sufficient local
funding from outside sources, even though they have expended a
considerable amount of their own resources to undertake alternatives
analysis and PE.
Proposal: Lacking any other suggestions, FTA will rely on the
requirement that all proposed sources of funding be specified in the
financial plan and that each sponsoring agency provide a letter
endorsing the proposed financial strategies and funding amounts. Again,
such a letter would not constitute a commitment on the part of a
proposed funding partner, but only an indication that the funding
partner understands and is willing to proceed with further development
of its proposed role in funding the project. In addition, FTA would
continue to require that funding commitments be provided as the project
moves through the process, with 50 percent of the commitments in place
as a condition of entry into final design, and 100 percent of the
commitments in place prior to execution of a FFGA.
29. In what ways could FTA describe the baseline alternative more
clearly?
Comment: Twelve comments were received in answer to this question.
Two commenters said the no-build should be the baseline. One commenter
stated that the use of a baseline that is different than the no-build
puts it in conflict with the National Environmental Policy Act (NEPA).
Others stated that it should be the Transportation System Management
(TSM) alternative, defined succinctly as the best than can be done
without construction of a new fixed guideway, and that it should be
identified as such. Other concerns included changes to the baseline
late in the project development process and the opinion that too much
emphasis is placed on the baseline alternative given that in most
circumstances it would not be built.
Response: FTA believes that a properly-defined TSM constitutes an
appropriate baseline for the purpose of estimating New Starts project
justification criteria and that, because there are only limited
circumstances in which the use of a no-build alternative is justified,
referring to the baseline by its ``intended'' name--the TSM
alternative--makes sense. FTA does not support using the no-build as
the baseline because a consistently defined TSM alternative is required
to ensure a level playing field when comparing projects across the
country. FTA has not required that the TSM alternative be carried
forward in NEPA documents when the project sponsor has adequately
described its reason in the NEPA document for not carrying the
alternative forward for detailed analysis. Both FTA's oversight of the
technical work supporting alternatives analyses and the project
sponsor's performance of the tests identified in the policy guidance
prior to FTA approval of the baseline alternative are intended to
obviate the need for review and adjustment of the baseline during
subsequent project development stages. The fact that SAFETEA-LU
establishes a Small Starts program that provides a source of capital
funding for low-cost major transit investments undermines the argument
that TSM-level improvements cannot be built. This undercuts the
argument that it is not fair to evaluate the merits of a New Start
against an ``academic'' TSM, because the TSM is now a viable
alternative, which could receive funding through the Small Starts
program category.
Proposal: FTA is already in the process of enhancing its guidance
on the development of the New Starts baseline alternative. Because FTA
is only clarifying, rather than changing, its existing guidance, such
clarification can be addressed as technical guidance, without affecting
any of the higher-level principles articulated in the existing
regulation and carried forward in the NPRM. The guidance will clarify
FTA's expectations that the New Starts baseline will be identical to
the TSM alternative in all but very rare cases, and will use that
terminology to describe the
[[Page 43339]]
attributes of the baseline. Since in most cases the baseline will be
the TSM alternative, the guidance will describe the process for
developing the TSM alternative, the appropriate tests for optimizing
the TSM alternative, and the rationale for these tests. The guidance
will further provide examples for the development of appropriate TSM
alternatives in specific environments.
30. Should there be a way to report project benefits of the
proposed New Starts project compared to the no-build alternative
outside the cost effectiveness evaluation?
Comment: Two comments were received in answer to this question.
Both commenters answered in the affirmative, although neither provided
suggestions on how to report benefits.
Response: In response to comments submitted by the transit industry
and in recognition of the desire to simplify the New Starts process,
the December 2000 New Starts Final Rule eliminated the requirement for
an evaluation comparing the New Starts criteria for the build
alternative against both the no-build and the TSM alternative. Instead,
the regulation promulgated the current requirement that projects be
evaluated against a single ``baseline'' alternative, typically the TSM
alternative. Permitting an alternative presentation of project benefits
(build vs. no-build) would result in additional work for project
sponsors and could lead to confusion over the true representation of
project benefits. Nevertheless, FTA has always allowed project sponsors
to use criteria and measures in their studies that depart from those
used by FTA, but which address local concerns.
Proposal: FTA will maintain the requirement as stated in the
current regulation that cost effectiveness will be based solely on a
comparison between the proposed project and the baseline alternative,
while clarifying that the baseline in almost all cases is the TSM
alternative and providing enhanced guidance on the development of the
TSM alternative.
