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New Starts/Small Starts Program. APTA Annual Meeting San Diego, CA October 4, 2008. Purpose of Session. Increase your understanding of the New and Small Starts programs by: Describing key elements of the program (bureaucratic stuff) Providing the unbureaucratic program principles

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new starts small starts program

New Starts/Small Starts Program

APTA Annual Meeting

San Diego, CA

October 4, 2008

purpose of session
Purpose of Session

Increase your understanding of the New and Small Starts programs by:

  • Describing key elements of the program (bureaucratic stuff)
  • Providing the unbureaucratic program principles
  • Provide responses to comments we’ve heard
topics
Topics
  • Overview of the Program
  • New/Small Starts Project Planning & Development
  • New/Small Starts Evaluation and Funding
  • Outreach
fta aspirations the program
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
long standing legislative requirements for funding
Long-standing Legislative Requirements for Funding
  • Alternative analysis
  • Cost effectiveness
  • Local financial commitment
eligibility new starts
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
eligibility small starts
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

eligibility very small starts
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)
key program principles
Key Program Principles
  • Information for 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
principle proper identification of project benefits and costs
Principle: Proper Identification of Project Benefits and Costs

Identify benefits of project realized by its infrastructure, not benefits related to:

  • Land use
  • Parking costs
  • Transit service frequencies and coverage
  • Transit fare
  • Transit service levels outside study corridor
  • Highway networks
principle mode neutral
Principle: Mode-neutral
  • Credit ridership attractiveness to those attributes that riders value – performance matters, 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.
principle accomplish purpose of development phase before progressing
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
principle projects accepted into pe pd are worthy of funding
Principle: Projects Accepted into PE/PD Are Worthy of Funding

Alternatives analysis is sufficiently robust to minimize uncertainties that affect:

  • Alignment or mode
  • Capital cost
  • Transportation benefits
  • Financial plan
  • Others that could significantly affect project viability
new starts small starts funding supply and demand
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
safetea lu provisions supporting good planning estimates
SAFETEA-LU Provisions Supporting Good Planning Estimates
  • 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
the new small starts environment
The New/Small Starts Environment

Press

150Projects

15 FFGAs, 34 FD/PE/PD, 100 AA

Inspector

General

Govt

Accountability

Office

Individual Senate and House Members

new starts project development process
New Starts Project Development Process
  • Project Development: Typically 6-12 Years

FTA Approval Required forFull Funding Grant Agreement (FFGA)

FTA Approval Required

FTA Approval Required

Alternatives Analysis 1-2 years

Preliminary Engineering2-3 years

Final Design

Construction

Operation

3-7 years

~ 100 AA Studies

12 PE Projects

6 FD Projects

15 FFGA Projects

key decisions for each phase of project development
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
planning and project development
Planning and Project Development

System Planning

Alternatives Analysis

Select LPA

  • Decisions
  • Needs
  • Policies
  • Priority corridor(s)
  • Decisions
  • Mode, general alignment
  • Financial plan

FTA Approval

to Start PE

  • Decisions
  • Refinements to LPA
  • Final scope and cost
  • Complete NEPA
  • Implement financial plan

Preliminary Engineering

FTA Approval to

Start Final Design

alternatives analysis guiding principles
Alternatives Analysis:Guiding Principles
  • Information on costs, benefits and impacts of alternatives results in better decisionmaking by local and federal officials
  • Given its importance, information needs to be reliable with frank disclosure of uncertainties
alternatives analysis key elements
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
useful fta reviews during aa
Useful FTA Reviews during AA
  • Scope of work
  • Initiation package
  • Technical framework
  • Technical results
  • Final report (AA report or AA/DEIS)
preliminary engineering key elements
Preliminary Engineering: Key Elements
  • 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
what is a full funding grant agreement ffga
What is a Full Funding Grant Agreement (FFGA)?
  • Formal Agreement signed by FTA and Grantee that includes:
    • Project Scope, Budget, and Schedule
    • Terms and Conditions of Federal Participation
    • Multi-year Funding Commitment (subject to Congressional Appropriations)
    • Cap on New Starts funds
significance of ffga
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
practical limits for new starts funds
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: $750M total, $100M per year (NYC region is exception)
what is a project construction grant agreement pcga small starts
What is a Project Construction Grant Agreement (PCGA)? (Small Starts)
  • Formal Agreement signed by FTA and Grantee that includes:
    • Project Scope, Budget, and Schedule
    • Terms and Conditions of Federal Participation
    • Multi-year Funding Commitment (subject to Congressional Appropriations)
    • Cap on Small Starts funds
actual ridership versus aa forecast for projects completed 2003 2007
Actual Ridership versus AA Forecast for Projects Completed 2003-2007

Average = 74.5%

50th Percentile = 63.8%

documents related to safetea lu requirements
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 in 2008
  • FTA must prepare new regulation for New and Small Starts
    • NPRM issued August 3, 2007
    • Current appropriation bill prohibits issuance of final rule
new starts evaluation and oversight
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
new starts evaluation and oversight over 3 decades of disagreement between fta and project sponsors
New Starts Evaluation and Oversight: Over 3 Decades of Disagreement Between FTA and Project Sponsors

Why???

