1. New Starts/Small Starts Program APTA Rail Conference San Francisco, CA June 5, 2008

2. 2 Topics Overview of the Program New/Small Starts Project Planning & Development New/Small Starts Evaluation and Funding Outreach

3. 3 FTA Aspirations the Program Goal: Fund meritorious projects Management objectives: –Make decisions with reliable information on project benefits and costs –Treat all projects equitably across the US –Facilitate communication between FTA, transit industry and Congress

4. 4 How FTA Meets Its Goals Sound and rigorous management of the program Promote - and assist in - the development of reliable information on costs and benefits Transparent evaluation process Local decisions, project ratings, and funding recommendations are based on the best information available to both the public and decision-makers

5. 5 Long-standing Legislative Requirements for Funding Alternative analysis Cost effectiveness Local financial commitment

6. 6 Key Program Principles Information used evaluations must properly reflect costs and benefits of the project - THIS IS HARD! FTA evaluations are mode-neutral Purpose of each project development phase should be accomplished before progressing to the next Projects accepted into PE/PD are worthy of funding

7. 7 Principle: Proper Identification of Project Benefits and Costs Maintain policy variables between project and baseline alternative with respect to: –Land use –Parking costs –Transit service frequencies and coverage –Transit fare –Transit service levels outside study corridor –Highway networks

8. 8 Principle: Mode-neutral Credit ridership attractiveness to those attributes that riders value, not mode per se Credit likelihood of economic development to those factors associated with it: developability of land, economic climate, plans and policies and accessibility.

9. 9 Principle: Accomplish Purpose of Development Phase Before Progressing Systems planning: corridor identification Alternatives analysis: mode and alignment PE: final scope/cost, completion of NEPA, financial plan commitments Final design: construction documents

10. 10 Principle: Projects Accepted into PE Are Worthy of Funding At completion of AA minimize uncertainties that affect: Alignment or mode Capital cost Transportation benefits Financial plan Others that could significantly affect project viability

11. 11 New Starts/Small Starts Funding: Supply and Demand Demand: –18 New Starts projects in PE and Final Design –16 Small Starts projects in PD –Total cost of pipeline: >$22.6 billion, $10.3 billion in New Starts funding –FTA tracking >100 planning studies considering major transit capital investments Annual funding –New Starts: $1.4+ billion –Small Starts: $200 million

12. 12 SAFETEA-LU Highlights for Alternatives Analyses Before and After Study –Required for both New Starts and Small Starts project – compares cost and ridership forecasts with actual numbers 2 years after revenue operations begins Before and After Study Report –Required annually to Congress documenting results of B&A studies Contractor Performance Assessment Report –Required annually to Congress citing contractor forecasts Incentives awards –Allows more federal funding if actual ridership is at least 90% and cost no more than 110% of forecasts made during alternatives analysis

13. 13 Eligibility: New Starts New fixed guideway systems and extensions New Starts funding > $75M or costs ≥ $250m Fixed guideway is established by any of the following characteristics: –Rail; –Separate right-of-way for the use of public transportation or high occupancy vehicles; or –Catenary

14. 14 Eligibility: Small Starts Cost criteria –Total cost <$250 million –Small Starts share < $75 million Scope criteria –Project has a fixed guideway for 50 percent or more of its length during peak periods, or –Non-fixed guideway project in a corridor including ALL of the following: -Significant transit stations -Traffic signal priority or pre-emption -Low floor buses or level boarding -Premium service branding -10 min peak/15 min off-peak headways at least 14 hours a day “Exempt” projects exist only until a new rule is published

15. 15 Eligibility: Very Small Starts Small Starts criteria for cost and scope Plus additional eligibility criteria: –Total cost under $50 million –Cost per mile < $3 million per mile, excluding rolling stock –(Existing weekday riders over 3,000)

16. 16 Small Starts/Very Small Starts Eligible Applicants Any public body is eligible to apply for Small Starts funds If the applicant is not the operator: –The small starts application must demonstrate how the project will be operated and maintained –Project sponsor must provide an executed operating agreement before a PCGA can be finalized

17. 17 The New Starts Environment Individual Senate and House Members 150Projects 15 FFGAs, 34 FD/PE/PD, 100 AA Inspector General Govt Accountability Office Press