31. How recent should on-board surveys be to ensure that the
information is still valid?
32. Are there cases where an on-board survey less than 5 years old
could be out of date? If so, how might FTA be sure of the usefulness of
on-board survey information?
Comment: Question 31 received 5 comments and question 32 received 3
comments. One commenter believed that on-board surveys were not needed,
stating that other data sources would suffice. Four commenters
suggested surveys be conducted within the past 5 to 10 years.
Response: Given the critical role that the information gleaned from
on-board surveys plays in understanding the nature of the transit
riding market and in ensuring that travel models can replicate current
conditions, it is essential that the data on ridership patterns be as
current as possible. To the extent that the data used to validate the
model varies from current ridership patterns because of significant
changes in population, service, or other factors, the usefulness of the
data is diminished. In fact, it may be necessary to update all or a
portion of the survey more frequently than every five years if an area
has experienced dramatic changes in service, population, and employment
or other factors during that time. For example, if the survey was taken
when little park-and-ride service existed, and considerable park-and-
ride service was implemented after the survey, a new survey would be
necessary to understand park-and-ride behavior if the New Start project
relied in large part on the park-and-ride market to generate ridership.
Proposal: FTA proposes that, for project sponsors using traditional
four-step travel forecasting procedures to estimate transportation
system user benefits, the procedures be rigorously validated using an
on-board survey of transit riders completed no more than five years
prior to entry into PE. FTA will determine if changes in service,
demographics, or other factors are significant enough to require a more
recent survey to validate the model.
33. Would a clearer definition of the preliminary engineering phase
for New Starts projects help project sponsors target resources expended
on preliminary engineering in ways that better support the decision-
making process for New Starts?
Comment: Three comments were received in answer to this question.
Two comments were received in support of this proposal, and one
provided an alternative. Commenters stated that significant resources
would need to be shifted from final design to preliminary engineering
(PE). Commenters also stated concern about potential increases in
costs. One commenter stated that an explanation of how PE relates to
the NEPA process would be helpful. Another stated that all NEPA
requirements should be met during PE and that a Record of Decision
(ROD) and FFGA should be issued simultaneously prior to final design.
Another respondent inquired about the purpose of final design if PE is
expanded to include capping of funds. That agency suggested that FTA
should have clear criteria for entrance into PE.
Response: The goal of PE is to finalize the project scope, cost
estimate, and financial plan. Project scope must be defined such that
all environmental impacts are identified and adequate provisions made
for their mitigation in accordance with NEPA. FTA will not complete the
NEPA process until a project has been approved for entry into PE. In
addition, although the level of scope development may vary from project
to project, it must, at a minimum, be advanced to the point where
design issues are fully addressed and no significant unknown impacts to
cost may result. FTA intends that the cost estimate produced at the end
of PE be used as the baseline cost estimate for determining the share
of Section 5309 Capital Investment funds to be awarded in the full
funding grant agreement. Similarly, FTA expects that the project
financial plan produced during PE (and submitted to FTA as part of its
statutory evaluation to approve project entrance into final design)
will demonstrate adequate financial capacity and provide support for
the local financial commitment necessary before FTA can execute the
FFGA.
In its May 2006 New Starts Policy Guidance, FTA adopted a policy
requiring that NEPA scoping be performed prior to entry into PE.
Scoping prior to PE fosters informed decision-making in the New Starts
process and allows for resolution of issues regarding the alternatives
to be considered in the NEPA review to be made during the planning
process instead of discovering them during PE and having to do
additional planning analyses to address them. NEPA completion during PE
facilitates performing the requisite engineering and analysis to define
the project scope, cost, and financial plan, which are documented in a
ROD.
Final design is a statutorily prescribed phase of the New Starts
project development process following PE and preceding construction.
Technically, final design is the phase of project development in which
the project sponsor prepares for project construction. During final
design, the engineering and design products of PE are refined for the
development and solicitation of construction contract packages, as well
as the development and/or updating of various project management plans
and risk mitigation strategies. It is, however, expected that under the
definition of New Starts PE adopted in the May 2006 New Starts Policy
Guidance, the duration of final design will be considerably shortened
as PE would result in developing sufficient engineering and design to
arrive at an
[[Page 43340]]
accurate and reliable cost estimate. Thus, it is expected that the time
between entrance into final design and negotiations on an FFGA will be
reduced.
Proposal: FTA has defined the conditions that must be met at the
completion of New Starts PE. FTA believes that these conditions will
help in clarifying when a New Starts project is ready to move from one
step to the next.