  • Two significantly different perspectives
    • Local decisionmaking
      • Local values and priorities
      • Local questions and answers
    • New Starts decisionmaking
      • Congressionally mandated evaluation criteria
      • Level playing field that treats proposals fairly and objectively
slide35

FTA Ratings: New Starts

Summary Rating

Project Justification

Rating

Financial Rating

Other

Factors

Mobility

Improvements

Environmental

Benefits

Operating

Efficiencies

Cost

Effectiveness

Non-Section

5309 Share

Capital

Finances

Land

Use

Operating

Finances

Capital

Cost

Low Income

Households

User

Benefits

Employment

O&M

Cost

User

Benefits

Minimum Project Development Requirements:

NEPA Approvals

Metropolitan Planning and Programming Requirements

Project Management Technical Capability

Other Considerations

what we ve heard
What We’ve Heard….

Why doesn’t FTA use all the criteria for its ratings?

  • Useful metrics for operating efficiencies and environmental benefits have not be developed
  • Metrics for mobility, while useful, have been delayed until rulemaking
fta ratings new starts
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 the case for the project
    • Local Financial Commitment
cost effectiveness
Cost Effectiveness
  • Dollars per hour of “user benefits” =
  • Benefits and costs computed in relation to a “Baseline Alternative”

Cost

Effectiveness

annualized capital cost + annual O&M cost

user benefits

Capital

Cost

O&M

Cost

User

Benefits

cost effectiveness39
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
cost effectiveness40
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
fta values for non travel time benefits
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

TOTAL constant 15.0 6.0

IVT coefficient 0.75*Civt 0.75*Civt

user benefits example
User Benefits Example

Local bus

TSM

100 transit trips

Wait time = 5 min; run time = 20 min

On

Off

BLD

Train

110 transit trips

Wait time = 5 min; run time = 15 min

On

Off

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

cost effectiveness43
Cost-Effectiveness
  • Current breakpoints* for ratings:
    • Low >$30.49 per hour
    • Medium-low $24.50 - $30.49 per hour
    • Medium $16 - $24.49 per hour
    • Medium-high $12 - $15.99 per hour
    • High < $12 per hour

* Adjusted annually using the GDP deflator

determination of cost effectiveness breakpoints
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)
breakpoints and funding
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
what we ve heard46
What We’ve Heard……

Why not include other benefits beyond user benefits in the cost effectiveness measure, e.g. economic development benefits?

  • Other benefits, particularly for economic development cannot be easily quantified
  • Even if additional economic development could be determined, adding these benefits to user benefits is problematic
what s a baseline alternative
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”
why use a baseline alternative
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
land use
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

mobility improvements
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
environmental benefits
Environmental Benefits
  • EPA air quality designationfor region
other factors
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

case for the project
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
case for the project outline
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
what we ve heard55
What We’ve Heard….

Why does FTA relegate something as important as the economic development benefits of transit projects to an “other factor”?

  • Difficulty of both defining economic development and assessing its likelihood
  • Reliability of economic benefit assessments compared to that of user benefits
  • Data collection implications to project sponsors
  • Reluctance to make significant evaluation changes prior to rulemaking
what we ve heard56
What We’ve Heard….

FTA’s evaluations do not give credit to the economic development benefits of transit.

  • 50% of project justification rating determined by land use rating which includes economic development considerations.
  • 5 to 20% of total project benefits derived from economic development according to FTA-assembled panel of experts
local financial commitment
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%)

acceptable financial ratings in project development
Acceptable 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
slide59

FTA Ratings: Small Starts

Summary Rating

Project Justification

Rating

Financial Rating

Other

Factors

Cost

Effectiveness

Non-Section

5309 Share

Capital

Finances

Land

Use

Operating

Finances

Capital

Cost

O&M

Cost

User

Benefits

Minimum Project Development Requirements:

NEPA Approvals

Metropolitan Planning and Programming Requirements

Project Management Technical Capability

Other Considerations

fta ratings small starts
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
fta ratings small starts continued
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
slide62

FTA Ratings: Very Small Starts

Summary Rating

Project Justification

Rating

Financial Rating

Other

Factors

Cost

Effectiveness

Non-Section

5309 Share

Capital

Finances

Land

Use

Operating

Finances

Capital

Cost

Benefiting

Riders

Minimum Project Development Requirements:

NEPA Approvals

Metropolitan Planning and Programming Requirements

Project Management Technical Capability

Other Considerations

fta ratings very small starts
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

what we ve heard64
What We’ve Heard….

The eligibility characteristics for Very Small Starts (VSS) unfairly exclude rail projects

  • VSS characteristics determined to ensure project’s cost effectiveness meaning limited capital and O&M costs compared to user benefits from existing riders
  • Higher costs & more complex service plans of fixed guideways (bus and rail) usually exclude use of a simplified estimate of cost effectiveness
summary ratings
Summary Ratings

Summary Rating

  • 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

Project Justification

Rating (50%)

Local Financial

Commitment Rating

(50%)

project ratings and decisionmaking
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
what we ve heard67
What We’ve Heard….

FTA’s evaluations are becoming more stringent making it difficult for many worthwhile projects to qualify for funding

  • FTA continues to award all the funding authorized for New and Small Starts
what we ve heard68
What We’ve Heard….

Increasing FTA requirements mean projects are taking longer to build

workshops and training courses
Workshops and Training Courses
  • October 28-30, Alternative Analysis Course, Washington, DC
  • TBD in 2009, Alternatives Analysis Courses
  • March, 2009, Workshop at APTA Legislative Conf, Washington, DC
  • March 3-5, 2009, Travel Forecasting Workshop for New/Small Starts, Phoenix, AZ
  • March 23-25, Travel Forecasting Workshop for New/Small Starts, Tampa, FL
  • Spring 2009, New/Small Starts Roundtables (by invitation)
  • June 2009, New/Small Starts Workshop at APTA Rail Conf, Chicago, IL
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