18. New Starts Planning and Project Development

19. 19 New Starts Project Development Process Project Development: Typically 6-12 Years Alternatives Analysis 1-2 years Preliminary Engineering 2-3 years 3-7 years Operation FTA Approval Required for Full Funding Grant Agreement (FFGA) ~ 100 AA Studies 12 PE Projects 6 FD Projects FTA Approval Required 15 FFGA Projects ConstructionFinal Design

20. 20 Length of Project Development – LPA to Opening

21. 21 Key Decisions for Each Phase of Project Development Systems planning: priority corridor Alternatives analysis: mode and alignment Preliminary engineering: final scope/cost, completion of NEPA, financial plan Final design: construction documents Full Funding Grant Agreement –FTA: funding –Project sponsor: delivery of the project

22. 22 Planning and Project Development Alternatives Analysis Preliminary Engineering Select LPA FTA Approval to Start PE FTA Approval to Start Final Design System Planning Decisions Mode, general alignment Financial plan Decisions Needs Policies Priority corridor(s) Decisions Refinements to LPA Final scope and cost Complete NEPA Implement financial plan

23. 23 History of Alternatives Analysis 1970s Initial UMTA Policy Statements 1980s Rating system and technical guidance created AA became statutory requirement FTA staff closely involved in AAs FTA had grasp of issues at decision-points 1990s Major Investment Study (MIS) era FTA had little involvement in or awareness of AA studies FTA focused on projects in PE and Final Design 2000s FTA, Congress focus on funding best projects Emphasis is on settling planning questions before PE FTA involvement in AA renewed

24. 24 Alternatives Analysis: Guiding Principles Local process, local decisions Early and ongoing participation by a wide range of stakeholders Sufficient level of analysis is necessary to select a mode and general alignment Documentation and presentation of key study components Development of alternatives that isolate the costs and benefits of capital investment in guideways

25. 25 Alternatives Analysis: Key Elements Identification of corridor problems, project “purpose and need,” and goals and objectives Development of a range of alternatives that address causes of transportation problems Analysis of costs, benefits, and impacts of alternatives Refinement of Alternatives Evaluation of alternatives

26. 26 Useful FTA Reviews during AA Scope of work Initiation package Technical framework Technical results Final report (AA report or AA/DEIS)

27. 27 Requirements for FTA Approval into Preliminary Engineering (New Starts) Completed alternatives analysis No outstanding planning issues remain Locally preferred alternative adopted into fiscally constrained long range plan Projected New Starts evaluation measures confirmed “Medium” or higher rating for project –at least medium rating for both project justification and local financial commitment Sponsor demonstration of technical capacity

28. 28 FTA Suggestions to Expedite PE Approval Process Involve FTA in the alternatives analysis study early on Permit FTA to review AA study products Develop a defensible TSM alternative (and get FTA concurrence) as part of the study; don’t wait until the end to seek approval for what will become New Starts baseline alternative Inform FTA of intent to request entry into PE well in advance of formal request Do not submit formal request until all readiness thresholds and FTA approvals/findings have been met

29. 29 Preliminary Engineering What It Is  Work necessary to develop a firm scope and cost estimate with appropriate contingencies:  Finalize station locations and configuration  Yard and shop location  Alignment  Park and ride size and configuration  Number of vehicles and peak capacity needs  Work necessary to complete the environmental requirements  Work necessary to firm up funding commitments

30. 30 Preliminary Engineering What It Is NOT  Just engineering  Work necessary to complete 30% of design  Work necessary to develop a preliminary cost estimate that likely will increase during final design as project is better defined  An indication of likely New Starts funding

31. 31 Responsibilities of Project Management Oversight Contractors (PMOCs)  Serve as extension of FTA staff: - project management - construction management - project sponsor technical capacity  Monitor project progress: - schedule and budget - conformance with design criteria - construction to approved specifications  Provide technical guidance to grantee

32. 32 Requirements for FTA Approval into Final Design Completed NEPA process (ROD or FONSI) Approved Project Management Plan (PMP) Approved Rail and Bus Fleet Management Plan Address Railroad Right-of-Way (ROW) Issues Establish Process for Real Estate and ROW Acquisition “Medium” or Higher Project Rating –At least Medium rating for both Project Justification and Finance (including commitment of 50% of non-5309 funds)

33. 33 What is a Full Funding Grant Agreement (FFGA) ? Formal Agreement signed by FTA and Grantee following detailed review by DOT, OMB and Congress Agreement on Project Scope, Budget, and Schedule Terms and Conditions of Federal Participation Multi-year Funding Commitment (subject to Congressional Appropriations) Caps Federal Section 5309 New Starts funds