34. How might the Project Management Oversight (PMOC) process be
designed to support the higher expectation regarding the results of
preliminary engineering?
Comment: Only one comment was received, and it favored enhanced
PMOC assistance. The respondent stated that although nearly all the
information needed to make a final decision on project funding should
be complete at the end of PE, completion of engineering should not be a
criterion for exiting PE. Design refinements and subsequent cost
adjustments should be expected through the final design phase. The
earlier in the process that the PMOC understands the unique challenges
the project faces in terms of engineering and cost estimating, the more
likely the PMOC will be able to assist in determining whether or not
the contingencies are appropriate.
Response: FTA has a number of activities underway to strengthen its
project management oversight activities during PE. These include cost
validation, independent cost estimates, and risk analysis and
management. The PMOC reviews grantee data and corresponding engineering
analysis throughout PE to determine the completeness and mechanical
correctness of the baseline cost estimate. Project cost reviews are an
iterative review process, whereby costs are assessed for consistency
with the project scope adopted in the ROD (as amended and/or updated to
the selected alignment), as well as consistency with relevant,
identifiable industry or engineering practices. In this manner, FTA can
determine that the project scope and costs are sufficiently complete to
support the level and quality of revenue service expected. Using these
tools during project development allows the grantee, with Federal
oversight, to identify opportunities to improve the operation and cost
effectiveness of its project. Whereas design refinements are expected
during final design, significant cost adjustments should not occur. The
scope and cost reviews that FTA incorporates in its risk analysis
conducted during PE are intended to identify those project elements
that are likely to require cost adjustments so that these potential
cost adjustment may be accounted for in the resulting baseline cost
estimate, as part of the contingency calculation, at the completion of
PE.
Proposal: FTA is currently reviewing its PMOC regulations and
guidance with the goal of providing greater program effectiveness in
New Starts project development and delivery. These changes will be
discussed under a separate rulemaking to amend the Project Management
Oversight regulation and are not reflected in this NPRM.
35. Does this approach significantly increase the cost of
preliminary engineering? If so, is that problematic if costs are just
shifted from final design?
Comment: Two comments were received in response to this question,
both generally agreeing that the cost of PE would increase. One
commenter stated that the proposed requirement would result in an
extended PE phase and blur the line between PE and final design.
Specifically, the commenter noted that a shift in consultants between
phases could result in increased costs due to the need to redesign
project elements and that increased costs should not eliminate projects
from the New Starts pipeline. The other stated that asking project
sponsors to front load their design costs may prove to be an onerous
burden.
Response: It is not clear that costs for PE will increase in order
to meet FTA's requirement for a more reliable cost estimate. This is
because the nature of work performed in PE and in final design has
never been well defined, and as a result the level of engineering
performed varies widely among projects. Expenditures for PE in the past
have not always been focused on a reliable cost estimate, but have
addressed a variety of concerns, many of which did not necessarily
enhance the soundness of the cost estimate. In addition, many candidate
New Starts project sponsors have already undertaken ``continuing/
extended PE'' prior to entry into final design in order to identify and
resolve engineering and/or design issues. In those instances, the
project's sponsors have generally been able to complete final design in
a shorter timeframe. From an accounting standpoint, requiring this
effort by all project sponsors may increase costs incurred during the
designated PE phase but decrease costs during final design.
Proposal: The proposed regulation clearly identifies the products
of both PE and final design. With FTA clearly defining each phase of
New Starts project planning and development, along with prescribed exit
criteria, project sponsors can assess their resource needs and plan for
them accordingly.
36. Does the proposed policy of MPO reaffirmation of the proposed
project address FTA's goal of ensuring local support for implementing
and financing proposed New Starts projects?
37. If FTA implements the previously mentioned local endorsement of
the Financial Plan, does this separate action become redundant?
Comment: FTA received 8 comments on question 36 and 1 comment on
question 37. Five commenters noted opposition to the proposal mentioned
in question 36. Those opposed who wrote this proposal would add an
unnecessary step to the process that would delay final design approval
and thereby add to the cost of project development. In addition, they
wrote this would not help to address FTA's concern of ensuring local
support for financing of the project. Lastly, commenters suggested this
would create a disconnect with requirements placed on highway projects.
Three comments were received stating no objection to the proposal, but
also not stating strong support of it. These commenters wrote it was
reasonable and in line with current local planning process
requirements, but would not help address FTA's concern. Only one
comment was received on whether the proposal was redundant should FTA
implement its other proposal for local endorsement of financial plans.
