U.S. Department of Transportation Federal Transit Administration NEW STARTS AND SMALL STARTS Notice of Proposed Rulemak

1. U.S. Department of Transportation Federal Transit Administration NEW STARTS AND SMALL STARTS Notice of Proposed Rulemaking February 2012

2. New and Small Starts Program • Successful 30-year program of investing in transit infrastructure around the country • Generates projects that are transformational, create economic opportunity, and improve our quality of life • In the past year alone under the Obama Administration, there has been a record number of projects approved for construction • But FTA believes we can still do better

3. Reasons for Undertaking Regulation Change • Better Address Obama Administration Goals: • Invest in infrastructure • Foster economic development and job creation • Improve sustainability and livability • Ensure consideration of the environment, disadvantaged populations, and the impact these projects have on economic development • Streamline project delivery • Inform reauthorization discussion • Better quantify benefits of transit projects

4. The ANPRM Process • To ensure we captured a broad range of ideas on how to improve the process, FTA: • Published an Advanced Notice of Proposed Rulemaking (ANPRM) on June 3, 2010 • Conducted extensive outreach to non-traditional partners • Worked closely with our partners and HUD and EPA • As a result, FTA received more than 1,000 pages of comments on the ANPRM from a wide audience

5. The NPRM • FTA believes the proposals included in the NPRM will: • Reduce red tape and allow projects to reach the construction stage sooner • Potentially shave six months or more off the time required to move major projects through the process • Eliminate time-consuming technical requirements • These are common-sense changes that: • Continue an appropriate level of scrutiny for these significant investments of taxpayer dollars • Increase the transparency of the process

6. Agenda • Ground Rules for the Session • Overview of NPRM • Current Process and Legislative Framework • Streamlining Proposals in NPRM • Criteria and Measures Proposed in NPRM • Wrap Up

7. Ground Rules for this Session

8. NPRM Information Session Ground Rules • This is not a public hearing • The purpose of this session is to provide an overview of the NPRM and respond to questions • Comments on the NPRM must be submitted in writing to the Docket by the closing date of the comment period: March 26, 2012

9. NPRM • Published January 25, 2012 in the FederalRegister: Volume 77, Pages 3848-3909 • 60 day public comment period • Submit written comments to the Docket by Mail, Fax, Hand Delivery, or On-Line at regulations.gov

10. NPRM • Structured within existing statutory framework of the program • Eligibility requirements • Steps in the project development process • Evaluation and rating criteria, timeframes, and 5-point rating scale • If reauthorization occurs before completion of final rule, FTA will need to re-examine next steps

11. Overview

12. NPRM • Summarizes and responds to comments received on ANPRM • Proposes regulatory text that outlines the evaluation criteria and parameters of the program • Includes an appendix that provides more detail on specific measures and weights

13. Proposed Policy Guidance • Published concurrently with NPRM • Provides more details and specifics on the measures and weights • Comments received on policy guidance will be considered in conjunction with those provided on the NPRM • Can be found on FTA website at http://fta.dot.gov/grants/12304.html

14. Benefits of This Structure • Consistent with direction in SAFETEA-LU: “Secretary shall publish policy guidance regarding the capital project review and evaluation process and criteria . . .each time significant changes are made, but not less frequently than once every two years” • Provides certainty on the criteria by including them in the regulation • Allows FTA flexibility to incorporate latest research on technical methods by including details on the measures and procedures in the appendix and policy guidance

15. Issues with Current Process • Misses Important Administration Priorities • Perceived bias against projects designed to address economic development and projects serving shorter, inner-city trips • Overly Complex Measures • False precision and unnecessarily burdensome • Incomplete Measure of Project Benefits • No measurement of environmental benefits or economic development effects • Lacks Transparency • Use of incremental measures and point of comparison used are hard to explain and difficult to understand

16. Goals for NPRM • Capture a wider range of transit benefits • Develop clear, understandable measures to support streamlining • Maintain data driven approach with quantitative measures wherever possible • Utilize simplified analytical methods • Retain ability to identify investment-worthy projects

17. Streamlining Ideas in the NPRM • Expand ability for projects to pre-qualify • Simplify data development • Use trips on the project rather than travel time savings • Allow use of FTA developed direct demand model to estimate trips • Eliminate baseline alternative • Use simplified methods and standard factors to estimate benefits • Give sponsors flexibility and options about the level of analysis they wish to undertake for some measures • Allow use of current year data to satisfy requirements, future year projections only at sponsor’s option