34. 34 Full Funding Grant Agreement To receive an FFGA a project must: –Be Authorized in Law –Complete the Planning, Project Development, and NEPA Processes –Meet Project Readiness Requirements (techinical capacity, firm and final cost estimate and funding) –Receive a “Medium” or higher overall rating –Receive a “Medium” or higher cost effectiveness rating –Meet all other Federal Requirements

35. 35 Significance of FFGA  Historically, 85% of New Starts Funds Appropriated for FFGAs and Projects with “Medium” or Higher Ratings  All Projects Eventually Receive 100% of Total New Starts Funding in FFGA  Majority of Projects Receive New Starts Funding according to Annual Schedule in FFGA  Practical Limits on Total New Starts Funding and Annual Schedule for Individual Projects

36. 36 Practical Limits for New Starts Funds Consider other projects in the region and their request for New Starts funds Assume no more than 50 percent in New Starts funding Historical maximum New Starts funds per project: $700M total, $100M per year (NYC region is exception)

37. 37 What is a Project Construction Grant Agreement (PCGA)? (Small Starts) Formal Agreement signed by FTA and Grantee following detailed review by DOT, OMB and Congress Agreement on Project Scope, Budget, and Schedule Terms and Conditions of Federal Participation Multi-year Funding Commitment (subject to Congressional Appropriations) Caps Federal Section 5309 Small Starts funds

38. 38 Project Construction Grant Agreement To receive a PCGA a project must: –Be Authorized in Law –Complete the Planning, Project Development, and NEPA Processes –Meet Project Readiness Requirements (technical capacity, firm and final cost estimate and funding) –Receive a “Medium” or higher overall rating –Receive a “Medium” or higher cost effectiveness rating –Meet all other Federal requirements Execution of the PCGA will be subject to a 60 day congressional review

39. 39 Before/After Study New requirement introduced in final rule Plan for data collection and analysis developed during FD/PD FTA approved plan required prior to FFGA/PCGA Data collection and analysis costs must be included in project cost estimate Activities are eligible for federal funding

40. 40 Before/After Study Analyze before-predicted-after data on: –Project scope –Service levels –Capital costs –Operating and maintenance costs –Ridership patterns

41. 41 Before/After Study Data collected at three key milestones: - Predictions developed at conclusion of AA, PE/PD and any changes made during Final Design - Prior Conditions immediately before service impacts caused by construction or opening - After Conditions collected two years after project opens for revenue service

42. 42 Actual Capital Cost vs. Inflation-Adjusted AA Estimate for Projects Completed 2003-2007

43. 43 Actual Ridership versus AA Forecast for Projects Completed 2003-2007 Average = 74.5% 50th Percentile = 63.8%

44. New Starts Evaluation and Funding

45. 45 Documents Related to SAFETEA-LU Requirements FTA must publish policy guidance for the New/Small Starts review and evaluation process and criteria each time significant changes are made, and not less than every two years –Guidance issued in Spring of 2006 and 2007, and planned for 2008 FTA must prepare new regulation for New and Small Starts –NPRM issued August 3, 2007 –Current appropriation bill prohibits issuance of final rule

46. 46 New Starts Evaluation and Oversight Among most rigorous in government Increasingly credible and important to Congress and local communities Program Management Oversight recommended by GAO and OIG

47. 47 FTA Ratings: New Starts Summary Rating Project Justification Rating Financial Rating Non-Section 5309 Share Capital Finances Operating Finances Other Factors Low Income Households User Benefits Mobility Improvements Environmental Benefits Operating Efficiencies Cost Effectiveness Land Use Minimum Project Development Requirements: Employment Capital Cost O&M Cost User Benefits Metropolitan Planning and Programming Requirements Project Management Technical Capability Other Considerations NEPA Approvals

48. 48 FTA Ratings: New Starts Existing New Starts Criteria –Project Justification -Land-use (transit friendliness of the setting) -Cost-effectiveness (costs in scale with benefits) -Other factors, including economic development, congestion and pricing strategies, and make-the-case –Local Financial Commitment

49. 49 Cost Effectiveness Dollars per hour of “user benefits” = Benefits and costs computed in relation to a “Baseline Alternative” annualized capital cost + annual O&M cost user benefits Cost Effectiveness Capital Cost O&M Cost User Benefits