That commenter wrote it was not redundant and that it is important for
the MPO as a regional entity to formally state that it supports the
project in its final configuration.
Response: FTA does not believe this proposal would add significant
time or cost to the project development process. The FTA/FHWA
metropolitan and statewide planning regulations require that before
Federal funds may be spent on a project, it must be adopted into the
MPO's financially constrained metropolitan transportation plan and
transportation improvement program. FTA's proposal would ensure that
the latest information on the project's cost estimate and impacts is
incorporated into the region's transportation plan.
Proposal: To verify that New Starts projects, with their final
scope and costs, are supported by regional planning partners, FTA
proposes to require that MPOs reaffirm their commitment to implementing
and financing projects, prior to those projects advancing into final
design, if significant changes have occurred in the project definition
or cost.
[[Page 43341]]
38. Section 5309(h)(3) as amended by SAFETEA-LU accords FTA the
discretion to provide a higher percentage of New Starts funding than
that requested by the project sponsor as an incentive to producing
reliable ridership forecasts and cost estimates. How could FTA
implement this provision of SAFETEA-LU?
Comment: Eight comments were received in total, but very few
included specific ideas on how the incentive could be implemented. Two
commenters were opposed to the incentive idea. Four transit agencies
and one MPO were supportive of the idea. One transit agency expressed
neither support nor opposition, but rather concerns with what
projections would be evaluated to determine eligibility, suggesting
that the proposal may result in less accurate cost and ridership
forecasts. The two commenters opposed to the idea, and one of the
transit agencies in support of the idea, suggested that rather than
allowing grantees to reduce the local share if New Starts funding is
increased under the incentive, project sponsors should instead be
required to use the additional funding for betterments to the project.
One transit agency suggested that incentives are acceptable only if
they are kept small (2-3 percent increase) while another transit agency
suggested that FTA should work with the project sponsor to determine an
incentive amount that would be meaningful. Another comment stated that
an FFGA should be amended before it is fully paid out to increase the
New Starts share if ridership and cost estimates prove reliable over
the course of the first year of operation.
Response: Regarding the accuracy of forecasts, the concern of the
commenting agency that this proposal could result in less accurate cost
and ridership forecasts may be unfounded. Presumably the commenter is
suggesting that grantees would overstate costs and understate ridership
during project development so as to come in under budget after
completion of the project and with higher ridership to be eligible for
an incentive. The very nature of the New Starts rating and evaluation
process would prevent this from happening, because overstating costs
and understating ridership would significantly impact a project's cost
effectiveness. Furthermore, FTA examines both cost and ridership
projections closely throughout project development and would not accept
obvious misrepresentation of costs and ridership.
Proposal: FTA proposes to implement a new feature of FFGAs,
consistent with changes made by SAFETEA-LU, that would include an
incentive clause that would allow for an amendment to either increase
the Federal funding contribution or allow for the addition of scope,
when actual opening year ridership is no less than 90 percent of that
forecast and actual capital costs, adjusted for inflation, are not more
than 110 percent of that estimated, at the time the project entered PE.
This standard is slightly more stringent than the wording in SAFETEA-
LU, as FTA is proposing to amend the FFGA only after the project is
complete and operating, rather than assessing whether forecasts have
stayed within these limits prior to execution of the FFGA. FTA believes
that the incentive should only be provided for actual performance not
for projected performance. However, as suggested by the commenters, FTA
is allowing the incentive to be used either to increase the Federal
share or to add scope to the system.
ANPRM on Small Starts
Small Starts Eligibility
SAFETEA-LU constrains eligibility of projects for Small Starts
funding by imposing limits of less than $75 million in Section 5309
Capital Investment funds and less than $250 million for total project
cost. However, it broadens eligibility in terms of project definition
by relaxing the existing requirement that the project include a fixed
guideway. With this change, a project that would not meet the fixed-
guideway criterion is now eligible if it (1) includes a substantial
portion that is in a separate right-of-way, or (2) represents a
substantial investment in specific kinds of transit improvements in a
defined corridor.
The eligibility provisions of the statute raise several issues: (1)
How to define ``substantial portion in a separate right-of-way;''; (2)
how to define ``substantial investment''; (3) the possibility that
project sponsors could divide traditional New Starts projects into two
or more Small Starts projects; and (4) the possibility that a Small
Starts project might be proposed as the initial transit service in a
corridor. The ANPRM provided a discussion of the challenges and merits
of various approaches to addressing these issues, and readers of this
NPRM are encouraged to refer to it for more information. The ANPRM
further posed several questions related to the eligibility of Small
Starts projects with the goal of facilitating a discussion of this
important topic. These questions, a summary of industry reaction to the
questions, and FTA's response and proposal for the NPRM follows:
1. What portion of the project should be in a separate right-of-way
to qualify for funding under the Small Starts eligibility criteria?
