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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 l.jpg

New Starts/Small Starts Program

APTA Annual Meeting

San Diego, CA

October 4, 2008


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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


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Topics

  • Overview of the Program

  • New/Small Starts Project Planning & Development

  • New/Small Starts Evaluation and Funding

  • Outreach


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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


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Long-standing Legislative Requirements for Funding

  • Alternative analysis

  • Cost effectiveness

  • Local financial commitment


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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


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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


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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)


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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


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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


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Principle: Mode-neutral Costs

  • 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.


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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


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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


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New Starts/Small Starts Funding: Supply and Demand Funding

  • 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


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SAFETEA-LU Provisions Supporting Good Planning Estimates Funding

  • 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


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The New/Small Starts Environment Funding

Press

150Projects

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

Inspector

General

Govt

Accountability

Office

Individual Senate and House Members



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New Starts Project Development Process Funding

  • 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


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Key Decisions for Each Phase of Project Development Funding

  • Systems planning: priority corridor

  • Alternatives analysis: mode and alignment

  • Preliminary engineering: final scope/cost, completion of NEPA, financial plan

  • Final design: construction documents

  • Full Funding Grant Agreement

    • FTA: funding

    • Project sponsor: delivery of the project


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Planning and Project Development Funding

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


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Alternatives Analysis: FundingGuiding 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


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Alternatives Analysis: Key Elements Funding

  • 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


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Useful FTA Reviews during AA Funding

  • Scope of work

  • Initiation package

  • Technical framework

  • Technical results

  • Final report (AA report or AA/DEIS)


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Preliminary Engineering: Key Elements Funding

  • 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


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What is a Full Funding Grant Agreement (FFGA)? Funding

  • 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


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Significance of FFGA Funding

  • 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


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Practical Limits for New Starts Funds Funding

  • 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)


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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



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Actual Ridership versus AA Forecast for Projects Completed 2003-2007

Average = 74.5%

50th Percentile = 63.8%


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New Starts Evaluation and Funding Projects Completed 2003-2007


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Documents Related to SAFETEA-LU Requirements Projects Completed 2003-2007

  • 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


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New Starts Evaluation and Oversight Projects Completed 2003-2007

  • Among most rigorous in government

  • Increasingly credible and important to Congress and local communities

  • Program Management Oversight recommended by GAO and OIG


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New Starts Evaluation and Oversight: Projects Completed 2003-2007Over 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


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FTA Ratings: New Starts Projects Completed 2003-2007

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


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What We’ve Heard…. Projects Completed 2003-2007

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


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FTA Ratings: New Starts Projects Completed 2003-2007

  • 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


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Cost Effectiveness Projects Completed 2003-2007

  • 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


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Cost Effectiveness Projects Completed 2003-2007

  • 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


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Cost Effectiveness Projects Completed 2003-2007

  • 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


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FTA values for Non-Travel Time Benefits Projects Completed 2003-2007

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


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User Benefits Example Projects Completed 2003-2007

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


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Cost-Effectiveness Projects Completed 2003-2007

  • 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


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Determination of Cost Effectiveness Breakpoints Projects Completed 2003-2007

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)


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Breakpoints and Funding Projects Completed 2003-2007

  • 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


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What We’ve Heard…… Projects Completed 2003-2007

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


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What’s a Baseline Alternative? Projects Completed 2003-2007

  • 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”


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Why Use a Baseline Alternative? Projects Completed 2003-2007

  • 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


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Land Use Projects Completed 2003-2007

Based on strength of:

  • Transit supportive existing land use

  • Transit supportive plans and policies

  • Demonstrated local performance of transit supportive policies

Land Use


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Mobility Improvements Projects Completed 2003-2007

  • 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


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Environmental Benefits Projects Completed 2003-2007

  • EPA air quality designationfor region


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Other Factors Projects Completed 2003-2007

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


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Case for the Project Projects Completed 2003-2007

  • 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


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Case for the Project - Outline Projects Completed 2003-2007

  • 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


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What We’ve Heard…. Projects Completed 2003-2007

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


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What We’ve Heard…. Projects Completed 2003-2007

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


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Local Financial Commitment Projects Completed 2003-2007

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%)


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Acceptable Financial Ratings In Project Development Projects Completed 2003-2007

  • 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


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FTA Ratings: Small Starts Projects Completed 2003-2007

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


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FTA Ratings: Small Starts Projects Completed 2003-2007

  • 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


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FTA Ratings: Small Starts Projects Completed 2003-2007(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


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FTA Ratings: Very Small Starts Projects Completed 2003-2007

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


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FTA Ratings: Very Small Starts Projects Completed 2003-2007

  • 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


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What We’ve Heard…. Projects Completed 2003-2007

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


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Summary Ratings Projects Completed 2003-2007

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%)


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Project Ratings and Decisionmaking Projects Completed 2003-2007

  • 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


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What We’ve Heard…. Projects Completed 2003-2007

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


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What We’ve Heard…. Projects Completed 2003-2007

Increasing FTA requirements mean projects are taking longer to build



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Planned Outreach Activities Projects Completed 2003-2007


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Workshops and Training Courses Projects Completed 2003-2007

  • 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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