18. Grandfathering of Projects • This new proposed rule would not apply to • New Starts and Small Starts projects that have already received a grant for construction • New Starts already approved for entry into Preliminary Engineering or Final Design • Small Starts already approved for entry into Project Development

19. Legislative Framework

20. Eligibility Requirements Eligible Projects New Starts New Starts funding is >$75M and/or total project cost ≥ $250M fixed guideway or extension to existing fixed guideway system Small Starts Total project cost <$250 million and Small Starts share <$75 million fixed guideway, extension to existing fixed guideway system, or corridor based bus system Eligible Project Sponsors Public bodies and agencies 20

21. Required Steps in theNew Starts Process Preliminary Engineering Full Funding Grant Agreement Alternatives Analysis Final Design FTA rating and decision points Determine Locally Preferred Alternative and adopt it into constrained long range transportation plan

22. Required Steps in the Small Starts Process FTA rating and decision points Alternatives Analysis Project Development Project Construction Grant Agreement Determine Locally Preferred Alternative and adopt it into constrained long range transportation plan

23. Requirements for FTA Evaluation and Rating • FTA must evaluate and rate projects: • Annually in a Report to Congress (due First Monday in February) • New Starts • For entry into Preliminary Engineering • For entry into Final Design • Prior to Full Funding Grant Agreement (FFGA) and construction • Small Starts • For entry into Project Development • Prior to Project Construction Grant Agreement (PCGA) and construction

24. Requirements for FFGA/PCGA • To receive an FFGA/PCGA • At least “medium” overall project rating required • No outstanding issues remain • Contents of FFGA/PCGA • Formal agreement on project scope, budget, and schedule signed by FTA and project sponsor • Establishes terms and conditions of Federal participation • Caps Federal Section 5309 New/Small Starts funds • New/Small Starts funds subject to annual congressional appropriation • By law FFGA/PCGA cannot be signed until after a 60 day congressional review

25. “Exempt” Projects • TEA-21 allowed projects seeking less than $25 million in New Starts funds to be exempt from evaluation and rating by FTA • SAFETEA-LU eliminated the exempt project category upon publication of final rule implementing Small Starts

26. Requirements for Before and After Study • Project sponsor must conduct a study that: • analyzes the impacts of the project on transit services and ridership • Evaluates predicted and actual outcomes • Identifies differences between predicted and actual outcomes • Study plan must be developed and included in the FFGA • Actual outcomes should be based on two years after opening of the project

27. Summary Rating Project Justification Rating Financial Rating Other Factors Environmental Benefits Operating Efficiencies Cost Effectiveness Non-New Starts Share Capital Finances Economic Development Mobility Improvements Land Use Operating Finances Statutory New Starts Project Evaluation and Rating Framework

28. Summary Rating Project Justification Rating Financial Rating Other Factors Land Use Cost Effectiveness Non-New Starts Share Capital Finances Economic Development Operating Finances StatutorySmall Starts Project Evaluation and Rating Framework

29. Development of Ratings Law requires that FTA: • Develop an overall project rating based on ratings for project justification and local financial commitment • Provide individual ratings for each of the criteria specified in law • Rate projects on a 5 point scale • Give each of the project justification criteria “comparable, but not necessarily equal numerical weight”

30. Summary Ratings Summary Rating Current FTA Decision Rules: • Must have at least “Medium” on both to receive “Medium” overall • If a project gets a “Low” rating on either, the overall rating will be “Low” Project Justification Rating (50%) Local Financial Commitment Rating (50%)

31. Proposals in the NPRM

32. Project Justification Criteria Current Weights • Mobility = 20% • Cost effectiveness = 20% • Environmental Benefits = 10% • Land Use = 20% • Economic Development = 20% • Operating Efficiencies = 10% • Other Factors – can raise or lower overall project justification rating one level Proposed Weights • Mobility = 16.66% • Cost effectiveness = 16.66% • Environmental Benefits = 16.66% • Land Use = 16.66% • Economic Development = 16.66% • Operating Efficiencies = 16.66% • Other Factors – can raise or lower overall project justification rating one level

33. Pre-Qualification (Warrants) Current FTA defined warrants • Small Starts and Very Small Starts • If O&M cost of the project is less than 5% of current system-wide O&M, project qualifies for automatic medium or better rating on local financial commitment • Very Small Starts • If project meets FTA defined parameters for cost and existing transit ridership in the corridor, project qualifies for automatic medium rating for project justification