Should this determination be based on length or on performance?
2. How might FTA interpret the requirements that a project
represent a ``substantial investment?''
3. How might we ensure that a Small Starts project is in a
``defined corridor?''
Comments: Questions 1 and 2 received 20 comments each, and question
3 received 11 comments.
Comments were generally split on the first question of eligibility.
Of the 12 comments that noted the need for a separate right-of-way for
Small Starts projects, there was a consensus that 25-50 percent of the
length of the project should be in exclusive right-of-way to be
eligible for Small Starts funding. Reasons cited for a minimum guideway
threshold included the ability to show a permanence of investment,
which would better support the land use and economic development
objectives of proposed transit investments, and to ensure travel time
savings. But 4 of the 8 commenters not in favor of requiring a
dedicated right-of-way noted similar gains in performance may be made
through the use of ITS technology such as signal prioritization, queue
jumping, and other operational treatments. Indeed, slightly more than
half of the commenters on this question favored a performance-based
determination of eligibility, with travel time savings the most
commonly suggested performance criteria.
All 20 of the commenters favored the inclusion in the NPRM of a
definition of ``substantial investment.'' However, 2 comments stressed
the need for flexibility and opposed either a dollar value or a
specific list of criteria elements that needed to be met, as proposed
in the ANPRM. Twelve comments requested that a portion of the right-of-
way be dedicated, although 7 of these stated that FTA should not
mandate that a separate right-of-way be an element of every Small
Start. More specific comments noted that a substantial investment
should be defined in terms of infrastructure investment. Fifteen
commenters recommended that FTA define substantial investment as a
``package'' of investments listed in 49 U.S.C. 5309(e)(10), as amended
by SAFETEA-LU, including hardware such as signal pre-emption, off-board
fare collection, level boarding, station investment, and special
vehicles. Due to the large number of potential variables associated
[[Page 43342]]
with a ``substantial investment,'' 7 comments noted the need for clear,
non-regulatory based guidance that should cover the majority of
projects.
Suggestions to the question on ``defined corridor'' were wide
ranging. Three commenters noted that a traditional view of an arterial
street or a transportation corridor may be too rigid of a definition
and suggested that FTA take a flexible approach to the definition of a
``corridor'' for Small Starts purposes. One commenter recommended, for
example, that a corridor could be defined as a combination of parallel
streets, as a downtown shopping area, or as a central business
district. To further define the corridor, local policies on economic
development and land use should be examined and matched to the
corresponding area of interest. Seven commenters suggested that a more
narrow definition be used, for the reason that the modest costs of
Small Starts tend to lend themselves to improvements to existing travel
corridors rather than creation of more expensive new services. Two
commenters expressed concern that any definition must be able to
distinguish Small Starts from improvements that could be funded under
the Section 5309 bus or FTA formula programs.
Two commenters cited additional concerns on consideration of a
Small Starts project that would cross multiple jurisdictions. To
proceed on a project spanning jurisdictions, it was recommended that a
number of construction and planning phases be allowed if that type of
implementation approach facilitated project delivery.
Response: FTA believes that there is significant merit to using a
performance-based approach to determine whether or not the separate
right-of-way is ``significant.'' Because all fixed guideway projects
(rail projects and those with catenary, i.e., electric trolley-bus
service using overhead wires for power supply) are automatically
eligible for New Starts and Small Starts, the following is relevant to
bus projects only. Generally, the purpose of a separate right-of-way
for bus projects is to remove transit vehicles from general-purpose
traffic, thereby speeding up service. Therefore, a performance-based
determination would ensure that the portion of the project in a
separate right-of-way actually had the intended effect of better
operating performance. However, FTA has never applied a performance
standard to fixed-guideway projects. Thus, in the interest of
consistency among potential Section 5309 Capital Investment projects,
FTA believes that using a criterion based on physical characteristics
is more appropriate.
Likewise, FTA believes that it is necessary to define a minimum
level of transportation investment sufficient to justify the project
for discretionary Small Starts funding. Otherwise, Small Starts
projects would be competing for funding with many capital investments
(e.g. buses) that should be funded with FTA formula, bus discretionary,
or Title 23 flexible funds. Thus, FTA is proposing a number of specific
project components that would comprise a ``substantial investment'' to
improve the level of transit service, yet not require a specific
threshold or dollar value of improvements.