50. 50 Cost Effectiveness Used instead of cost/benefit due to the difficulties in monetizing all transit benefits Effectiveness measure represents either most of the benefits of projects or is highly correlated to other benefits Allows a meaningful comparison of projects nationally of different modes with significant differences in costs and benefits

51. 51 Cost Effectiveness Potential sources of transportation benefits –Highway users: benefits from less congestion due to travelers changing from driving to riding on the project –Current transit users: benefits from faster travel times using project compared to their previous transit mode –New transit users: benefits from faster travel times using project

52. 52 Cost Effectiveness Current measurement of transportation benefits –Highway users: not included because of serious travel model difficulties in quantifying degree of congestion relief –Transit users: benefits from faster travel times for New Starts project for all travelers in the region -In-vehicle time -Walk and wait time -Number of transfers -Capacity constraints -Reliability, comfort, security, branding

53. 53 FTA values for Non-Travel Time Benefits Maximum benefit “Other” attribute Guideway only Guideway + local Guideway-like characteristics 8.0 3.0 - reliability of vehicle arrival 4.0 2.0 - branding/visibility/learnability 2.0 1.0 - schedule-free service 2.0 0.0 Span of good service 3.0 0.0 Passenger amenities 4.0 3.0 - stations/stops 3.0 2.0 - dynamic schedule information 1.0 1.0 TOTALconstant15.0 6.0 IVT coefficient 0.75*Civt 0.75*Civt

54. 54 User Benefits: Example #1 TSM BLD Local bus Train On Off Wait time = 5 min; run time = 20 min Wait time = 5 min; run time = 15 min 100 transit trips 110 transit trips User benefits = 100 trips x 5 minutes/trip (existing trips) + 10 trips x 5/2 minutes/trip (new trips) User benefits = 500 minutes + 25 minutes = 525 minutes

55. 55 User Benefits: Example #2 TSM BLD Local bus Train On Off Wait time = 5 min; transfer time = 4 min; total run time = 40 min Wait time = 3 min; run time = 30 min 100 transit trips 120 transit trips User benefits = 100 trips x (2.0 x 6 + 10) minutes/trip (existing trips) + 20 trips x (2.0 x 6 + 10)/2 minutes/trip (new trips) User benefits = 2,200 minutes + 440 minutes = 2,640 minutes Train

56. 56 Cost-Effectiveness Current breakpoints* for ratings: –Low >$30 per hour –Medium-low $24 - $29.99 per hour –Medium$15.50 - $23.99 per hour –Medium-high$12 - $15.49 per hour –High < $11.99 per hour * Adjusted annually using the GDP deflator

57. 57 Determination of Cost Effectiveness Breakpoints Based on the Value of Time 50% of median income per DOT policy ($10.54 when breakpoints established) plus 20% assumed for highway user benefits ($2.11) plus Indirect benefits such as economic development, safety improvements, pollutant reductions ($12.65) Result ($25.30 rounded to $25.00)

58. 58 Breakpoints and Funding Projects with cost effectiveness over $25.00 should not be funded FTA established the breakpoint for “Low” rating at $25.00  “Low” rated projects cannot be funded April 2005 - FTA announced more stringent standards –Projects with “Medium-Low” rating would not be recommended for funding

59. 59 What’s a Baseline Alternative? Low capital cost relative to fixed guideway Includes service frequencies, coverage, p&r lots comparable to the build alternatives “Best you can do to improve transit without building a new guideway”

60. 60 Why Use a Baseline Alternative? Illuminates project’s benefits and costs –Allows for identification of the additional project benefits due to significantly larger additional capital costs –Addresses concerns of critics that lower cost options are just as effective Ensures consistent evaluations nationally –Enables FTA to fairly assess project benefits in areas with good current transit service and areas with poor service

61. 61 Land Use Based on strength of: –Transit supportive existing land use –Transit supportive plans and policies –Demonstrated local performance of transit supportive policies Land Use

62. 62 Mobility Improvements User benefits per project passenger mile for all users and for transit dependents Number of all users of project and transit dependent riders Share of user benefits for transit dependents compared to the share of transit dependents in the Region

63. 63 Environmental Benefits  EPA air quality designation for region

64. 64 Other Factors Considerations not captured in other criteria: Project part of a pricing strategy in congestion management plan “Case” for the project Economic development Other Other factors

65. 65 Case for the Project Make-the-Case document –Guide to project benefits and “justification” -For FTA staff -For FTA briefing papers, talking points -For the Annual Report on New Starts –Element of project “justification” rating