34. Pre-Qualification (Warrants) NPRM Proposed Expansion of Warrants • Could cover larger projects and a wider range of corridor types • Projects could receive an automatic rating of ‘‘medium’’ or better on one or more of the project justification criteria • Specific proposals would be identified in future proposed policy guidance

35. Current Year/Horizon Year Current Approach • New Starts • Measures based on 20 year time horizon • Small Starts • Measures based on opening year of project Proposed Approach • New and Small Starts • Require forecast of costs/benefits based on current year inputs • At sponsor’s option, horizon year measures may be calculated if the sponsor feels it will help the project rating • Horizon is 10 years in the future • If sponsors chooses to do both, rating is proposed to be based on equal weighting of the two

36. Point of Comparison Current Approach • “Baseline” alternative – best that can be done in the corridor absent a major capital investment • Typically a Transportation System Management Alternative (lower cost bus option) Proposed Approach • If only current year forecasts prepared, existing system will serve as point of comparison • If horizon year forecasts prepared, no build alternative will serve as point of comparison (can include expansion projects funded in the TIP)

37. Breakpoints • Will recognize small amounts of benefits are simply small, but not bad • Small positive benefits will be rated medium rather than low • Only adverse impacts or disbenefits would receive medium-low or low ratings • FTA will look for research to help inform breakpoints • If no research available, FTA will establish an initial set of breakpoints based on the performance measures available from projects currently in the pipeline of projects • FTA seeking comment on how to establish breakpoints • Breakpoints will be discussed in future proposed policy guidance

38. Before and After Study Current Regulation • Project sponsor develops B&A study plan during preliminary engineering, must be submitted to FTA before final design • Require collection of ‘‘before’’ data prior to start of construction • Requires collection of ‘‘after’’ data two years after the project opens • Study is an eligible expense under the FFGA

39. Before and After Study Proposal in NPRM • Keeps existing requirements but: • Specifies in more detail the information to be collected • Adds that before execution of FFGA, there must be satisfactory progress on carrying out the study plan • Seeks comments on whether 2 years after opening is a sufficient time for project impacts to be fully realized • Proposes that the final report be submitted to FTA within 3 years of project opening

40. Pre-Award Authority NPRM proposes to codify existing procedures

41. Reimbursement with Federal Funds NPRM proposes to codify: • PE and FD costs potentially reimbursable once project approved into that phase • Real estate potentially reimbursable once a project is approved into final design • Vehicles and construction reimbursable only once a project is approved for construction

42. Definitions Added • Small Starts • Project Development • Corridor-Based Bus System • Early Systems Work Agreement • No-Build Alternative • Metropolitan Transportation Plan • Locally Preferred Alternative

43. No Changes Currently Proposed • The following areas have no changes proposed at this time: • NEPA and New Starts interfaces • Letter of No Prejudice policies/procedures

44. Proposed Criteria and Measures

45. Trips Rather Than Travel Time Saved • Allows for use of simplified direct demand model rather than traditional forecasting methods • FTA will develop the simplified model based on ridership experience on systems around the country • Will use census data and transit network information • Sponsors can choose to continue to use traditional methods if they prefer

46. Mobility Benefits – Current Measure • Based on: • Number of Transit Trips • User Benefits per Passenger Mile • Number of Transit Dependents Using the Project • Transit Dependent User Benefits per Passenger Mile • Share of User Benefits Received by Transit Dependents Compared to Share of Transit Dependents in the Region

47. Mobility Benefits – Proposed Measure • Trips on the Project • Each trip by a transit dependent person would be equivalent to two trips by a non transit dependent person

48. Environmental Benefits – Current Measure • Based on the EPA air quality designation for the metropolitan area where the project is located • Projects in non-attainment areas for any transportation-related pollutants receive a “High” rating • Projects that are in attainment areas receive a “Medium” rating

49. Environmental Benefits – Proposed Measure • Based on estimated change in VMT resulting from mode shift • Monetized value of changes in • Energy use • Greenhouse gas emissions • Air quality criteria pollutants • Safety • Human Health (in the future when method is determined) • Compared to annualized capital and operating cost

50. Environmental Benefits – Proposed Measure (continued) • Measures would be converted from VMT into their native units (e.g., tons of emissions or total accidents) using national-level standard conversion factors • Native units would be monetized based on standard dollar values • Monetized values would be summed and compared to the annualized capital and operating cost of the proposed project