It is very difficult to prescribe the dimensions of a ``defined
corridor'' given the diversity of project contexts. Nevertheless, the
principles guiding the definition should be that the project addresses
a single travel shed that consists of a concentration of trip origins
and destinations. While there is no rigid definition of travel
corridor, routes with significant geographic separation would be
considered to serve different corridor travel markets.
Proposal: FTA proposes in this NPRM that to qualify for funding,
Small Starts bus projects must either (a) provide a dedicated right-of-
way for at least 50 percent of the total project length in the peak
period or when congestion inhibits transit system performance, or (b)
be a corridor-based bus project with the following minimum elements:
Substantial transit stations
Traffic signal priority/pre-emption, provided that there
are traffic signals on the corridor,
Low-floor buses or level boarding,
Branding of the proposed service, and
10-minute peak/15-minute off peak headways or better while
operating at least 14 hours per weekday
The first three bullets are taken directly from the statute; the
fourth is a low-cost strategy for achieving a sense of the uniqueness
and permanence of transit service and is thus consistent with SAFETEA-
LU's requirement that a corridor-based bus capital project include
``features that support long-term corridor investment.'' The fifth
bullet embodies the underlying concept that, to be successful
transportation investments, Small Starts projects must provide for a
significant level of transit service. Experience in major transit
corridors across the United States suggests that 10-minute peak
frequencies, in addition to representing a high level of service, is
the minimum headway at which passengers' decision to take transit is
not based upon route schedule information.
While other project features such as park-and-ride lots and off-
board fare collection are also eligible expenses under the program,
they are not required elements. The regulation simply states that the
project must be a corridor bus project; however, FTA intends to review
proposed projects on a case-by-case basis to determine whether they are
located in a ``defined corridor.'' A key consideration for this review
will be whether the project is located in a single travel shed.
4. Should we try to prevent traditional New Starts projects from
being divided into two or more Small Starts projects? If so, in what
ways might we prevent this from happening?
Comments: Twenty comments were received in answer to this question.
Only three of the commenters indicated they were in favor of allowing
traditional New Starts projects to be divided into two or more Small
Starts projects. The main reason cited to permit this division was that
any phased implementation would result in faster implementation of at
least some portions of a larger proposed investment, and that any
``stand-alone'' segment/project should be considered by FTA so long as
it is deemed worthy when evaluated against the Small Starts criteria.
The remaining 17 commenters noted that the division of large New Starts
projects into two or more Small Starts projects is contrary to the
intent of the Small Starts program. However, 14 commenters noted that
the funding of projects in the same region but on adjacent or unrelated
corridors should be allowed and even encouraged. In addition, other
more specific comments included limiting the amount of funding over a
given time period or justifying funding on the basis of how corridor
improvements are included in a region's metropolitan transportation
plan.
Response: The purpose of the simplified evaluation and project
development process for Small Starts is to scale the analysis and
procedures according to the complexity of the projects. Projects that
are very large investments in fixed guideway transit facilities demand
the full due diligence regarding the benefits, costs, and the project
sponsor's capability and readiness in order to ensure that public
resources are allocated to their best use. These larger projects should
not be able to evade due diligence simply because they are divided into
phases which individually meet the cost limits for Small Starts.
Proposal: FTA proposes that all potential Small Starts projects
(i.e.,
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portions of a larger investment) planned in a corridor will be
evaluated as a single project. If the combined cost or total requested
funding amount, both expressed in year-of-expenditure dollars, is over
the Small Starts limits, the project will be evaluated as traditional
New Starts project.
5. Should we establish a minimum ridership requirement to ensure
that Small Starts projects are used to improve the quality of service
for existing transit markets rather than represent the first transit
service offered to potentially new transit markets? If not, how can a
project demonstrate need for an investment?
Comments: Twenty-seven comments were received in answer to this
question. Approximately two-thirds of commenters opposed the idea of
instituting a minimum ridership requirement for Small Starts, citing
that this would penalize communities that are in the initial stages of
land development and thus currently do not have a demand for transit or
communities that are trying to open up new markets to transit. The 9
commenters in favor of the minimum ridership requirements indicated
that such a threshold would allow Small Starts funds to be provided
only to those areas that have a demonstrated need for improved transit.