66. 66 Case for the Project - Outline No more than “five pages” –Project identification –Setting –Purpose –Current conditions in the corridor –Anticipated conditions in 2030 –The case for the proposed project –Risk –Summary

67. 67 Case for the Project - Some Not- Useful Elements Topics relevant elsewhere (not here) –History of project development –Detailed project description –Financial feasibility –Public support; other support –“Importance” –Pictures

68. 68 Case - Thoughts on Good Practice Focus –All discussion sections should help explain the benefits of the project –A strategy 1.Figure out the principal benefits (markets: geography, trip purposes, etc.) that make the case 2.Focus the introductory sections (setting, current and future conditions) on those markets

69. 69 Case - Thoughts on Good Practice Quantification –Forecasts have numbers for ≈ everything –Use them to avoid hand-waving. Clarity –“To write well is to think clearly. That’s why it’s so hard.” – David McCollough, 2003 –Assign someone who can do both.

70. 70 Case - Thoughts on Good Practice Resources –Basic summaries often not enough –Subtask: extract information from forecasts –Preservation of resources for this work FTA assistance Ethics –Reliable numbers for decision-making –Bringing project benefits to the discussion

71. 71 Local Financial Commitment Based on: –Current capital and operating financing condition –Commitment of capital and operating funds –Cost estimates/planning assumptions/capacity Local Financial Commitment Rating Non-Section 5309 Share (20%) Capital Finances (50%) Operating Finances (30%)

72. 72 Financial Ratings In Project Development PE Approval – Reasonable financial plan; Funding sources identified; Good non-federal funding history FD Approval – At least 50 percent of non- 5309 New Starts funding committed; Firm cost estimates; Ability to address funding shortfalls FFGA – 100% non-New Starts funding committed; Funding shortfalls covered

73. 73 FTA Ratings: Small Starts Summary Rating Project Justification Rating Financial Rating Non-Section 5309 Share Capital Finances Operating Finances Other Factors Cost Effectiveness Land Use Minimum Project Development Requirements: Capital Cost O&M Cost User Benefits Metropolitan Planning and Programming Requirements Project Management Technical Capability Other Considerations NEPA Approvals

74. 74 FTA Ratings: Small Starts Existing New Starts framework Simplifications –Fewer criteria –Simpler evaluation measures for land use criterion –Opening year forecasts only –Simpler travel forecasting procedures possible –Simpler financial documentation possible

75. 75 FTA Ratings: Small Starts (continued) Simpler financial documentation possible –Rating of “medium” for local financial commitment if: -Reasonable plan to secure local share (all non-New Starts funding committed for PCGA) -Project O&M under 5 percent of agency operating budget -Agency in solid financial condition –Projects that cannot meet these conditions submit a financial plan -According to FTA guidance -Covering period up to and including opening year -Evaluated based on criteria used for New Starts

76. 76 FTA Ratings: Very Small Starts Summary Rating Project Justification Rating Financial Rating Non-Section 5309 Share Capital Finances Operating Finances Other Factors Cost Effectiveness Land Use Minimum Project Development Requirements: Capital Cost Benefiting Riders Metropolitan Planning and Programming Requirements Project Management Technical Capability Other Considerations NEPA Approvals

77. 77 FTA Ratings: Very Small Starts Existing New Starts framework Simplifications –Fewer criteria –“Warrants” approach for project justification -Benefiting riders > 3,000/day -Capital cost (excl. vehicles) < $3M/mi. -Total capital cost < $50M –Simpler financial documentation possible (as with Small Starts) Demonstrate consistency with characteristics of “justified” projects

78. 78 Summary Ratings Rating categories: –High –Medium-high –Medium –Medium-low –Low Decision Rule: –Must have at least “Medium” on both justification and finance to receive “Medium” overall Summary Rating Project Justification Rating (50%) Local Financial Commitment Rating (50%)

79. 79 Project Ratings and Decisionmaking Ratings guide FTA approvals of PE/PD, Final Design, and FFGA/PCGAs “Medium” or better overall rating required to advance Once in PE/PD, rating reported each year in Annual Report on Funding Recommendations

80. Planned Outreach Activities

81. 81 Workshops and Training Courses TBD, Alternative Analysis Courses March, 2009, New/Small Starts Workshop at APTA Legislative Conf March, 2009, Travel Forecasting Workshops for New/Small Starts Spring 2009, New/Small Starts Roundtables (by invitation) June 2009, New/Small Starts Workshop at APTA Rail Conf