It was further suggested by 8 of these 9 commenters that in these
existing cases, there would be substantially less risk to a project's
achievement of success because of this demonstrated need.
Response: FTA recognizes that the implementation of high quality
transit service in areas where such service does not exist today can,
when combined with aggressive corridor land use development
initiatives, contribute to future use of service.
Proposal: In the interim guidance for Small Starts, FTA required,
as one criterion for qualifying as a Very Small Start, that sponsors of
such projects provide evidence of current corridor ridership that would
benefit from the project of no less than 3,000 average weekday
passengers. FTA proposes to maintain this eligibility requirement for
Very Small Starts since it is an intrinsic element of FTA's ability to
warrant the project as being cost effective. For all other projects,
FTA proposes not to require a minimum ridership threshold. However, FTA
notes that it would seem unlikely that Small Starts projects proposed
in corridors with a small or non-existent transit market would be able
to generate immediate transportation benefits, as required by SAFETEA-
LU in its requirement that cost effectiveness be calculated for an
opening, rather than design, year. In considering the reliability of
ridership estimates, FTA will closely examine the justification for the
ridership and travel time benefits of such projects. Consequently,
sponsors of such projects must make an extremely compelling case that
there is sufficient planned development to result in conditions that
support a strong transit travel market.
Small Starts Evaluation and Ratings
As amended by SAFETEA-LU, 49 U.S.C. 5309(e)(2) allows the Secretary
of Transportation to provide funding assistance to a proposed project
under this new Small Starts category only if the Secretary finds that
the project is:
(A) Based on the results of planning and alternatives analysis;
(B) Justified based on a review of its public transportation
supportive land use policies, cost effectiveness, and effect on local
economic development; and
(C) Supported by an acceptable degree of local financial
commitment.
The statute expands on the justification required in paragraph (B),
requiring that the Secretary make the following determinations:
The degree to which the project is consistent with local
land use policies and is likely to achieve local development goals;
The cost effectiveness of the project at the time of the
initiation of revenue service;
The degree to which a project will have a positive effect
on land use and local economic development;
The reliability of the forecasting methods used to
estimate costs and ridership associated with the project; and
Any other factors that the Secretary determines
appropriate to make funding decisions.
The statutory provisions for the evaluation of proposed Small
Starts projects raise several issues. These include the framework for
the evaluation; the specific measures used in the evaluation; and
scaling of the evaluation approach for Small Starts projects of
different size, cost, and complexity. The ANPRM provided a discussion
of the challenges and merits of various approaches to addressing these
issues. Most notably, FTA proposed two potential options for organizing
the Small Starts project criteria into a coherent evaluation framework.
This is the same framework that is discussed in Question 3 under the
Guidance on New Starts Policy and Procedures. The ANPRM further posed
several specific questions related to the evaluation and rating of
Small Starts projects. These questions, a summary of industry comments,
and FTA's response and proposal for this NPRM follow:
6. How should the evaluation framework for New Starts be changed or
adapted for Small Starts projects?
Comments: Twenty-four comments were received in response to this
question. Several commenters addressed not only the overall evaluation
framework but also measures for local financial commitment and FTA's
proposal that the nature of the problem or opportunity in the Small
Starts project corridor be included in FTA's evaluation of Small
Starts. Comments on these specific measures were addressed in our
response to questions that specifically addresses these two issues. Of
the two evaluation framework options presented in the ANPRM, Option 2
generated the most support, although 3 commenters strongly indicated
that land use should be elevated to a benefit rather than used as a
risk factor. Four commenters objected to both Options 1 and 2, and
proposed an alternative approach--a ``point-system'' developed in a
Transit Cooperative Research Program (TCRP) quick study report.
In terms of local financial commitment, 1 commenter noted that FTA
should not penalize smaller Small Starts project sponsors who may not
be able to generate more than a 20 percent local funding match,
although another commenter hoped that FTA would continue to encourage
local overmatch through its evaluation of local financial commitment.
Two commenters suggested that State and local governments or private
investors are unwilling to commit project revenues until they receive
assurances of Federal funding, and that FTA needs to consider prior
history in obtaining non-Federal commitments as a surrogate for actual
commitments.
There was little comment on the proposal that projects be evaluated
in terms of the problems they solve or the opportunity they take
advantage of. One respondent was concerned that the ANPRM couches
``problems'' as only being mobility related.
Response: Based upon the comments received, FTA intends to advance
the framework described in Option 2 into the NPRM with one exception
that is discussed more fully in the question 3 under the Guidance on
New Starts Policy and Procedures. FTA has reviewed the TCRP proposal
for evaluating Small Starts projects and notes that the approach
entails double counting and difficulties determining the proper
weights. FTA understands the positive and negative aspects of
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encouraging local overmatch to Federal discretionary funding, but notes
that SAFETEA-LU permits FTA to consider the degree to which the project
financial plan depends upon non-New Starts funding, and FTA therefore
intends to reward overmatch for Small Starts just as it does New
Starts. Further it would be poor program management for FTA to make
Federal funding commitments in advance of local commitments. Equally
importantly, FTA expects that the demand for Small Starts funding will
be great enough among projects that can demonstrate such commitments
that it would be counterproductive for FTA to commit its funds in
advance of local funding commitments. FTA strongly encourages project
sponsors to provide an overmatch under the Small Starts program as it
is likely to be as highly competitive, if not more so, as the New
Starts program.
Proposal: The NPRM advances for further review and comment the
Option 2 evaluation framework first proposed in the ANPRM. However,
Option 2 has been modified in three important ways. First, the
``nature/extent of problem or opportunity'' in the project corridor has
been removed as an explicit evaluation criterion. FTA acknowledges that
this factor is not specifically identified in 49 U.S.C. 5309(e)(4).
However, FTA notes that 49 U.S.C. 5309(e)(4)(E) directs FTA to
``consider other factors that the Secretary determines appropriate.''
Therefore, whenever a project is evaluated, FTA intends to consider the
degree to which the proposed Small Starts project addresses the
existing and forecast problem and opportunity as an ``other'' factor.
As congestion is one of this Nation's most daunting transportation
challenges, another measure that FTA currently intends to consider
under ``other factors'' is the degree to which a project is a part of a
significant congestion reduction strategy. FTA will evaluate projects
that are a principal element of a congestion reduction strategy, in
general and a pricing strategy, in particular, more highly. FTA seeks
comment on how it might better measure congestion in the future.
FTA will also consider as an ``other factor'' any benefit of the
project not covered under the project justification criteria or other
factors that the Secretary determines to be appropriate to carry out
the evaluation. This consideration could result in a project's rating
being increased or decreased.
Further, FTA is proposing that land use be included under both the
economic development/land use criterion (under effectiveness) and the
reliability criterion. FTA intends that current land use conditions, as
well as land use plans and policies, be critical components of these
criteria. The economic development/land use criterion will account for
60 percent of the effectiveness rating, with the remaining 40 percent
of the rating comprised of mobility benefits. This should ensure that
the factor is given sufficient overall attention in the rating process.
FTA seeks comment on how it might better measure economic development/
land use in the future.
In addition to revising Option 2, FTA is asking for specific
comment, under a section entitled ``Additional Discussion Items for
Comment'' on an alternate evaluation framework for rating proposed
Small Starts projects. This framework is based upon three principles
that FTA espouses, which it has heard expressed by many in the transit
industry. The first principle is that there are two primary reasons for
implementing major transit capital investments--mobility improvements
and economic development--and that these can be evaluated on a pass/
fail basis. In the Small Starts program, FTA considers cost
effectiveness in terms of the cost of improving mobility. The second
principle is that FTA's evaluation process for Small Starts should be
as simple as possible, and only needs to be sufficient to identify the
best projects, ferret out the worst projects, and array those in the
middle. Finally, the third principle is that whatever the merit of
proposed Small Starts, lack of sufficient financial capability will
prevent its implementation; therefore, financial commitment should be
treated as a ``minimum'' or ``readiness'' requirement, rather than a
component of an overall New Starts project rating.
Figure 1 presents FTA's proposed Option 3 evaluation framework:
[GRAPHIC] [TIFF OMITTED] TP03AU07.039
Under this framework, the financial commitment, as measured by the
adequacy of a project's capital and operating plan (but not its
proposed Small Starts share) would join technical and legal capacity,
and the achievement of Federal metropolitan planning requirements, as
basic ``readiness'' requirements for being considered for advancement
in the Small Starts project development process. Once readiness is
determined, projects would be subject to a ``pass/fail'' assessment of
their cost effectiveness and economic development/land use impacts. If
projects pass both assessments, they will receive an initial rating of
High. If a project passes the cost effectiveness assessment but not the
economic development/land use assessment, it would receive an initial
rating of Medium. A project that fails both assessments, or passes the
economic development assessment but not the
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cost effectiveness assessment, would receive an initial rating of Low
and will not be considered by FTA for either advancement into project
development or a fundin